On 10 July 2018, the Ukrainian Parliament passed Law No. 2498-VIII introducing amendments to certain Ukrainian laws to address the issue of collective ownership of land, to improve the rules of land use in respect of tracts of agricultural land, to prevent illegal takeovers, and to promote irrigation in Ukraine (the "Law").
The Law is extremely welcome since it governs issues that have been left unaddressed legislatively for more than ten years.
What are the changes brought by the Law?
1. In accordance with the Law, the land of liquidated collective agricultural farms (other than land plots that are privately owned as of the effective date of the Law) will be deemed the property of territorial communities where such land is located from the day on which the Law comes into legal force. The Law provides a basis for state registration of community title to land plots formed of land the ownership of which is transferred to communities by operation of the Law.
It means that the tracts of land having the legal status of collectively owned land (provided that a relevant collective farm has been liquidated) will be registered as community-owned land in the State Register of Proprietary Rights to the Immovable Property pursuant to the Law.
Unfortunately, the Law does not address procedural matters related to such registration (meaning that it does not specify whether a council's decision is required to have title to land registered). What should the procedure for registration be if collectively owned agricultural land is located in more than one community area (except where there is a united territorial community)? What should the procedure for registration be if collectively owned agricultural land is located beyond the boundaries of a populated area?
We expect that all these unanswered matters will result in quite an inconsistent implementation of the Law in different regions of Ukraine.
2. The owners and users of agricultural land designed for private family farming or farming and making part of tracts of agricultural land can use such land to, among other things, manufacture agricultural goods without changing its designated use.
This is quite a logical provision because all of the above types of land use fall within one designated use – "agricultural land."
3. The Law specifies that the owners of all land plots, howsoever owned and making part of a tract of agricultural land, can exchange those land plots.
A state or community-owned land plot that makes part of a tract of agricultural land can be exchanged for another land plot within the same tract only if both land plots are equal in their standard monetary values or if the difference between such values does not exceed ten per cent.
This is a very interesting novelty because it allows for exchanging state or community-owned land for private land by execution of an exchange agreement if the land plots concerned have the same standard monetary values or if the difference between such values is less than ten per cent.
4. Also, in accordance with the Law, state or community-owned land used as field roads designed to access land plots within a tract of agricultural land (except for field roads that serve as the boundaries of such tract) are let on lease, without holding any land auction, to the owners and/or users of land plots adjacent to land used as field roads. The term of the abovementioned lease is seven years.
We can say now that the problem of unauthorised occupation/use of field roads has been finally solved. However, another issue has emerged with the interpretation of the term of lease. Should it be understood as lasting for at least seven years or at most seven years or just seven years?
5. The Law also has introduced a provision stipulating that land used as field roads and making part of a tract of agricultural land (except for field roads that serve as the boundaries of such tract) can be used by land owners (users) to access (either by walk or by ride) other land plots within such tract and to grow agricultural products. In fact, the Law has actually formalised a longstanding practice to use field roads to grow agricultural products.
6. The Law provides for another quite interesting novelty. The Cabinet of Ministers of Ukraine will set standards for the environmentally safe irrigation, drainage, and watering or water disposal management to ensure that agricultural land is in proper environmental and ameliorative condition, to provide irrigation water of adequate quality, to satisfy biological needs of crops, and to prevent the possible development of soil degradation.
On the one hand, the legislative initiative to protect soil is clear. However, could the Cabinet's regulation of irrigation, drainage and watering management adversely affect agribusinesses? Yes, it could.
The Law was published on 29 August 2018 and it will come into force on 1 January 2019.
In general, it can be said, as early as now, that, although the Law is extremely beneficial and necessary, some of its provisions will be differently construed and applied inconsistently.