An Information Sheet on loss repayments to Ukrainian businesses that suffered in military actions.

An Information Sheet on loss repayments to Ukrainian businesses that suffered in military actions

On 20.03.2022, by Decree No. 326, the Government established the Procedure of determining the loss and damage caused to Ukraine by armed aggression of rf (the Procedure), having outlined focuses and criteria to elaborate methods of defining the loss.

The Procedure specifies the list of state authorities to determine the loss and to approve the mentioned methods. For instance, if it goes about losses of agriculture businesspeople who own land plots for agricultural purposes, par.6 of the Procedure says that the assessment of loss and damage shall take place according to the method approved by Order of the Ministry of Agrarian Policy, agreed with the Ministry of Integration.

Regional state administrations and the state administration in the city of Kyiv (within the martial law period, there will be military administrations) are responsible for specifying loss and damage in the mentioned sphere. The main focus of establishing the losses of private entities appears in par.14 of the Procedure: “Economic losses of entities”.

According to it, the following types of business losses are subject to assessment: destruction or damage of property, lost profit due to impossibility or hindrances in running an agricultural business, and loss of unpaid goods, services and works supplied and consumed in the temporarily invaded territories.

Full text of the Procedure is available here: https://zakon.rada.gov.ua/laws/show/326-2022-%D0%BF#Text

Decree No. 326 specifies that ministries and other central and local authorities have six months to elaborate and approve methods established by the Procedure approved by the said Decree.

Regards any income lost due to the war, an appropriate assessment method shall be elaborated and approved by a regular order of the Ministry of Economy and the State Property Fund and agreed upon with the Ministry of Integration. Nowadays, new mechanisms still do not exist, and the pre-martial rules remain in force. According to article 22 of the Civil Code of Ukraine, lost profit means “profit that a person could reasonably obtain in regular conditions without this person’s right infringement”.

Documentation of loss of profits in the war expressed in the loss of income may include an audit and/or expert inspection, determining the company’s cost since 24.02.2022. It may be expedient to register the drop or absence of incomes or the decrease in the cost of the business since the full-scale rf’s invasion started.

Identic is the situation with the assessment of loss caused by the lack of payment for goods, works, and services delivered and consumed at temporarily invaded territories. It still lacks approval, as does the mechanism to calculate lost profits.  

Despite the absence of regulations containing explicit algorithms to compensate for the loss of businesspeople, instead of wasting time, one should already register the loss caused by the rf’s aggression and collect pieces of evidence.

In case of damage/destruction/loss of the actual access to the property, you should:

• Apply to the authorities competent in the elimination of consequences: to the National Police of Ukraine to open a criminal case on the destruction/damage/loss of actual access to the property or with a written application about a crime); to the State Emergency Service – on the elimination of consequences of military acts that had damaged the property, on issuing a certificate (on fire/accident, etc); 
• self-registration of the destruction/damage/loss of the actual access to the property by own, if possible. It should be a detailed photo or video including the place of the event, identifying the person taking photos/video (full name, passport details, position), venue, location, time of the fixation and the event itself. One could order an examination and/or inventory inspection of the property from a special commission at a company to issue a certificate of examination/deficiency certificate. Orders by the company on the impossibility to use the property due to the loss of access or control over the property (for instance, the impossibility of a sowing campaign in some regions due to the armed invasion, destruction or damage thereof, termination of business activities, etc;
• To carry out a preliminary assessment of the loss and damage, to run an inspection with written conclusions, involving technical inventory experts to have their opinion on real estate; independent records of loss in documents, making loss calculations);
• To collect witnesses’ reports and all available mass media announcements of the accident;
• To collect and preserve all possible confirming documents: those on the title to the property; technical documents on its characteristics; other documents expedient to assess loss and damage.