Analytical note on draft law №13606 in the context of the possibility of performing registration actions in relation to persons subject to sanctions

On August 7, 2025, the Cabinet of Ministers of Ukraine initiated the registration of draft law “On Amendments to Certain Legislative Acts of Ukraine in the Fields of State Registration with the Aim of Ensuring Public-Law Interest” (№13606). According to the explanatory note, the purpose of the draft law is to improve the accessibility, transparency, and efficiency of registration processes, as well as to protect them from possible abuses.

At the same time, analysis of the draft law regarding its potential impact on the implementation of sanctions policy revealed significant threats to national security and inconsistencies with approaches applied in the EU.

In particular, the draft proposes amendments to the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Associations” and the Law of Ukraine “On State Registration of Proprietary Rights to Real Estate and Their Encumbrances” that would, in effect, allow state registration on the basis of a court decision, regardless of any applied sanctions.

Currently, under the Law of Ukraine “On Sanctions,” the establishment of the fact that sanctions are applied, which makes state registration of rights impossible, is grounds for refusing such registration. This rule is intended to ensure strict compliance with applied sanctions restrictions and to prevent the re-registration and subsequent disposal of frozen assets. However, the draft law proposes to add an exception to the relevant provisions -- “except for the state registration of rights on the basis of a court decision.” Thus, if adopted, court rulings, including injunctions, would take precedence over sanctions imposed by the President’s decree. This could make it possible, for example, to re-register real estate or rights to a legal entity based on a decision of a district court or even on an injunction issued before the opening of court proceedings.

Such amendments would not only pose threats to national security and undermine the effectiveness of sanctions policy but would also be inconsistent with EU approaches, negatively affecting the harmonization of legislation within Ukraine’s EU integration efforts.

According to Part 1, Article 5 of the Council of the EU Regulation “Concerning Restrictive Measures in Respect of Actions Undermining or Threatening the Territorial Integrity, Sovereignty and Independence of Ukraine” (№ 269/2014 of 17 March 2014), the unfreezing of assets pursuant to a court decision is only possible on the basis of a decision by a competent authority and only under clearly defined conditions.

Moreover, such a practice is also not typical in the sanctions legislation of other partner countries. For example, in the United Kingdom, a special license must be obtained to enforce a court decision. This requirement is provided in para. 5, Part 1, Schedule 5 of The Russia (Sanctions) (EU Exit) Regulations 2019.

Thus, the legislation of partner countries follows the approach that unfreezing the assets of a sanctioned person cannot occur automatically on the basis of a court decision; instead, a licensing or authorization mechanism applies.

It should also be noted that the proposals in draft law №13606 are inconsistent with the purpose of draft law №12406 (on the criminalization of sanctions violations and circumvention), which is currently being prepared for adoption in the second reading, as they would create additional loopholes for violating sanctions restrictions.

The Institute of Legislative Ideas, as co-author of draft law №12406, continues to emphasize the need to introduce in Ukraine a mechanism for granting permits for actions prohibited by sanctions, which would also cover the possibility of enforcing court decisions. Such a mechanism would help fulfill one of the EU integration requirements, make sanctions policy more flexible, minimize the risk of human rights violations, increase transparency, and bring Ukrainian legislation closer to the best international standards.

In view of the above, the Analytical Center “Institute of Legislative Ideas” recommends not supporting the adoption of draft law №13606 in its current version and calls for the further improvement of sanctions policy, in particular through the introduction of a mechanism for granting permits for actions prohibited by sanctions.