Weekly analytics for 21 — 27 June

Not yet “Excellent”, but no longer an “F”: how Ukraine is fulfilling the recommendations of the European Commission

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On June 22, during the Ukraine Recovery Conference (URC23) that took place in London, an interim assessment of the state of implementation of the European Commission’s recommendations regarding Ukraine’s accession to the European Union was issued. According to members of the Commission, two out of seven items have been fully implemented. The implementation of each recommendation was evaluated based on a 5-point scale, where 5 points mean full implementation and 1 point means lack of any progress.

CPLR’s expert assessment

In March, the CPLR’s experts already reviewed the state of Ukraine’s implementation of the European Commission’s recommendations, focusing on the accuracy of their implementation. At that time, the Government’s statements that all seven recommendations had been implemented were clearly premature. However, even over these past few months that elapsed, Ukraine has demonstrated some progress.

Recommendation 1: enact and implement legislation on a selection procedure for judges of the Constitutional Court of Ukraine (CCU), including a pre-selection process based on evaluation of their integrity and professional skills, in line with Venice Commission recommendations;

In December 2022, the Parliament adopted a new procedure for the competitive selection of candidates for the position of a judge of the CCU, as well as operating procedures for the Advisory Expert Group (AEG) for evaluating the moral qualities of candidates for the position of a judge of the CCU. However, the relevant law did not take into account the Venice Commission’s recommendation regarding the seventh member of the AEG under the international quota.

In April-May 2023, several draft laws were registered in the Parliament aimed at improving the current provisions on the AEG’s operation and the procedure for selecting judges of the CCU, as well as partial consideration of the Venice Commission’s comments. The CPLR’s experts have previously provided their evaluations of the draft laws № 9225, № 9322, № 9322-2.

In June, the Venice Commission analyzed provisions of the draft law № 9322 and provided a generally favorable opinion, although the main requirements regarding the gradation of evaluation of moral and professional qualities of candidates for the position of a judge of the CCU (“does not meet”, “meets” and “highly meets”) and the inclusion of the seventh member in the AEG composition were not taken into account in this draft law. However, the absence of the AEG member under the international quota is compensated through providing a decisive vote to other representatives of the international community in the AEG’s composition.

Since it is currently only a draft law and not has not been adopted, the implementation of this recommendation can be rated at 4 points.

Recommendation 2: finalize the integrity vetting of the candidates for the High Council of Justice (HCJ) members by the Ethics Council and the selection of candidate to establish the High Qualification Commission of Judges of Ukraine (HQCJ).

On June 13, 2023, joint information on the follow-up to Ukraine’s implementation of the Urgent Joint Opinion of the Venice Commission and the Directorate General of Human Rights and the Rule of Law (DGI) of the Council of Europe on the draft law on amendments to certain legislative acts concerning the procedure for electing (appointing) members of the High Council of Justice (HCJ) and the activities of disciplinary inspectors of the HCJ was published. This document only states that the HCJ started its activity and formed the composition of the HQCJ. Thus, on June 1, not only was the authorized composition of the commission formed, but the remaining vacant positions on the Commission were also fully filled.

At the same time, the problems related to the HCJ’s activities itself remain unresolved. Four positions are still vacant, including one under the quota of the President of Ukraine, two under the quota of the Congress of Lawyers, and one under the quota of the Congress of Legal Higher Educational Institutions and Scientific Institutions.

Back in March, the Ethics Council conducted interviews with candidates for the HCJ under the President’s quota. Three out of 11 candidates were determined to meet the professional ethics and integrity criteria. However, only two such candidates currently remain (as Oleg Koliush was elected to the HQCJ).

On June 2, the Congress of Representatives of Higher Legal Education Institutions and Scholarly Institutions took place. Neither of the two candidates was elected due to the lack of majority of the total number of elected delegates. This Congress also highlighted a number of problems in the procedure for electing the HCJ members (more details in the CPLR’s assessment).

Since January 2022, the Council of Lawyers of Ukraine has not convened a Congress of Lawyers and has not announced a competition to fill vacant positions in the HCJ.

Despite these problems, both judicial bodies perform their functions. But the disciplinary function of the HCJ remains “locked” because the Service of Disciplinary Inspectors, which plays one of the key roles in disciplinary proceedings against judges, has not been formed. Since August 2021, the Council has not considered disciplinary complaints against judges.

Considering the wording of the recommendation itself: to finalize the integrity vetting of the candidates for the HCJ members and establish the HQCJ – its fulfillment is evaluated at 4.5 points.

Recommendation 3: further strengthen the fight against corruption, in particular at high level, through proactive and efficient investigations, and a credible track record of prosecutions and convictions; complete the appointment of a new head of the Specialized Anti-Corruption Prosecutor’s Office through certifying the identified winner of the competition and launch and complete the selection process and appointment for a new Director of the National Anti-Corruption Bureau of Ukraine (NABU).

According to the experts of the CPLR, this recommendation was partially completed in March 2023. This assessment was influenced by the lack of public access to the full text of the State Anti-Corruption Program for 2023-2025 as approved by the Cabinet of Ministers of Ukraine. The heads of NABU and SAP had already been appointed at that time. 

Currently, the restoration of asset declarations of public officials and financial reporting of political parties are considered the cornerstone of the fight against corruption, which was also emphasized by European partners.

Regarding ensuring the proper dynamics of court cases and sentencing, despite the fairly vague wording of the European Commission, the SAP contains a number of measures that will contribute to the implementation of this recommendation. In particular, this has to do with the simplification of certain investigative procedures, the establishment of reasonable terms of criminal proceedings, individual hearings of certain cases by judges of the first instance of the Higher Anti-Corruption Court (according to the law, currently all cases are heard by panels three judges, which objectively causes delays), the possibility entering into plea agreements, etc.

Currently, apart from politicians’ statements regarding the need to implement these steps, there is no information on the state of their implementation, so this recommendation can be rated as fulfilled at 2.5 points.

Recommendation 4: ensure that anti-money laundering legislation is in compliance with the standards of the Financial Action Task Force (FATF); adopt an overarching strategic plan for the reform of the entire law enforcement sector as part of Ukraine’s security environment.

In November 2022, the Law “On Amendments to Certain Laws of Ukraine on the Protection of the Financial System of Ukraine from the Actions of a State Carrying Out Armed Aggression against Ukraine, and on the Adaptation of Ukrainian Legislation to Certain Standards of the Financial Action Task Force Against Money Laundering (FATF) and the requirements of EU Directive 2018/843” was adopted. However, certain FATF standards were mechanically transferred into the Ukrainian legislation, creating new corruption risks (for more details, see the assessment of the CPLR’s experts).

On May 11, 2023, the President of Ukraine issued a Decree № 273/2023 approving the Comprehensive Strategic Plan for the Reform of Law and Order Bodies as Part of the Security and Defense Sector of Ukraine for 2023–2027. It concerns both institutional reform of law and order agencies and further amendments to criminal procedure legislation, criminal policy, forecasting, etc. Thus, the policy of reforming law and order agencies in the long term was defined, which was lacking following the Revolution of Dignity, since the reforms were non-systemic and often simply not completed. Since the European Commission had no requirements for the content of the Plan (unlike other recommendations), the very fact of the adoption of this document is important and it can be said that the recommendation has been fulfilled. More details regarding the plan and its assessment were provided by the CPLR earlier.

Therefore, this task is fulfilled at 3 points.

Recommendation 5: implement the Anti-Oligarch law to limit the excessive influence of oligarchs in economic, political, and public life; this should be done in a legally sound manner, taking into account the forthcoming opinion of the Venice Commission on the relevant legislation.

On June 13, the Venice Commission published its opinion on the Anti-Oligarchic Law, which emphasized that the fight against oligarchs in Ukraine should be systemic, and essentially noted the need to address the problems referred to in other opinions of the European Commission. In particular, this has to do with strengthening the antimonopoly measures and ensuring the political independence of the Antimonopoly Committee; strengthening the fight against corruption and prevention of corruption through implementation of the SAP; increasing transparency in the area of public procurement and media ownership; strengthening the transparency of the structure of legal entities and implementation of anti-money laundering policy; and improvement of rules for political parties and election campaign financing.

As a reminder, in order to implement the Anti-Oligarchic Law, the Cabinet of Ministers approved the Plan of Anti-Oligarchic Measures, whose frail performance was constantly justified with various excuses. Although the opinion of the Venice Commission suggests postponing the implementation of the Law until the end of the war, this does not mean completely folding down the anti-oligarchic measures.

As can be seen, implementation of the majority of other recommendations of the European Commission directly or indirectly affects this point; therefore, its fulfillment can be rated at 1 point.

Recommendation 6: tackle the influence of vested interests by adopting a media law that aligns Ukraine’s legislation with the EU audio-visual media services directive and empowers the independent media regulator.

According to the European Commission, this recommendation has been fully implemented. The Law “On Media” was adopted in December 2022 and entered into force on March 31, 2023. CPLR’s experts have already drawn attention to a number of problems contained in its provisions while stating that the relevant EU Directives are mostly implemented. At the same time, the martial law and the operation of a unified telethon create the basis for the establishment of influence on a significant number of media by individual entities, whose self-dealing interests may manifest after the victory of Ukraine and the revitalization of political life.

Therefore, Ukraine fulfilled this recommendation at 4 points.

Recommendation 7: finalise the reform of the legal framework for national minorities currently under preparation as recommended by the Venice Commission, and adopt immediate and effective implementation mechanisms.

In June, the Venice Commission published a critical opinion on the Law “On National Minorities (Communities)”. Other laws affecting the rights of national minorities (communities), including the language law and the media law, were also criticized. Thus, the Venice Commission recommended eliminating the language quotas established by these laws in the media and in publishing activities. This caused fury among the Ukrainian society, since the language issue itself served as one of the reasons for Russia to start the war against Ukraine.

This disagreement with the Venice Commission’s position can significantly slow down the process of implementation of the Law on National Minorities, since the weakening of measures to protect the state language will lead to further expansion of the Russian-speaking environment, primarily in the cultural space, and thus create new threats to the national security and independence of Ukraine.

The lack of appropriate English translations of the Constitution of Ukraine, in particular articles 10 and 53, is an added obstacle to the Venice Commission’s activity regarding the assessment of Ukrainian laws and draft laws. Unfortunately, there is no high-quality translation on other web resources as well (such as the websites of the Parliament, the Constitutional Court of Ukraine, or the President of Ukraine). This directly affects the understanding of the text of the Constitution by the Western experts, particularly concerning the observance of constitutional rights and guarantees of national minorities in Ukraine.

Thus, we assess the implementation of this recommendation at 4 points.

The average assessment of the CPLR’s experts almost coincides with the assessment of the European Commission (3.3 points by the CPLR versus 3.7 points from the EC).

This review suggests that the implementation of measures directly related to the fight against corruption and the excessive influence of oligarchs is lagging the most. However, in general, Ukraine’s progress towards the European integration is noticeable, as the implementation of all recommendations of the European Commission is necessary, first and foremost, for the Ukrainians themselves.

How Britain is helping Ukraine to receive Russian funds to compensate for damages caused by the war

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Last week, a number of events happened in the United Kingdom, which in one way or another relate to the recovery of Ukraine and Russia’s compensations for the damages caused. At the beginning of the week, the “[James] Cleverley plan” regarding the maintenance of sanctions against Russia and the voluntary transfer of funds of Russian oligarchs to Ukraine was presented in the British government. Subsequently, the Ukrainian Prime Minister Shmyhal spoke about next steps of Ukraine and its allies to create a compensation mechanism, while international partners supported the idea of rebuilding Ukraine at the expense of frozen Russian assets at a conference in London.

CPLR’s assessment

The value of Russian-connected assets located in Britain is approximately USD 30 billion. At the same time, the country’s government is in no hurry to make a decision regarding the transfer of frozen Russian sovereign and private funds to Ukraine.

The most significant initiative was presented on the eve of the conference on the recovery of Ukraine, which took place last week in London. The plan, developed by the Minister of Foreign Affairs J. Cleverley, boils down to 3 key points:

• sanctions against Russia will not be lifted until compensation is fully paid to Ukraine;
• sanctioned Russians will be able to “donate” their frozen assets for the restoration of Ukraine at their will;
• Britain will independently control the distribution and spending of funds transferred to Ukraine by Russian oligarchs.

First, the draft law that was presented will allow the British government to extend sanctions against Russia in an interesting way: the purpose of these restrictions will now be changed in the relevant legislation. Along with encouraging the Kremlin to withdraw its troops from Ukraine, the facilitation Russia’s compensation to Ukraine will be the direct goal of sanctions. It is also in line with Britain’s recent commitment to keep Russian state assets frozen until Russia compensates for damages.

Second, Russian citizens who are under sanctions and wish to support Ukraine will now be able to voluntarily donate their immobilized funds for Ukraine’s recovery. Such persons will be able to ask for their assets to be unblocked with one goal only – to direct these funds to the recovery of the state that suffered from the actions of their government. No demands for easing the sanctions in return for a donation can be made.

Third, the British government will oversee the operation of the fund that will distribute assets donated by the sanctioned Russians and the spending of this money. Precise oversight mechanisms would be presented at a later date.

At the second conference on the recovery of Ukraine, which took place on June 21-22 in London (Ukraine Recovery Conference), representatives of states and businesses generally supported the opinion that frozen Russian assets should be used for the post-war recovery of Ukraine.

In particular, the idea to attract Russian funds for the reconstruction of destructions was voiced once again on the eve of the conference by the Prime Minister of Ukraine D. Shmyhal. According to the Prime Minister, this is how Kyiv sees the next steps for the development of the concept of compensation mechanism for Ukraine:

1) states create an intergovernmental commission to determine the amount of compensation for victims of armed aggression based on the data from the Register of Damages established under the Council of Europe’s auspices;

2) partner states amend their legislations to allow the transfer of Russian assets blocked on their territories to Ukraine;

3) a compensation fund is created for the accumulation of collected funds;

4) confiscation of Russian assets and payments to Ukraine are made in practice.

Moreover, Ukraine proposes to sign an international agreement on the creation of a universal system under which states resorting to illegal armed aggression will be required to pay for damages caused. 

Thus, all of these events are important for Ukraine’s post-war recovery and compensation for damages caused by Russia. As such, they are part of the transitional justice system for Ukraine, which is currently being created. The Ukrainian concept of transitional justice, which is based on the norms and principles of international law, contains the following provision (specifically, enshrined in the draft Law “On Fundamentals of State Policy for the Transitional Period” №5844 of August 9, 2021): all damages are ultimately paid by the aggressor state. It is clear that it will be extremely difficult to transfer Russian funds to Ukraine without the decisions analyzed above.

However, it should be noted that Britain remains cautious regarding Russia’s state assets: so far, they are only frozen, and their confiscation and transfer to Ukraine are not being prepared. Furthermore, the extension of sanctions is clearly intended to force Russia to voluntarily pay compensation and does not indicate an intent to confiscate Russian assets as an end in itself.

Unfortunately, no specifics regarding compensation for Ukraine were heard at the London conference. The event emphasized the support of foreign governments and businesses to Ukraine to recover and become a full-fledged part of the democratic world, particularly the EU.

It should also be noted that without a compensation mechanism – that is, without an internationally agreed approach – the efforts by individual states to introduce and extend sanctions against Russian citizens and companies, block and confiscate the funds of Russian oligarchs, and freeze and transfer Russian sovereign assets are doomed to become ineffective.

At the same time, the international consensus on the need to attract Russian funds and property as the main sources of compensation and economic recovery of Ukraine remains unshaken; the work on the creation of a comprehensive compensation mechanism continues; and there is increasing support for such a step in discussions regarding the confiscation of Russian sovereign assets.