IMPLEMENTATION OF THE PRINCIPLE OF TALIC CONSENT IN THE SPHERE OF ECONOMIC ACTIVITIES

The process of reforming and adapting the legislation of Ukraine to the legislation of the European Union (hereinafter – the EU), which provides for the convergence of the existing and future normative framework of Ukraine with the law of European countries, is undoubtedly a prerequisite for the gradual economic and political integration of Ukraine into the EU.

The introduction of the principle of tacit consent became one of the elements of the spread of the European concept of “proper governance” in Ukraine, which actually reflects the postulates on which legal relations between public administration entities and private individuals (natural and legal entities) should be built. 12 principles of good governance are enshrined in the Strategy for Innovation and Good Governance at the Local Level, approved by the decision of the Committee of Ministers of the Council of Europe in 2008. They cover issues such as ethical behaviour, rule of law, efficiency and effectiveness, transparency, sound financial management and accountability.

NORMATIVE REGULATION AND COURT PRACTICE

On the other hand, such principles of good governance as:

·       transparency – decisions of state
authorities are made in accordance with the provisions of the law, and
information about the activities of such bodies must be complete and publicly
available;

·       proper response – the exercise of
powers by state authorities should maximally satisfy the interests of citizens
within a reasonable period of time;

·       effectiveness and efficiency –
effective, productive and efficient use of resources by state authorities to
meet the needs of society;

·       responsibility – state authorities
take responsibility and guarantee the correction of the situation in cases of
violations of citizens’ rights.

It should be noted that the Law of Ukraine “On the List of Permitting Documents in the Field of Economic Activity” establishes a list of permitting documents, which include a permit, license, declaration, conclusion, decision, consent, certificate or other document confirming the right of a business entity to conduct of a certain type of activity or its compliance with standards and requirements defined by legislation. Some types of permits are also provided to individuals. Business entities may not be required to obtain permits that are not included in the list defined by law.

As of today, there are about a hundred documents of a permissive nature. Some of them can be obtained quite quickly. Some of them can be obtained by using electronic services, the introduction of which has been progressing in Ukraine in recent years. However, there remains a significant number of permits and licenses, when obtaining which complex and regulated procedures cannot be bypassed.

The introduction of the principle of tacit consent as a tool to counter the improper performance or non-performance by state authorities of their functions in the field of licensing activities was legally enshrined in the Law of Ukraine “On Amending Certain Laws of Ukraine on Simplifying the Conditions of Doing Business in Ukraine”, which entered into force in 2009. The drafters of the said law determined that its adoption will contribute to the development of the business environment in Ukraine, the interest of individuals in starting a business, and the simplification of permit procedures in the field of economic activity.

Thus, the said law amended the Law of Ukraine “On the Permit System in the Field of Economic Activity”, supplementing it with, among other things, provisions on the application of the principle of tacit consent, according to which a business entity acquires the right to carry out certain actions regarding the implementation of economic activity or types of economic activity without obtaining a corresponding permit document, provided that the business entity or a person authorized by him has submitted an application and documents in full in accordance with the established procedure, but a permit document or a decision to refuse its issuance has not been issued within the time limit established by law or not sent.

However, the implementation of this principle in practice was complicated by legal conflicts both with other provisions of the Law of Ukraine “On the Permit System in the Field of Economic Activity” and with the provisions of other normative legal acts. In particular, Article 164 of the Code of Ukraine on Administrative Offenses in the version that was in effect at the time of the introduction of the principle of tacit consent provided for administrative liability for the conduct of economic activity without obtaining a permit or other document of a permissive nature, if its receipt is provided for by law.

In order to enable economic entities to exercise the right to apply the principle of tacit consent, the Resolution of the Cabinet of Ministers of Ukraine No. 77 dated 27.01.2010 clarified some issues of the application of this principle, in particular, provided that in the event of non-submission within the period specified by law, the economic entity of a permit document or a decision to refuse its issuance, the business entity has the right to carry out certain actions regarding the implementation of economic activity or types of economic activity without receiving a permit document 10 working days after the end of the period established for issuing a permit document or making a decision on refusal to issue it, on the basis of a copy of the description of accepted documents with a note on the date of their acceptance.

Also, the above-mentioned resolution obliged the subordinate government body to develop a draft Law of Ukraine on Amendments to Article 164 of the Code of Ukraine on Administrative Offenses.

In addition, it should be noted that with the aim of harmonizing Ukrainian legislation in the field of economic activity regulation with European standards and optimizing the procedures for obtaining permit documents, changes were also made to the text of the Law of Ukraine “On the Permit System in the Field of Economic Activity”, in particular, an article was added 41, according to which, in the event that a business entity is not issued a permit document within the period established by law or a decision is not made to refuse its issuance, ten working days after the end of the established period for issuing or refusing to issue a permit document sub the economic entity has the right to carry out certain actions regarding the implementation of economic activity or types of economic activity. Also, the specified article establishes an important point regarding the terms of the re-examination of documents, namely, in the event that the economic entity eliminates the reasons that became the basis for refusing to issue a permit document, the re-examination of the documents is carried out by the permitting authority within a period not exceeding five working days days from the date of receipt of the relevant application of the business entity.

That is, the introduction of the principle of tacit consent in the field of economic activity in Ukraine was primarily aimed at counteracting the violation of the terms of consideration of applications and documents submitted for the purpose of obtaining documents of a permissive nature, and secondly at reducing the time it takes for businesses to start their own processes that require regulation.

Of course, as in any other field, the introduction of the principle of tacit consent resulted in the emergence of corresponding judicial practice on the implementation of this principle.

It should be noted that the European Court of Human Rights (hereinafter referred to as the ECtHR) has repeatedly evaluated the actions of state authorities regarding their compliance with the principles of good governance. Thus, in the decision in the case “Rysovsky v. Ukraine” (application No. 29979/04, final decision dated January 20, 2012), the ECtHR emphasized the special importance of the principle of good governance. In particular, the fact that state bodies are tasked with implementing internal procedures that will increase the transparency and clarity of their actions, minimize the risk of errors. The need to correct a past “mistake” should not disproportionately interfere with a new right acquired by a person who relied on the legitimacy of the good faith actions of a state body. Public bodies that do not implement or follow their own procedures should not be able to profit from their wrongdoing or avoid their responsibilities.

The practice of the Supreme Court regarding the application of the right to use the principle of tacit consent by business entities in carrying out certain actions shows that such a right is not unconditional.

Thus, in case No. 826/2810/17, the subject of consideration of which were the requirements of a natural person-entrepreneur to the Executive Body of the Kyiv City Council on the obligation to make a decision (order) on granting permits for the placement of outdoor advertising in accordance with the principle of tacit consent, the Supreme Court pointed out that the legal fact, which consists in the inaction of the permitting authority, becomes a prerequisite for the emergence of legal relations in which the business entity can apply the principle of tacit consent. That is, for a business entity to have the right to apply the principle of tacit consent, the set of the following conditions is necessary:

·       the business entity has submitted
all legally defined documents for obtaining a permit, which is confirmed by a
copy of the application (description of accepted documents) with a note on the
date of their acceptance;

·       the end of the term of consideration
of the submitted documents – 10 working days from the date of submission of the
application;

·       absence/lateness of the response of
the subject of authority on the substance of the submitted application.

The Supreme Court also drew attention to the fact that the defendant’s appeal to the court of cassation against the decision of the appellate court shows that the defendant does not recognize the plaintiff’s implementation of the principle of tacit consent. In addition, the court referred to the position set forth in the resolution dated 04/25/2018 in case No. 806/1000/17, according to which “tacit consent” is usually manifested in inaction.

The panel of judges noted that guarantees of the rights of subjects of private law enshrined in legislation (in particular, procedural terms, the possibility of applying the principle of tacit consent, etc.) should not be used to legalize an ongoing offense or carry out illegal activities (positions of the resolutions of 04/11/2018 in case No. 804 /401/17 and dated June 19, 2018 in case No. 464/2638/17).

In the end, the case was sent for a new consideration, because the courts of previous instances did not investigate the presence of all the conditions for a business entity to have the right to apply the principle of tacit consent.

Subsequently, the conclusion set out in the Supreme Court ruling dated 26.06.2018 in case No. 826/2810/17 was developed in the ruling dated 20.09.2018 in case No. 826/4604/17, and the system of conditions for the emergence of the right on the application of the principle of tacit consent was supplemented by the following conditions:

·       documents were submitted by the
business entity according to the procedure established by law (within the
established period, to the relevant subject of authority, in the appropriate
form, etc.);

·       the documents submitted by the
business entity meet the requirements of the law.

The Supreme Court noted that the principle of tacit consent can be applied provided that the business entity complies with all the requirements of the legislation, and the subject of authority has no alternative in accepting or not adopting a positive decision upon the application of such business entity. The principle of tacit consent does not mean that such a right is absolute and is acquired in any case when a document of a permissive nature or a decision to refuse its issuance has not been issued or sent within the period established by law.

Subsequently, the conclusions set forth in the above-mentioned resolutions were further detailed in other decisions of the Supreme Court.

In case No. 826/9746/17, the subject of consideration of which were the demands of a legal entity to the Executive Body of the Kyiv City Council for the obligation to grant permits for the placement of outdoor advertising in accordance with the principle of tacit consent in accordance with the submitted applications, the Supreme Court stated:

“According to the fifth part of Article 41 of the Law of Ukraine “On the permit system in the field of economic activity”, the grounds for refusing to issue a permit document are:

·       submission by the business entity of
an incomplete package of documents necessary for obtaining a permit document,
in accordance with the established comprehensive list;

·       detection of inaccurate information
in the documents submitted by the business entity;

·       a negative conclusion based on the
results of conducted examinations and surveys or other scientific and technical
evaluations necessary for issuing a permit document.

The establishment of these circumstances shows that there are no grounds for issuing a permit document, and that the activity does not comply with the requirements of the law.

In case No. 803/1541/16, the subject of consideration of which was the demands of a legal entity to the State Geology and Subsoil Service of Ukraine (hereinafter – DSHNU) to recognize as illegal the inaction of DSHNU regarding the failure to consider within the time limit established by the law the application for obtaining a special permit for the use of subsoil and the obligation the request of the State Technical University of Ukraine to issue a special permit for geological study with exploratory and industrial development of amber deposits, the Supreme Court established the following.

At the time of submitting the application and documents for obtaining a special permit for the use of subsoil, the resolution of the Cabinet of Ministers of Ukraine dated 30.05.2011 No. 615 “On approval of the Procedure for granting special permits for the use of subsoil” was in effect in the version that provided for the right of a business entity to obtain a permit without conducting auction in the case of geological study, including research and industrial development of mineral deposits of national significance or mineral extraction, if, in accordance with the law, the applicant is the owner of a complete property complex built (reconstructed) for the purpose of extracting and processing minerals from the subsoil area , for the use of which a permit is granted, or such a property complex has been leased (concession) to a subsoil user (subparagraph 8 of paragraph 8 of the said resolution).

At the time of the decision on the refusal to issue a permit for the use of the subsoil of the DSGNU, the specified provision of subsection 8 of paragraph 8 of the mentioned Government resolution was excluded.

The plaintiff, arguing his position, noted that he did not receive a special permit within the prescribed period, as well as a refusal to issue it. The defendant did not express any comments regarding the completeness of the package of documents submitted by the plaintiff for obtaining a subsoil use permit and did not establish any unreliable data in the documents, did not indicate which requirements they did not meet. Therefore, the plaintiff believed that, based on the principle of tacit consent, he acquired the right to use the subsoil without obtaining the corresponding document of a permissive nature.

The Supreme Court stated the legal position that the decision based on the results of the examination of the application for granting a special permit for the use of subsoil is made on the basis of the legislation that is in effect at the time of making a decision on granting or refusing to grant a permit, and not at the time of the application.

Indicative for understanding the possibility of applying the principle of tacit consent are the conclusions given in the decisions of the Supreme Court dated 03.04.2020 in case No. 640/21505/18 and dated 14.02.2023 in case No. 640/22377/18, the subject of consideration of which were the claims of legal entities ( construction customers) to the Ministry of Culture of Ukraine about recognition of inaction as illegal and an obligation to act in accordance with the principle of tacit consent.

The Supreme Court indicated that the principle of tacit consent (in the context of the procedure for obtaining a permit and the consequences of the subject’s failure to take a timely decision) can be applied in the event that no (positive or negative) decision on the issuance or refusal of the issuance of a permit document or appropriate approval. The business entity has the right to continue the work until the appropriate decision (positive or negative) is made by the competent authority.

Taking into account the existing judicial practice, it can be concluded that if in the future the competent authority makes a negative decision regarding the submitted application and documents, then the application of the principle of tacit consent by the subject of economic activity becomes impossible, regardless of whether the period of 10 working days has passed from expiration of the period established for the issuance of a permit document.

Thus, the application of the principle of tacit consent, taking into account the judicial practice that has developed today, creates risks for the business entity of liability for conducting activities without obtaining a document of a permissive nature, if its receipt is provided for by law.

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