Demolish or Settle: Where the Supreme Court Puts the Comma in Land Disputes Involving Prosecutors

Does a land dispute involving the prosecutor's office always have to end with the demolition of a property or the return of land? Snizhana Vasylieva, a lawyer specializing in land law at ALARIUS Law Firm, shared her opinion in an article for "Legal Practice" publishing house.

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Court disputes concerning land and real estate involving the prosecutor's office are often perceived as uncompromising conflicts, where the return of land, demolition of unauthorized construction, or termination of usage rights are considered the only proper means of protection. However, current Supreme Court practice demonstrates a different approach: a settlement agreement in disputes regarding communal or state-owned land may not be a violation of public interest, but rather an effective tool for its realization.

Provided it has appropriate content, undergoes judicial review, and adheres to the limits of local government authority, a settlement agreement can achieve practical results: compensation for community losses, formalization of land rights, increased local budget revenues, elimination of legal uncertainty, and a balance between the interests of the community, the state, and businesses.

This approach aligns with the general direction of state policy in the field of justice. The Law of Ukraine "On Mediation" supplemented the Land Code of Ukraine with Article 158-1, which explicitly provides for the possibility of resolving land disputes through mediation and obliges bodies that resolve land disputes to facilitate reconciliation between parties.

Peaceful settlement also complies with European standards. Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 aims to develop alternative dispute resolution and ensure a balance between mediation and judicial proceedings. A similar approach is enshrined in the Strategy for the Development of the Justice System and Constitutional Justice for 2021–2023, approved by Decree of the President of Ukraine No. 231/2021, which identified the development of mediation, pre-trial, and alternative dispute resolution as priorities.

Settlement Agreement as a Tool for Procedural Economy, Not a "Waiver of Defense"

A settlement agreement is not merely a tool for quickly closing a case. In commercial proceedings, it is explicitly defined as a method of dispute resolution based on mutual concessions between parties. It must pertain to the rights and obligations of the parties, and exceeding the scope of the dispute is permissible only if it does not violate the rights or legally protected interests of third parties. This framework is provided for in Articles 192–193 of the Commercial Procedure Code of Ukraine.

Similar logic is embedded in civil procedure: Articles 207–208 of the Civil Procedure Code of Ukraine also stipulate that a settlement agreement is concluded on the basis of mutual concessions, can be submitted at any stage of the process, and is subject to judicial review.

In public law disputes, an additional limitation is important: if a party to the reconciliation is a public authority, the terms of reconciliation cannot contradict the law or exceed the competence of such an entity. This is particularly significant in land disputes, where a local government body acts not as an ordinary owner, but as a representative of the territorial community.

Therefore, the mere fact of concluding a settlement agreement in a land or real estate dispute is not illegal. The question is not whether a settlement agreement can be concluded in such cases, but rather what its terms are, who approved it, whether it substitutes for a decision by a competent authority, and whether it creates a real legal and property outcome for the community or the state.

Kyiv City Council Procedure for Concluding Settlement Agreements in Disputes Regarding Territorial Community Property

For disputes involving the Kyiv City Council, local regulations are of particular importance. Decision No. 1664/9630 of the Kyiv City Council dated 04.07.2024 amended Decision No. 18/6234 dated 22.09.2011 regarding the procedure for concluding settlement agreements in disputes concerning the property of the Kyiv territorial community. Furthermore, by order of the Kyiv City Mayor No. 978 dated 23.10.2024, a Commission was established to develop and pre-review draft settlement agreements, terms of party reconciliation, and provide conclusions to the Kyiv City Council regarding the possibility of their approval.

The procedure applies to commercial, administrative, civil proceedings, bankruptcy procedures, and specific situations in criminal proceedings if the terms of the agreement concern property disposal. Its application is separately provided for in cases based on prosecutor's claims regarding the challenging of decisions, actions, agreements, transactions, or the invalidation of property disposal transactions.

The procedure for approving a settlement agreement at the Kyiv City Council involves the following stages:

1.    The initiator of the agreement submits a written proposal with supporting documents and justification on how the terms of the agreement restore or protect the interests of the territorial community.

2.    The materials are forwarded for consideration to the Commission for Preliminary Review of Draft Settlement Agreements.

3.    The Commission verifies the legality of the terms, their compliance with community interests, the feasibility of implementing the agreement, and the completeness of the submitted documents.

4.    Based on its review, the Commission either supports the draft settlement agreement, requests additional documents, or provides a conclusion that its approval is not possible.

5.    If the conclusion is positive, the matter is submitted for approval to the Kyiv City Council.

6. After approval by the Kyiv City Council, the settlement agreement is submitted to the court for approval.

Communal and State-Owned Land Plots: Where to Draw the Line for Acceptable Compromise

An analysis of the Supreme Court's practice shows that settlement agreements in land disputes are approved by courts in quite diverse categories of cases: from the recovery of funds for actual land use without proper registration of rights to disputes concerning the renewal of lease agreements, lease termination, return of land plots, unauthorized construction, and registration of land rights under real estate objects. Thus, the subject matter of a land dispute itself does not preclude the possibility of peaceful settlement. What is decisive is not whether the dispute concerns communal or state-owned land, but whether the terms of the settlement agreement comply with the law, the parties' powers, and the real interest of the territorial community or the state.

The practice in disputes involving a prosecutor is particularly illustrative. In cases No. 922/436/22 and No. 904/39/24, the Supreme Court upheld rulings approving settlement agreements, despite objections from the prosecutor's office. In these disputes, the land plot owner — the respective city council — agreed to a settlement that did not entail unconditional «legalization» of the violation, but rather the subsequent formalization of rights in the manner prescribed by law and the achievement of a specific property outcome for the community. This approach confirms that the prosecutor does not have an absolute procedural «veto» over a settlement agreement, but must prove a specific violation of the law or the interests of the state or community.

However, the ambiguity in the Supreme Court's practice regarding land disputes stems from differing approaches to the question of whether a settlement agreement concerning a communal land plot requires a separate decision by the relevant council's plenary session. One approach, established in the Supreme Court's resolution of 07.04.2021 in case No. 911/15/19, is more formal and proceeds from the premise that issues of transferring land for lease, terminating the right of use, concluding, extending, or terminating lease agreements fall within the exclusive competence of the council. Therefore, an official cannot unilaterally resolve such a land issue through a settlement agreement without prior consideration at a session. Another approach, adopted by the panel in case No. 904/254/25, is more flexible: if a settlement agreement is signed by a representative within the scope of granted procedural powers, does not involve direct extra-procedural alienation or transfer of land, and is aimed at resolving the dispute and subsequently formalizing rights in the manner prescribed by law, its approval may be permissible; that is why the panel indicated the need to deviate from the conclusion in case No. 911/15/19 and support the approaches outlined in cases No. 904/3912/23 and No. 922/436/22.

Given such divergent practices regarding the application of the Law of Ukraine «On Local Self-Government in Ukraine» when approving settlement agreements, the Supreme Court referred case No. 904/254/25 to the chamber for consideration of cases concerning land relations and property rights of the Commercial Cassation Court of the Supreme Court (KGS VS) to ensure uniformity of judicial practice.

In this context, adherence to the internal procedure of the Kyiv City Council regarding the preliminary approval of a draft settlement agreement is of particular importance. If the draft settlement agreement is reviewed by the relevant Commission, receives a positive conclusion, and is then approved by a decision of the Kyiv City Council, this significantly reduces the risk of applying a more formal approach, under which the settlement agreement could be questioned due to the absence of proper expression of will by the council. Under such conditions, the settlement agreement no longer appears as a unilateral procedural decision by a representative in court, but rather confirms the proper expression of will by the owner of communal property – the territorial community represented by the Kyiv City Council – with adherence to internal procedures, council competence, and subsequent judicial oversight.

Key Elements of a Quality Settlement Agreement in a Land Dispute

For a settlement agreement to withstand judicial scrutiny and potential challenge by a prosecutor, it must not be a formal agreement to terminate a dispute, but a clear legal mechanism for resolution.

First and foremost, the agreement must provide for a real property outcome for the community or the state: compensation for the use of the land plot, debt repayment, reimbursement of expenses, transfer of property, increased rent, or another measurable economic effect.

It is also important that the settlement agreement defines the lawful procedure for further regulation of legal relations. If the dispute is related to land use without proper registration, the agreement must provide not for automatic «legalization» of the violation, but for the obligation to follow the procedure established by law.

Of particular importance are the enforceability of terms, confirmation of proper authority of the parties' representatives, and the absence of infringement on third-party rights. The terms of the agreement must be formulated so that the court's ruling on its approval can be effectively enforced, including through compulsory execution.

Risky settlement agreements are those that effectively transfer land without a council decision, establish the right of use without a contract and state registration, circumvent land auctions, change the designated purpose without proper procedure, do not contain mutual concessions, impose obligations on third parties, or do not provide any real benefit for the community or the state. These very issues should be the subject of a preliminary legal audit before submitting a settlement agreement for court approval.

Conclusion

A settlement agreement in land and property disputes involving the prosecutor's office is not a waiver of the protection of public interest. If properly structured, it can be a more effective way to protect the interests of the community or the state than lengthy court proceedings with an uncertain outcome.

The Supreme Court's jurisprudence confirms that if the owner of communal land agrees to a settlement that includes formalizing rights, compensatory payments, and enforceable obligations, the prosecutor's demand for the demolition of the object or the unalternative continuation of the dispute may be excessive.

The key is not the type of dispute, but the content of the settlement agreement. If it does not circumvent the law, does not substitute the decision of a competent authority, does not violate the rights of third parties, and provides a real property benefit for the community or the state, such an agreement is an admissible and effective tool for resolving a land dispute.

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