The issue of the expropriation of privately owned property during martial law is of critical importance. Everything is being seized: from a single vehicle to entire complexes of buildings and several dozen pieces of equipment.
On the one hand, the procedure is fairly well-regulated—the relevant Law of Ukraine No. 4765-VI was adopted more than ten years ago. The issue of fulfilling military transportation obligations is also regulated.
However, the emergence of new case law indicates that owners will have to make an effort to protect their rights. Such protection is possible on several fronts—which we will discuss below.
Law of Ukraine No. 4765-VI provides for two distinct procedures regarding property—compulsory alienation of property (requisition) and seizure of property.
The difference between them lies in the fact that compulsory alienation of property applies to private and municipal property and involves payment, whereas seizure of property applies exclusively to business entities in the public sector of the economy and occurs without compensation.
Both procedures share a common goal—to meet the State’s defense and security needs during wartime.
In this article, we will focus on the compulsory alienation of property.
As a general rule, compulsory alienation of property occurs with full reimbursement of its value, and compensation must be paid in advance by default. However, there are exceptions—compensation may be paid subsequently.
The law clearly stipulates that the compulsory expropriation of property is carried out pursuant to a decision by the military command, approved by the military administration, the regional, district, Kyiv, or Sevastopol city state administration, or the executive body of the relevant local council.
In other words, any expropriation of property without such approval is considered entirely unlawful. The exception is when the property is located in areas where combat operations are taking place.
An important detail is the timing of approval. Court practice indicates that a decision is first made and then approved. There is no prior approval.
During the compulsory alienation of property, it is extremely important to ensure that the deed governing the transfer of property is properly executed. The deed is signed by the property owner and authorized representatives of the military command.
State ownership of the property arises on the date the deed is signed.
Thus, if the deed is not signed, there is no transfer of ownership to the State.
Current case law confirms that the property owner’s presence during the drafting of the deed of compulsory alienation is not mandatory. Therefore, the deed may be drafted and signed in the absence of the property owner.
The fundamental guarantee for the property owner is the right to compensation, which is matched by the state’s obligation to pay funds from the State Budget of Ukraine.
However, as already mentioned, compensation may be either preliminary or subsequent. While the preliminary compensation is more or less clear, the subsequent full reimbursement is made only after the legal regime of martial law is lifted, at the expense of the state budget. To receive subsequent full compensation, the former owner, following the lifting of the legal regime of martial law, must apply to the territorial center for resettlement and social support at the location where the property was expropriated, submitting an application accompanied by a report and a document containing an appraisal of the property’s value.
After the war, the owner has the right to have the property returned in kind, provided it has survived.
If the expropriated property has survived and the former owner insists on its return, such return shall be carried out through the courts.
To determine the amount of compensation, the valuation report on the property’s value as of the date of the appraisal is crucial.
A logical question arises: what should be done if the owner disagrees with the appraisal?
Let’s consider an example: a company that owned residential buildings filed a lawsuit seeking to have the real estate appraisal declared invalid, to declare the act of compulsory alienation invalid with respect to the value of the real estate properties, and to order a re-appraisal of the compulsorily alienated property in accordance with the requirements of current legislation. The key point is that the requisition was carried out with subsequent full compensation for the value of the property. The Supreme Court, after assessing the situation, noted that the owner may challenge the determined valuation of this property in court only after its value has been compensated. The Supreme Court upheld the lower courts’ conclusions that challenging the valuation of the requisitioned property was premature, given that the plaintiff had not yet been compensated for the value of the property pursuant to the relevant claim, as required by law. The court recommends filing a claim for compensation, in which, citing the incorrect valuation, the plaintiff should provide evidence regarding the value of the compulsorily expropriated property—which the plaintiff considers to be correct—to support their claims. Therefore, the panel of judges noted that the plaintiff had chosen an inappropriate legal remedy.
The law clearly stipulates – that movable property subject to compulsory alienation or seizure must be transferred, no later than five calendar days from the date the Cabinet of Ministers receives the relevant decision of the National Security and Defense Council of Ukraine, to a state-sector economic entity pursuant to a decision of the Cabinet of Ministers.
Let me emphasize once again: the procedure for the compulsory alienation of movable property will be considered lawful only if the property is subsequently transferred to an entity in the public sector. In other words, any transfer of movable property (machinery, equipment, vehicles) to a third-party private-sector enterprise constitutes a gross violation of the law and the owner’s rights.
At the same time, this situation is widespread. Moreover, there have been cases where, following the compulsory alienation of property, the enterprise not only failed to receive compensation but also discovered that its movable property was in the possession of another legal entity, which was using it in its own business operations. Paradoxically, the property lost by the company actually ended up in the hands of a competitor, for whom it began to generate revenue. This situation is quite unfair to a company that agreed to surrender its property for defense purposes and was confident that this property was benefiting the state right then and there.
At the same time, the purpose of compulsory expropriation—to meet defense or security needs—is completely ignored. As we understand it, commercial resale differs significantly from this purpose.
So, are there any mechanisms to protect the owner’s rights if their property was unlawfully seized and/or transferred to a third party?
First, filing a claim in court for recovery of property—a lawsuit to reclaim the property. In other words, if property is unlawfully taken from the owner and ends up with a third-party company, the owner is not deprived of the opportunity to reclaim it. There can be no question of a legal basis or the legitimacy of the third-party company’s acquisition of the property in such a case. (Imagine the situation: someone came and took everything; no transfer document was signed; there is no legal basis whatsoever for the transfer of ownership.)
In addition, the owner of the property has the right to demand that the third-party company transfer all income from the property that it has received or could have received during the entire period of its possession of the property.
It is essential to file a motion for preliminary relief along with the action for recovery of property—this will block any registration actions regarding the property for the duration of the court proceedings.
Second, the protection of an owner’s rights has, as is well known, repeatedly been the subject of review by the European Court of Human Rights. Therefore, if national courts have not properly assessed the situation, an appeal to the ECHR is both possible and necessary.
Third, contact law enforcement agencies to initiate criminal proceedings. In such a case, the investigator or prosecutor must immediately apply to the court to seize the property and prohibit its use by the company in whose possession the property is held.
Another interesting point is this: in 2026, a trend emerged of referring cases to the Grand Chamber of the Supreme Court, as it is necessary to clarify whether, in cases of compulsory alienation of property (requisition), establishing the public necessity of such alienation is relevant—specifically, examining the circumstances of actual necessity regarding the specific property in question.
The issue of corporate rights deserves special attention. Thus, the Supreme Court and the appellate courts simultaneously held in several cases that corporate rights/shares may be subject to compulsory expropriation in favor of the state (the opposite view is a “subjective interpretation by the complainant”).
Regarding the seizure of funds—there is little case law on this matter, but from what is available, it is clear that the courts are convinced: the provisions of Law of Ukraine No. 4765-VI do not apply to money as property defined by generic characteristics, and the legislature did not provide for the confiscation of money under martial law for defense purposes or similar reasons based on a decision by the military command.
Thus, the procedure for the compulsory alienation of property is not straightforward. The situation is particularly complex when what has been taken from one person ends up in the hands of another. However, there are ways to fight for one’s rights, and by carefully considering each step—determining exactly who committed the violation and which defense strategy is appropriate in a specific situation—it becomes possible to achieve a positive outcome.
Author: Serhii Shklyar, Founding Partner and Senior Partner at ARZINGER, Doctor of Law, Professor, and Member of the Supervisory Board of “KP Mykolaivvodokanal”
Source: https://biz.ligazakon.net/
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