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Recovery of debts, penalties and fines

Updated: November 2026
 
A counterparty does not pay for goods, services or rent and ignores demand letters. Whether the creditor actually gets paid depends on three things: how the claim is calculated, whether limitation periods are still running, and whether the debtor’s assets are frozen in time. Since 28 August 2025 the rules on contractual penalties between businesses have changed, so contracts signed earlier should be read again in light of the new rules.
 
What can be recovered
In addition to the principal debt, a creditor may claim:
  • 3% per annum and inflation losses for the entire period of delay (art. 625 of the Civil Code of Ukraine (in Ukrainian)). They are due by law, even if the contract is silent;
  • contractual penalties and fines;
  • damages, where their amount can be proven;
  • court fees and legal costs.
The Grand Chamber of the Supreme Court holds that 3% per annum and inflation losses are not penalties, so the court cannot reduce them. Penalties and fines can be reduced where they significantly exceed the creditor’s losses (art. 551(3) of the Civil Code). The court weighs the ratio of debt to penalties, the parties’ conduct and the debtor’s financial position. The claim should therefore rest on the principal and art. 625 charges, with penalties argued separately.
 
Penalties after the repeal of the Commercial Code
The Commercial Code of Ukraine ceased to have effect on 28 August 2025 under the Law of Ukraine “On the regulation of legal entities of certain organisational and legal forms in the transitional period and associations of legal entities” (in Ukrainian). Penalties between businesses are now governed by the Civil Code.
 
For creditors this means:
  • the rule in art. 232(6) of the Commercial Code, which limited penalties to six months of delay, no longer applies. Penalties now accrue for the whole period, within the limitation period;
  • art. 549(3) of the Civil Code now expressly provides for a penalty for late payment at twice the NBU discount rate. A contract may set a lower rate, but not a higher one;
  • where the delay began before 28 August 2025, court practice is still forming. Penalties on such debts should be calculated in two scenarios;
  • references to Commercial Code articles do not invalidate a penalty clause, but the court will assess it under the Civil Code.
Time limits
  • The general limitation period is three years (art. 257 of the Civil Code). For penalty claims it is one year (art. 258).
  • Limitation periods were extended during martial law. That rule was deleted from 4 September 2025 by Law of Ukraine No. 4434-IX of 14 May 2025 (in Ukrainian), and the periods are running again. How to count limitation for debts that arose under martial law is not yet settled in court practice, so older debts should be reviewed without delay.
  • The court applies limitation only at the debtor’s request, but creditors should not count on the debtor failing to raise it.
Demand letter and choice of procedure
A pre-trial demand is not mandatory in commercial disputes (art. 19 of the Commercial Procedure Code of Ukraine (in Ukrainian)). It does, however, record the claim, and for contracts with no payment date it sets the point from which delay is counted. It also often settles the matter without court.
 
The procedure is then chosen as follows:
  • an undisputed claim under a written contract of up to 100 subsistence minimums (UAH 332,800 in 2026) can be pursued through a court order, which is faster and cheaper than a full claim;
  • cases with a claim value up to 100 subsistence minimums are treated as minor. They are heard in simplified proceedings, usually without the parties being summoned;
  • all other cases go through general claim proceedings.
Under the Law of Ukraine “On court fees” (in Ukrainian), the fee for a monetary claim by a company is 1.5% of the claim value, but not less than UAH 3,328 and not more than UAH 1,164,800 (2026 rates). Claims filed through the “Electronic Court” system pay 80% of that amount.
 
Freezing the debtor’s assets
The main risk for a creditor is not losing the case. It is winning against a debtor that no longer has anything. A freeze of the debtor’s accounts or property can be sought together with the claim (arts. 136, 137 of the Commercial Procedure Code) or even before it is filed. In the latter case the claim must follow within ten days.
 
The amount of the debt alone is not enough for a freeze. The court needs evidence that enforcement would otherwise be difficult: asset stripping, disposal of property, changes of shareholders or registered address, other claims against the debtor.
 
Foreign creditors
A foreign company brings a claim before a Ukrainian commercial court on the same terms as a Ukrainian one. It will need:
  • an extract from the trade register of its home country;
  • a power of attorney for the advocate, apostilled or legalised;
  • Ukrainian translations of these documents, the contract and the supporting documents.
If the contract is governed by foreign law, the court will apply that law, and the art. 625 charges may not be available. A debt expressed in foreign currency may be awarded in that currency.
 
Loans under a receipt
A signed receipt evidences a loan agreement (art. 1047 of the Civil Code). It should state the amount, the currency, the fact that the money was handed over and the obligation to repay. Where no repayment date is set, the loan must be repaid within 30 days of a demand (art. 1049). A written demand with proof of delivery should therefore come first. Claims against individuals are heard by courts of general jurisdiction under the Civil Procedure Code of Ukraine (in Ukrainian).
 
Enforcement
A judgment is enforced by the state enforcement service or a private enforcement officer under the Law of Ukraine “On enforcement proceedings” (in Ukrainian). Most monetary judgments can be assigned to a private officer, whose fee depends on the amount recovered, so the officer has a stake in the result. The officer traces the debtor’s accounts and assets, freezes them and bars their disposal. Where a freeze was obtained during the proceedings, there is already something to recover at this stage.
 
Our services
  • review of the contract, supporting documents and the debtor’s position, with an assessment of recovery prospects;
  • calculation of principal, 3% per annum, inflation losses, penalties and fines;
  • demand letters and negotiations with the debtor;
  • applications for a court order and statements of claim;
  • freezing of the debtor’s funds and assets, including before a claim is filed;
  • representation in commercial and general courts at all instances;
  • representation of foreign creditors before Ukrainian courts;
  • support in enforcement through state and private enforcement officers.