The Constitutional Court is reviewing the constitutionality of transitional provisions on developers' equity participation after the repeal of Article 40

The Constitutional Court reports that on July 8, the Second Senate, during an open part of the plenary session in the form of written proceedings, considered the case on the constitutional complaint of Liubov Borysivna Petrenko.

During the plenary session, the reporting judge in the case, Oleksandr Vodyannikov, presented the content of the constitutional complaint, the applicant's reasoning, and the grounds for opening constitutional proceedings in the case.

The judge noted that the applicant addressed the Constitutional Court of Ukraine with a petition to verify the constitutionality of certain provisions of the Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine Regarding the Stimulation of Investment Activity in Ukraine" dated September 20, 2019, No. 132-IX (hereinafter - the Law). In this case, the panel of judges of the Court opened constitutional proceedings concerning the applicant's claims. Thus, the subject of constitutional control in this case is the second paragraph, subparagraphs 3 and 4 of paragraph 2 of Section II "Final and Transitional Provisions" of the Law.

The contested provisions establish that during 2020, construction customers on a land plot in a settlement transfer funds to the relevant local budget for the creation and development of the settlement's infrastructure (hereinafter - equity participation) in the specified amount and procedure:

• The construction customer is obliged within 10 working days after the start of construction of the object to apply to the relevant local self-government body with a request to determine the amount of equity participation regarding the construction object, to which documents confirming the cost of construction of the object are attached. The local self-government body within 15 working days from the date of receipt of the specified documents provides the construction customer with a calculation of the equity participation regarding the construction object;
• Equity participation is paid exclusively in cash before the acceptance of the respective construction object into operation.

From the content of the constitutional complaint and the attached materials, it appears that the applicant is the owner of a land plot in Kyiv, on which she built an individual (estate) residential house.

From 1 January 2020, subparagraph 3 of paragraph 13 of Section I of the Law came into force, which excluded Article 40 of the Law of Ukraine "On Regulation of Urban Development Activities" dated 17 February 2011, which established developers' equity participation in the development of settlement infrastructure.

The applicant submitted a notification about the start of construction works on 15 June 2020, and the declaration of readiness for operation of the house was registered by the Department of State Architectural and Construction Control of Kyiv City Executive Body (Kyiv City State Administration) on 13 July 2020. On the date of acceptance of the house into operation, the applicant had not concluded an equity participation agreement for the development of Kyiv's infrastructure.

In 2023, the Department of Economics and Investments of the Kyiv City Executive Body (Kyiv City State Administration) (hereinafter - the Department of Economics and Investments) filed a lawsuit against L. B. Petrenko to recover unjustly retained equity participation funds in the amount of UAH 1,409,024.34 for the creation and development of social and engineering-transport infrastructure of Kyiv.

The Desnianskyi District Court of Kyiv partially satisfied the claim and recovered from the applicant unjustly retained funds in the amount of UAH 223,866.87 to the budget account of the special fund of the city budget development. The Kyiv Court of Appeal left the decision of the first instance court unchanged.

In 2025, the Department of Economics and Investments filed a cassation appeal to the Supreme Court, requesting to cancel the aforementioned court decisions and adopt a new one fully satisfying the claim. The Civil Cassation Court in the Supreme Court left the cassation appeal unsatisfied, and the decisions of the courts of first and appellate instances remained unchanged.

The applicant argues that the contested provisions of the Law, which establish "the procedure and amounts of equity participation payment in 2020 without concluding the respective agreement with the local self-government body," contradict the fundamental principles of the constitutional order in Ukraine, and violate the guaranteed constitutional rights of the individual provided for in Articles 7, 8, 13, 19, and 58 of the Constitution of Ukraine. In her opinion, "the norm that de facto obliges a person to pay funds under conditions that were repealed by legislation, without the presence of a direct and valid legal basis, contradicts not only Articles 13, 42, and 57 of the Constitution of Ukraine but also the general philosophy of the relationship between the state and business in a democratic rule-of-law state."

The reporting judge also informed that letters-requests were sent to state authorities, scientific institutions, and organisations regarding the issues raised in the constitutional complaint.

The Court examined the case materials and proceeded to the closed part of the plenary session.

The plenary session was attended by the authorised person acting on behalf of the subject of the constitutional complaint, lawyer Hanna Nikitina-Dudikova, and the permanent representative of the Verkhovna Rada of Ukraine in the Constitutional Court of Ukraine, Maksym Dyrdin.

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