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Publication date: 22.05.2024
Discretionary powers of the court in reducing the fine: legal conclusions of the Supreme Court
On January 19, 2024, the combined chamber of the Commercial Court of Cassation as part of the Supreme Court of Ukraine adopted a resolution in case No. 911/2269/22, which highlights important aspects of judicial discretion when reducing the amount of a penalty. This decision demonstrates how the courts assess the circumstances of each particular case and use their discretionary powers to ensure fairness and balance the interests of the parties.
The circumstances of the case
The basis of the case was a lawsuit by PJSC against LLC for the collection of penalties and fines due to the latter's failure to fulfill its obligations under the contract for the purchase of works on the manufacture (repair) of equipment. LLC applied for a reduction in the amount of the penalty, arguing that the total cost of the work under the contract was three times less than the amount of the penalty, which was contrary to the principles of fairness and reasonableness. Courts of previous instances satisfied the claim in part, reducing the amount of the fine.
Legal conclusions of the joint chamber of the Commercial Court of Cassation of the Supreme Court
The Joint Chamber of the Supreme Court of the Supreme Court refused to satisfy the cassation appeal, which was filed against the decisions of the courts of previous instances, and left these decisions unchanged. In her legal opinions, she emphasized several key points:
The right of the court to reduce the fine: The law of Ukraine gives the court the right to reduce the amount of the fine (Part 3 of Article 551 of the Civil Code of Ukraine). This does not mean that the court must release the debtor from its payment, but only that it can reduce its size based on an assessment of the specific circumstances of the case.Individual nature of the circumstances: Each case has an individual nature, therefore the circumstances, which are the basis for reducing the penalty, differ in each specific case. Accordingly, the amount of the penalty, to which the court reduces it, also has an individual character and is determined by the court within the limits of its discretionary powers.
Assessment of circumstances: When deciding the issue of reducing the amount of the penalty, the court must take into account and evaluate both those grounds for reduction that are directly provided for by law, and those that are not provided for by law, but are important for specific legal relationships. These may be formal signs of the debtor's default, breach of obligation due to the creditor's fault, etc.
Ensuring justice: Case law shows that a 99% reduction in the amount of the fine actually defeats the purpose of the existence of a penalty as a tool of civil liability for breach of obligation. Such reduction can be regarded as a way of avoiding responsibility and disrupting the balance of interests of the parties.
Determining the amount of the penalty in monetary terms: The reduction of the penalty to a certain amount should occur by determining it in a specific monetary amount, and not in the form of a share or percentage. This provides an objective approach to assessing the circumstances of the case and a fair solution to the issue of reducing the fine. You may be interested in the following articles: lawyer's consultation, lawyer's consultation, document analysis, legal situation analysis, written consultation, document review by a lawyer, lawyers' documents, lawyer's help online, lawyer online, legal opinion, lawyer's legal opinion, lawyer online.
Conclusions
The right of the court to reduce the amount of the penalty is an important tool for ensuring justice in the resolution of economic disputes. Each case has an individual character, therefore the court must assess the circumstances in their totality and make a decision based on the principles of the rule of law.
This decision of the Supreme Court emphasizes the importance of balancing the interests of the parties in economic legal relations and the need to ensure a fair approach to the resolution of disputes about the collection of fines. This approach helps maintain trust in the judicial system and ensures fairness and reasonableness in the application of economic sanctions.
