CCU Ruling on Constitutional Guarantees of Individual Entrepreneurs’ Rights

The Constitutional Court of Ukraine (CCU) has issued a decision in a case regarding the constitutional guarantees of the rights of individual entrepreneurs (FOPs).

The CCU stated that, under Article 51 of the Commercial Code, “the regulatory legal acts governing the entrepreneurial activities of legal entities shall also apply to the entrepreneurial activities of individuals unless otherwise provided by law or implied by the nature of the relations.”

The complainant argued that the challenged provisions of the Code violate the constitutional principle of non-discrimination (Article 24 of the Constitution of Ukraine) and preclude the retroactive application of laws and other regulations that mitigate an individual's liability (Part 1 of Article 58 of the Constitution of Ukraine) to individual entrepreneurs.

The Court concluded that the provisions of Article 51 of the Code comply with the Constitution of Ukraine (are constitutional). At the same time, it emphasized that the basis of an individual's legal status is the human rights and freedoms guaranteed by the Constitution. When an individual exercises their constitutional right to engage in entrepreneurial activity, their legal status is supplemented by the rights and obligations arising from their status as an entrepreneur. Thus, the legal status of an entrepreneur does not limit an individual in the scope of their human rights and freedoms guaranteed by the Constitution.

The CCU highlighted that upholding the constitutional guarantees of free enterprise is essential not only for the effective development of the market economy, self-employment, and replenishment of the state budget but also for strengthening fundamental constitutional values such as democracy and the rule of law.

As a result, the Constitutional Court of Ukraine determined that the interpretation and application of the provisions of Article 51 of the Code must align with the principles and norms of the Constitution of Ukraine (in a constitutionally conforming manner). This ensures that the level of constitutional guarantees of human rights and freedoms is not diminished in the exercise of the right to entrepreneurial activity not prohibited by law (Part 1 of Article 42 of the Constitution of Ukraine).