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5 October 2022

Ukraine declares invalid all acts relative to Russia's annexation of its territories. The areas continue to be subject to Ukrainian law, public and private. Contracts in the annexed territories are only valid if consistent with Ukrainian law. 

Following Russia’s actions to formally seize Ukrainian territories, Ukraine’s President signed a decree declaring null and void the legal acts adopted by Russia in connection with the annexation. 

In early October the Russian authorities took steps to officially absorb four Ukraine’s provinces: Donetsk, Lugansk, Zaporizhia and Kherson. The decree affects, among other things, the referendums held there, their treaties with Russia, and the acts of Russia’s legislature and other authorities approving them. 

The decree is a welcome step in that it supplies a bespoke Ukrainian law basis for denying legal effects to the operation of Russian law in the territories. For example, a party contesting a Russian law contract from an annexed oblast will now only need to invoke the decree and will not need to provide a more specific legal justification. 

Yet the decree should not, by itself, mean that all contracts made in the annexed territories will now be invalid. Two distinctions should probably be made.

If the parties do not expressly agree on applicable law, the presumption perhaps will be that the contract is governed by Ukrainian law. That would probably be the case for a majority of the daily transactions. 

Where, by contrast, the parties expressly agree for Russian law to govern the contract (such as when selling and buying real estate, which requires notarization and/or registration), the court will probably look at whether that choice of law is proper under Ukrainian law. Under Ukrainian law Ukrainian residents, generally, may not choose foreign law to govern contracts as between themselves. In practical terms this means that to be valid a contract will need to be expressed to be made under Ukrainian law, with all the applicable formalities.

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