The Ukrainian legislative framework regulating construction is constantly under development and is not always straightforward or aligned. In order to launch a construction project in Ukraine, it is crucial for developers to consider the guidance found in the decisions of the Supreme Court, which are binding for state apparatus, including authorities granting permissions to develop buildings. When high court decisions make a U-turn in established practice, they can potentially impact the market. The following article describes Supreme Court decisions in two areas of development: construction in historical areas and construction in the vicinity of airports.
Construction in historical area
There are 401 historical cities in Ukraine, but the boundaries of historical areas are not approved in 321 of these cities. In Kyiv city, for example, historical areas occupy more than 10% of Kyiv's territory and most of its downtown. However, Kyiv lacks definitive boundaries for these zones.
Before 2023, the lack of clear boundaries raised uncertainty among developers as to whether a permit was required for a given site since Ukrainian legislation stipulated the necessity of obtaining a permit from the cultural heritage authorities before initiating construction activities in historical areas.
According to amendments to the law On the Cultural Heritage Protection effective from 1 January 2023, however, there are no longer any requirements to seek such permission. The court practice we are analysing below, therefore, relates to construction projects started prior to 2023.
Prior to 2023, the Ukrainian Supreme Court adhered to a consistent position that aligned with the provisions of the Law of Ukraine On the Cultural Heritage Protection. Specifically, the Court ruled that if distinct scientific project documentation as a separate document that outlines the historic areas is absent, the developer was not obliged to procure a permit from the Ministry of Culture.
A significant shift in the court's position, however, occurred in January 2023. In Case No. 640/8728/21, the Supreme Court ruled that the designation of a territory as a cultural heritage site is not contingent on having a separate scientific project documentation demarcating historic zones. According to the court, the boundaries of the historical zone in Kyiv's masterplan and the scientific project documentation as part of that masterplan must be the guidance to understand cultural heritage restrictions.
Under the court's decision, adherence to this perspective is essential for government and municipal authorities to strike a balance between public and private interests while safeguarding cultural heritage. Consequently, the court agreed that the Ministry of Culture’s 2021 order to cease construction works carried out without the said permit was lawful.
Kyiv's masterplan received approval in 2002 and was initially set to remain in effect until 2020. With the adoption of new urban-planning legislation in 2011, Ukrainian authorities permitted developers to continue relying on existing masterplans, including Kyiv's masterplan, without temporal constraints. The Supreme Court did not address the fact that the masterplan had become outdated and no longer reflects contemporary developmental concerns in the Ukrainian capital, and an amendment to the Law on Cultural Heritage Protection rescinded the obligation to secure a permit from the Minister of Culture as of 1 January 2023.
Lack of an Aviation Service permit does not stop construction
In comparison to the above position, the court established the opposite approach when addressing similar construction permitting issues related to territories adjacent to airports.
Supreme Court resolution dated 30 November 2022 in court case No. 826/4910/18 states that the responsibility for obtaining approval from the State Aviation Service of Ukraine in conferring urban-planning conditions and restrictions for property development near airports rests with local authorities rather than developers.
Therefore, a court rejected the Ukrainian State Aviation Service's claim that the absence of the service's approval was the basis for illegality concerning permits and commissioning documents for properties near the Odessa airport. This determination is based on the comprehensive list of grounds for revoking permits or commissioning documents as prescribed within Ukrainian law, which does not include the absence of a State Aviation Service permit.
While this position has solidified through court decisions and aligns with Ukrainian legal provisions, it remains plausible the Supreme Court could potentially diverge from this position in the future, similar to its divergence in addressing heritage authority permits within historical areas. Pursuant to Article 69 (9) of the Air Code of Ukraine, it is prohibited to build facilities within 15 km of an airport that could impede flights. Given the absence in Ukrainian law of a clear definition which of the facilities near an airport might hinder flight operations, the court can adopt a more stringent approach.
For more information on restrictions in the Ukrainian construction industry and case-law pertaining to it, contact your CMS client partner or these CMS experts: Natalia Kushniruk and Anna Pogrebna.
Links to Ukrainian Supreme Court resolutions (in UKR):
Resolution of Ukrainian Supreme Court in court case No. 640/8728/21 dated 31 January 2023
Resolution of Ukrainian Supreme Court in court case 826/4910/18 dated 30 November 2022