Ukraine Commercial Leasing: Fines, Late Fees, NBU Discount Rate

Ukrainian law provides specific mechanisms for landlords to manage payment defaults in commercial leasing. Commercial courts enforce financial penalties stipulated in lease agreements, provided they comply with the Commercial Code of Ukraine (effective 1 January 2004) and the Civil Code of Ukraine (effective 1 January 2004).

1. Late Fees and the Statutory Framework

In commercial contracts, the primary tool for sanctioning defaults is the Late Fee (Penya), which accrues for every day of delayed payment. The legal framework establishes a mandatory ceiling for these penalties to prevent usurious practices between business entities.

Contracts Between Private Economic Entities

For private economic entities (B2B), the principle of freedom of contract allows parties to agree on the specific penalty rate within the lease agreement. However, the Law of Ukraine "On Responsibility for Late Fulfillment of Monetary Obligations" (543/96-VR) imposes a mandatory statutory cap that applies to all enterprises and individual entrepreneurs (FOPs) regardless of ownership form.

• Statutory Cap: The late fee (penya) cannot exceed double the discount rate of the National Bank of Ukraine (NBU) in effect during the period for which the penalty is paid.
• Judicial Review: Under Article 233 of the Commercial Code of Ukraine, courts maintain the discretion to further reduce a penalty if it is excessively large compared to the actual losses suffered by the landlord or if the debtor is in a difficult financial position.

State-Related Obligations

While the double NBU cap applies universally to all commercial penya, the Commercial Code (Article 231) provides specific default penalties for obligations involving state-owned enterprises or those funded by the state budget. In these cases, if the contract does not specify otherwise:

• The penalty is 0.1% of the overdue amount for each day of delay.
• An additional fine of 7% is levied if the delay exceeds 30 days.
• Regardless of these defaults, the total daily accrual remains subject to the double NBU discount rate limit established by Law 543/96-VR.

2. Lump-Sum Fines (Fixed Penalties)

To supplement daily late fees, landlords often include fixed penalties for systemic or significant breaches.

Fixed Fine (Shtraf): According to Article 231 of the Commercial Code, a landlord may stipulate that a daily late fee (penya) and a one-time fine (shtraf) are levied simultaneously.

Common contractual structures include:

• A daily late fee for the initial period of delay.
• A one-time fine (e.g., 7% to 20% of the debt) if the delay exceeds a specific threshold (e.g., 10 or 30 banking days).

This combination of daily accruals and one-time penalties is a standard practice in Ukrainian commercial leasing to address the costs of debt recovery.

3. Statutory Protections: Article 625 of the Civil Code

Beyond contractual penalties, Article 625 of the Civil Code of Ukraine provides statutory protections for landlords that apply unless the contract establishes a different rate of interest:

1. 3% Annual Interest: The landlord is entitled to 3% annual interest on the overdue amount for the duration of the delay, unless another rate is established by the contract or law.
2. Inflation Adjustment: The landlord may claim compensation for the "inflation index" for the period of delay. This ensures the debt maintains its value relative to inflation.
   • Note: Inflation adjustments are typically not applicable if the debt is pegged to a stable foreign currency (e.g., USD or EUR), as the exchange rate adjustment is deemed to cover the loss of value.

Landlords must ensure that all penalty calculations are grounded in the specific terms of the lease and the relevant articles of the Civil and Commercial Codes.

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