Restrictions on Supplies to and from Occupied Crimea (Ukraine) Do Not Automatically Apply to Personal Property
⚖️ Ukraine | Commercial Disputes | Occupied Territories | Movement of Goods
Case Details
Case No.: 820/1782/17
Proceedings No.: К/9901/68624/18, К/9901/64677/18
Court: Supreme Court, Administrative Cassation Court
Decision Date: 27 April 2023
Case Category: Administrative Law
Subject Matter: Restrictions on Movement of Goods to and from Temporarily Occupied Crimea
Sub-Subject: Supply of Goods / Personal Property / Customs Restrictions / Scope of Government Powers
Property: Two privately owned Japanese Chin dogs
Checkpoint: Chonhar Entry-Exit Checkpoint
Key Issue: Whether statutory restrictions on supplies of goods, works and services to and from the temporarily occupied territory of Crimea also permit restrictions on the movement of privately owned property for non-commercial purposes
Outcome: The Supreme Court held that the statutory authority granted to the Cabinet of Ministers concerned restrictions on supplies of goods, works and services. In the absence of evidence that the claimant’s privately owned animals were being moved for commercial purposes, their movement could not be treated as a supply subject to those restrictions.
Background of the Dispute
In April 2017, an individual attempted to cross the Chonhar entry-exit checkpoint from mainland Ukraine to the temporarily occupied territory of Crimea with two Japanese Chin dogs.
The claimant declared the animals to the customs authorities.
The customs authority nevertheless refused to permit their movement, treating the dogs as goods subject to the restrictions established by Cabinet of Ministers Resolution No. 1035 of 16 December 2015.
The customs authority proceeded on the basis that the animals did not fall within the list of personal belongings that individuals were permitted to move across the administrative boundary. Вставлений текст markdown
The claimant challenged the refusal before the administrative courts.
The first-instance court declared the customs refusal unlawful and cancelled it.
The appellate court upheld that decision.
The dispute ultimately reached the Supreme Court.
What Restrictions Could the Government Impose in Relation to Occupied Crimea?
The central issue concerned the scope of the authority granted to the Cabinet of Ministers under the legislation governing economic activity involving the temporarily occupied territory of Crimea.
Subparagraph 4 of paragraph 12.4 of Article 12 of the Law of Ukraine No. 1636-VII of 12 August 2014 “On the Establishment of the Free Economic Zone ‘Crimea’ and on the Peculiarities of Economic Activity in the Temporarily Occupied Territory of Ukraine” authorised the Cabinet of Ministers, during the period of temporary occupation, temporarily to restrict supplies of certain goods, works or services under individual or all customs regimes.
Those restrictions could concern supplies:
from the temporarily occupied territory to the rest of Ukraine; and
from the rest of Ukraine to the temporarily occupied territory. Вставлений текст markdown
The scope of that statutory authorisation was therefore critical to the dispute.
The Law Referred Specifically to Supplies of Goods, Works and Services
The Supreme Court examined the wording of the statutory provision.
The legislation did not grant the Cabinet of Ministers an unlimited authority to prohibit every movement of property between mainland Ukraine and the temporarily occupied territory.
Instead, the relevant provision expressly referred to supplies of certain goods, works and services.
The distinction between a supply and the mere movement of privately owned property was therefore legally significant.
The Court considered the concept of supply in conjunction with the relevant provisions of Ukrainian civil and commercial legislation governing commercial transactions. Вставлений текст markdown
What Constitutes a Supply?
Under Ukrainian law, a supply relationship involves the transfer of goods for use in entrepreneurial activity or for other purposes unrelated to personal, family, household or similar use.
The Supreme Court referred to the legal nature of supply arrangements under Article 712 of the Civil Code of Ukraine and the corresponding provisions of the Commercial Code.
The commercial purpose of the transaction therefore matters.
A movement of property does not become a commercial supply merely because the property can, in a broad sense, be characterised as goods.
The purpose for which the property is being moved and the nature of the relevant legal relationship must also be considered. Вставлений текст markdown
The Claimant Was Moving Her Own Property for Personal Purposes
The courts established that the two dogs belonged to the claimant.
Her ownership and the identity of the animals were supported by relevant documentation, including pedigrees and veterinary documents.
There was no evidence that the claimant was transporting the animals for sale, resale, commercial distribution or any other entrepreneurial purpose.
The customs authority had not established the existence of a commercial transaction involving the dogs.
The movement of the animals therefore did not have the characteristics of a supply within the meaning relevant to the statutory restrictions. Вставлений текст markdown
The Absence of the Animals From the List of Personal Belongings Was Not Decisive
The customs authority relied on the fact that the animals were not included within the applicable statutory list of personal belongings.
The Supreme Court did not regard that circumstance as sufficient to bring the movement of the animals within the prohibition on supplies.
The decisive question was not simply whether the property appeared on a particular list of personal belongings.
The Court had to determine whether the activity itself fell within the scope of the statutory power exercised by the Cabinet of Ministers.
That power concerned supplies.
Because the movement of the claimant’s privately owned dogs was not established to be a commercial supply, the statutory basis relied upon by the customs authority did not justify the restriction.
The Government’s Regulatory Powers Were Limited by the Enabling Legislation
The judgment therefore concerned not only the movement of personal property but also the limits of executive regulatory authority.
The Cabinet of Ministers could exercise the powers conferred upon it by Parliament, but the scope of subordinate regulation had to remain within the limits established by the enabling legislation.
In this case, the legislation authorised temporary restrictions on supplies of particular goods, works and services.
It did not authorise the Government, through that provision, to treat every movement of privately owned property to or from the occupied territory as a commercial supply.
The legal character of the underlying activity therefore remained relevant when determining whether the restriction could lawfully be applied.
The Customs Refusal Was Unlawful
Because there was no evidence that the claimant was carrying out a commercial supply of the animals, the customs authority had no sufficient legal basis to apply the relevant supply restrictions to her situation.
The Supreme Court consequently agreed with the lower courts that the refusal to permit the movement of the animals was unlawful.
The fact that the animals were physically being moved from mainland Ukraine towards the temporarily occupied territory was not, by itself, sufficient to transform that movement into a supply within the meaning of the legislation.
The Supreme Court’s Decision
The Supreme Court dismissed the cassation appeals and left unchanged the decisions of the lower courts.
The judgment of the Kherson District Administrative Court of 20 November 2017 and the judgment of the Odesa Administrative Court of Appeal of 19 September 2018 therefore remained in force. Вставлений текст markdown
The customs refusal concerning the movement of the claimant’s two privately owned dogs was consequently recognised as unlawful.
The Supreme Court confirmed that the statutory authority granted to the Cabinet of Ministers concerned temporary restrictions on supplies of certain goods, works and services and could not automatically be extended to the non-commercial movement of privately owned property.
Why This Decision Matters
The judgment clarifies the distinction between the supply of goods and the movement of personal property in the context of restrictions concerning temporarily occupied territories.
The physical movement of an object across the administrative boundary does not necessarily constitute a supply.
The legal nature and purpose of the movement must be considered.
The decision is particularly relevant where:
privately owned property is moved to or from a temporarily occupied territory;
customs authorities characterise property as goods subject to commercial restrictions;
there is no evidence that the property is being sold or otherwise transferred commercially;
subordinate legislation imposes restrictions based on statutory authority concerning supplies;
the scope of powers delegated to the Cabinet of Ministers is disputed; or
an individual or business challenges an administrative restriction as exceeding the enabling legislation.
Lions Lawyers’ Analysis
The practical significance of this decision lies in the Supreme Court’s approach to the scope of statutory restrictions and the legal characterisation of the underlying activity.
The relevant legislation did not authorise restrictions on every possible movement of property between mainland Ukraine and the temporarily occupied territory of Crimea. It authorised restrictions specifically on supplies of goods, works and services.
That distinction required the courts to determine whether the claimant’s actions actually constituted a supply.
The absence of a commercial purpose was therefore important. Privately owned property transported for personal purposes could not automatically be brought within a regulatory regime directed at commercial supplies merely because it crossed the administrative boundary.
The case also illustrates a broader principle relevant to Ukrainian administrative law. Where the Cabinet of Ministers adopts subordinate legislation pursuant to powers delegated by statute, the resulting restrictions must remain within the substantive scope of the authority granted by Parliament.
For foreign businesses, investors and individuals dealing with Ukrainian restrictions concerning occupied territories, this distinction may be particularly important. The existence of a restriction on supplies does not necessarily answer whether a particular movement of assets, equipment or other property falls within that restriction. The nature of the transaction, purpose of the movement, status of the property and precise statutory basis of the restriction should be examined separately.
Lions Lawyers advises Ukrainian and international clients on commercial and administrative disputes in Ukraine, including movement of goods, customs restrictions, transactions , regulatory measures, challenges to decisions of public authorities and cross-border commercial matters. We provide full-service legal representation as well as standalone legal opinions, enabling clients to assess their existing strategy and, where appropriate, identify alternative legal approaches.
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