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Claim for termination of the enterprise: what do the courts pay attention to?

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Applying for the application of response measures in the form of shutdown of the enterprise is what the business is most afraid of after inspections by regulatory authorities. However, the inspection does not always end with a lawsuit of the inspector, and the filed lawsuit - a court decision to terminate the enterprise. What to pay attention to when your company is approached with such a lawsuit, we'll talk later.


Evidence of violations

Inspectors who file lawsuits do not always provide evidence of violations of the law (for example, fire safety rules). Usually the only evidence by which the supervisory authorities justify the need to stop the operation of enterprises is an inspection report. Sometimes the courts take into account only the data of the inspection report and satisfy the requirements of the controlling body. However, this position is not entirely correct.

The Supreme Court in the composition of the panel of judges of the Administrative Court of Cassation in its decision of 31.10.2018 in case №826 / 14758/17 noted that the concept of "threat to life and health" is evaluative. However, this does not negate the need for courts to examine the evidence that substantiates their existence, and given that such claims are heard on the basis of claims by subjects of power, courts should not be limited to the acts of inspections. The accuracy of the information about the violations recorded in them should be verified by the courts by collecting relevant evidence, and the application of the court's chosen response measure should be justified in compliance with all the principles of administrative proceedings.

That is, the Supreme Court noted that the courts could not make a decision to suspend the operation of an enterprise solely on the basis of an inspection report. Each violation specified in the act must be verified by a court by gathering relevant evidence.

A real threat to life

It is common practice for regulatory authorities to reproduce a list of inspection reports in claims for the closure of enterprises and do not indicate how these violations pose a threat to human life and health.

At the same time, the current legislation connects the grounds for going to court with a claim for the application of security measures not with any violations, but only with those that pose a threat to human life and health.

The same legal position has been repeatedly expressed by the Supreme Administrative Court of Ukraine in its decisions in similar cases, in particular in the decision of 27.11.2014 in the case №K / 800/51577/14 and in the decision of 15.05.2014 in the case №K / 800/3116 / 14.

For example, in its decision of 15.05.2014 in case №К / 800/3116/14 the Supreme Administrative Court of Ukraine noted:

"The current legislation does not include only the circumstances of lack of equipment of fire partitions, automatic fire alarm systems in production and storage facilities, etc. to those circumstances that pose a real threat to human life and health (company staff and persons who will extinguish the fire) ».

Therefore, in the lawsuit, the controlling body must state the circumstances that confirm that the specific violations identified by it during the inspections pose a threat to human life and health.

 The Supreme Court in the composition of the panel of judges of the Administrative Court of Cassation in its decision of 31.10.2018 in case №826 / 14758/17 also noted that the lack of reasoned assessment of each argument put forward by the parties on the presence or absence of grounds for satisfaction of the claim, failure to state reasons each argument of the participant shows that the conclusions of the courts on the recognition of the circumstances of the existence of grounds for the application of response measures are premature and unfounded, made on the basis of incompletely established circumstances that are important for the proper resolution of the dispute.

Thus, in cases of lawsuits for the application of response measures in the form of shutdown of enterprises (including the operation of premises and equipment), the plaintiff must not simply provide an inspection report, but prove the existence of recorded violations, as well as justify the danger to human life. . However, in most cases, controllers provide only general wording and do not indicate the specific consequences of each violation.


Premature lawsuit

Based on the results of the inspection, the inspectors of the controlling bodies issue instructions, in which they indicate the terms for elimination of violations of the legislation. However, without waiting for the order to be fulfilled, the controllers file lawsuits to close the enterprise.

At the same time, the Supreme Administrative Court of Ukraine on the basis of analysis of the provisions of Part 7-9 of Article 7 of the Law of Ukraine "On Basic Principles of State Supervision (Control) in the Sphere of Economic Activity" has repeatedly concluded that such lawsuits are premature. A similar legal position was expressed by the court in the decision of 19.04.2016 in the case №K / 800/51548/15 and in the decision of 15.05.2014 in the case №K / 800/3116/14.

As we can see, the courts do not always satisfy the claims of the supervisory authorities for the closure of enterprises. This is primarily due to the fact that controllers improperly prove the facts of violations, as well as the threat to human life and health. However, objecting to the claim of the supervisory authority, one should not rely only on the shortcomings of the claim. It is necessary to eliminate the identified violations and provide evidence to eliminate the violations in court. With regard to violations that cannot be remedied, it is necessary to justify why such violations do not pose a real threat and why the termination of the enterprise will be a disproportionate punishment.

The article was published in the Journal of the Chief Engineer 

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If they came to you with an inspection, or filed a lawsuit to close the company, then contact us for help.


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