After the start of the full-scale war, Ukraine established two parallel mechanisms of influence on the assets of sanctioned individuals. The first is an administrative process based on lawsuits filed by the Ministry of Justice to recover assets into state revenue. The second is criminal proceedings, within which law enforcement agencies seize property as material evidence. Both procedures apply to the same individuals, but their rules, timeframes, and standards of proof are fundamentally different.
As a result, a system has emerged where the administrative process moves forward and concludes with decisions on the confiscation or refusal of confiscation of assets, while criminal proceedings remain fact-based for years or are suspended after a notice of suspicion is served in absentia. Meanwhile, the assets remain under seizure for an indefinite period, even when there is already a decision in the administrative process. Such imbalances create obvious problems in terms of legal certainty and the right to property.
Ministry of Justice lawsuit against HACC: administrative confiscation model
The law provides for expedited proceedings under the rules of administrative procedure, with the High Anti-Corruption Court as the reviewing authority. The Code of Administrative Procedure establishes a one-month timeframe for reviewing asset recovery cases in favor of the state. In practice, the HACC fails to meet this deadline and considers cases significantly longer—ranging from several months to a year in the first instance.
Yes, in the case regarding Mykhailo Shelkov's assets, the proceedings lasted about nine months, and in the sanctions process regarding IDS (the owner of the Morshynska brand), in which attorneys from our law firm are participating, court hearings have already been going on for over a year and are scheduled all the way until mid-summer 2026!
This is not about procrastination, but rather about massive evidence: thousands of pages of financial documents, corporate structures, data from foreign jurisdictions, materials from criminal proceedings, regulatory authorities, and so on.
Ultimately, the one-month deadline turned into an approximate one. This means that a practice is being established where the administrative process goes beyond the timeframe set by the Code of Administrative Procedure, but still proceeds much faster than criminal cases, where timeframes are measured in years.
Sanctions cases are considered without the need to prove the elements of a crime. The court assesses a person's connection to the Russian Federation's aggression against Ukraine, participation in the financing of Russian structures, and cooperation with occupation administrations. This is a public law dispute that does not concern criminal liability. That is why the High Anti-Corruption Court operates in a broader factual field than criminal courts and allows the use of various sources of information.
Criminal proceedings: a path without result
In contrast to the administrative process, criminal proceedings against sanctioned individuals have a completely different dynamic. Most of them are opened under articles on the financing of aggression or collaborationism, but remain in factual status. Suspicions are not served because the individuals are abroad, mostly in the Russian Federation.
Another scenario is serving a notice of suspicion *in absentia*. Following this, proceedings are often suspended immediately due to the need for international legal assistance. No real investigative actions are conducted, but asset seizures remain in place. This happened, for example, in a number of proceedings related to the assets of the VS Energy group, where seizures lasted for years even though the investigation barely progressed.
This way, the criminal proceedings do not progress to a verdict. They exist in parallel and actually perform a security function: keeping assets under seizure.
This is clearly visible in judicial practice. Lawful owners extremely rarely win decisions on lifting seizures. Courts refer to the possibility of destroying evidence, unestablished circumstances, and the need to complete the investigation. The Supreme Court has confirmed in a number of decisions that the seizure of material evidence can last for the entire duration of the pre-trial investigation, and when a notice of suspicion has not been served, the investigation period is effectively unlimited.
Intersection of two processes: materials of criminal cases and evidence in the Code of Administrative Procedure of Ukraine
Materials of criminal proceedings often become a source of information for the Ministry of Justice. Interrogation protocols, analytical reports, financial monitoring data, expert opinions—all of this is used in sanction lawsuits. For a criminal defense attorney, it is immediately clear that these are not evidence, and their evaluation will be carried out by the court only based on the results of the trial. That is, this is not evidence until a court verdict is rendered.
However, there is an important aspect: the materials of criminal proceedings are not recognized as evidence in administrative proceedings by themselves. The Code of Administrative Procedure of Ukraine determines that evidence is a document that has the appropriate procedural form and also relates to the subject matter of proof in the case. And the same HACC judges who consider sanction cases use materials from criminal proceedings to justify judicial decisions on the application of sanctions. Even despite the fact that in criminal proceedings this evidence may be excluded from the prosecution's evidentiary base altogether.
As a result, the administrative process uses criminal materials as a factual basis, but is independent of the results of the criminal proceedings.
Legal certainty and property rights: a problem that cannot be ignored
The sanctions process and criminal proceedings outwardly look like two independent mechanisms, but for the asset owner, the consequences are different. The paradox is that in both cases, the state essentially remains a party that loses nothing.
When the Ministry of Justice's lawsuit is satisfied, the asset becomes state property. After that, the Ministry of Justice applies to the investigating judge with a motion to lift the seizures in criminal proceedings, and the courts grant such motions without delay. This is exactly how it happened in the cases regarding Medvedchuk's assets and in the mentioned Shelkov case.
However, if the HACC refuses to recover the assets, the situation looks different. A refusal does not mean the automatic lifting of seizures in criminal proceedings. Moreover, the seizures often remain in effect for a long time because the criminal proceedings continue to be in a factual status or are suspended due to international legal assistance. This was the case, in particular, in the proceedings regarding Demurins, where the HACC dismissed the claim, but the seizures in the criminal case remained in effect.
Thus, the state wins in both the first and second cases. If the administrative claim is satisfied, the asset passes into state ownership. If the claim is dismissed, the seizure remains in effect, and the property is not returned to the owner due to the status of the criminal proceedings. Legal certainty is not achieved in either scenario.
This creates an obvious imbalance between the interests of the state and the rights of owners. From the perspective of the ECtHR, the right of ownership cannot be held hostage by indefinite or protracted criminal proceedings, especially if the parallel administrative process has already concluded with a decision in favor of the individual. Such a construct contradicts the requirement of proportionality and predictability of interference with property rights.
Risks are growing precisely in the category of cases where the sanctions claim was dismissed, but the asset remains blocked due to seizures in criminal proceedings. This creates a breeding ground for potential complaints to the ECHR, since the owner formally won against the Ministry of Justice, but actually cannot dispose of their property.
Conclusion
Sanction and criminal proceedings pursue different goals, are based on different standards, and operate in different time dimensions. The Ministry of Justice's administrative cases are establishing a new practice of recovering assets for the state revenue. Criminal proceedings remain lengthy, often formalistic, and do not end in verdicts. They create legal uncertainty regarding the fate of assets, the seizures of which can continue for years.
Ukraine must define the limits of each process and provide guarantees that comply with property rights standards. In the future, it is the balance between the two mechanisms that will determine trust in the institution of confiscation of sanctioned assets.
Source:Legal newspaper.
