The Problem of Recognising a Legal Entity as a Victim in Criminal Proceedings: A Right, Not Coercion

Author: Angela Pavlenko, Attorney at Grain Law Firm

The issue of recognising a legal entity as a victim in criminal proceedings is not new; however, it remains highly relevant. It continues to attract significant attention within the legal community, as the approach of pre-trial investigation authorities to recognising legal entities as victims is often inconsistent, insufficiently clear, and, in many respects, selective.

In some cases, immediately after a legal entity files a statement reporting a criminal offence committed against it or an application requesting recognition as a victim, the entity is promptly provided with a notice outlining its procedural rights and obligations pursuant to Article 55 of the Criminal Procedure Code of Ukraine (“CPC of Ukraine”), and the investigator or prosecutor issues a decision recognising the entity as a victim without difficulty.

In other cases, a legal entity that has in fact suffered substantial pecuniary damage as a result of a criminal offence — supported by relevant evidence — may spend months or even years attempting to obtain a formal decision from the investigative authority recognising it as a victim, or repeatedly appeal manifestly unsubstantiated refusals before an investigating judge.

However, particular attention should now be paid to a third scenario: where a legal entity has neither filed a statement reporting a criminal offence, nor submitted an application requesting recognition as a victim, nor provided written consent to such involvement, nor filed a civil claim within the criminal proceedings — in other words, where there is no indication from the legal entity itself that it considers pecuniary damage to have been caused by the alleged offence.

At this stage, the pre-trial investigation authority, fully aware that Part 7 of Article 55 of the CPC of Ukraine expressly provides that, in the absence of written consent, a person may only be involved in criminal proceedings as a witness and only where necessary, and also aware of established court practice — including the ruling of the panel of judges of the Second Chamber of the Criminal Cassation Court of the Supreme Court dated 10 February 2020 in case No. 234/16822/18, which concluded that “criminal procedural law does not provide for the possibility of involving an injured person in proceedings and granting victim status if such person does not wish to obtain it; in such a case, the person may only be involved as a witness” — nevertheless attempts, by all available means and procedural manipulation, to obtain written consent from the legal entity.

To better illustrate this issue, let us consider the example of a pre-trial investigation conducted under Part 5 of Article 191 of the Criminal Code of Ukraine (“CC of Ukraine”), which concerns misappropriation, embezzlement, or appropriation of property through abuse of office on a particularly large scale.

Under the rules governing investigative jurisdiction, detectives of the National Anti-Corruption Bureau of Ukraine (“NABU”) conduct pre-trial investigations into offences under Article 191 of the CC of Ukraine involving officials of public legal entities, provided that at least one of the conditions set out in Article 216 of the CPC of Ukraine is met.

The most common situation involves cases where the amount of alleged damage exceeds two thousand times the subsistence minimum for able-bodied persons established by law at the time of the offence, provided that the offence was allegedly committed by an official of a state authority, law enforcement body, military formation, local self-government body, or a business entity in which the state or municipal ownership share exceeds 50%.

Criminal offences under Article 191 of the CC of Ukraine are offences with a material element, meaning that causing pecuniary damage to a victim is an essential component of the offence and such damage must be clearly quantifiable in monetary terms.

Accordingly, because the offence necessarily involves damage to the owner of property, the existence of a victim is an indispensable element of the alleged crime.

In practice, the following situations frequently arise:

• information regarding criminal proceedings is entered into the Unified Register of Pre-Trial Investigations not on the basis of a complaint filed by a legal entity or its representative, but following the independent discovery by an investigator or prosecutor of circumstances potentially indicating the commission of a criminal offence;
• pre-trial investigations continue for years, during which investigative actions are conducted, including covert investigative (search) measures, the results of which are intended to form part of the prosecution’s case; procedural coercive measures are applied, procedural decisions adopted, and notices of suspicion served;
• investigators establish the existence of a legal entity — for example, a business entity with more than 50% state or municipal ownership — whose official is suspected of committing an offence under Part 5 of Article 191 of the CC of Ukraine, while forensic expert reports allegedly confirm pecuniary damage exceeding the statutory threshold;
• simultaneously, from the moment the proceedings were registered, the legal entity itself has neither filed a complaint, nor applied for victim status, nor otherwise confirmed that it suffered any pecuniary loss as a result of the alleged offence;
• the investigative authority understands that, although the collected evidence may be sufficient to prepare an indictment, difficulties arise in proving damage where the allegedly injured entity either does not claim such damage or expressly denies that any pecuniary harm was caused.

At this point, the investigative authority, fully understanding the requirements of Article 55 of the CPC of Ukraine, attempts by all available means to obtain written consent from the legal entity for its involvement as a victim.

Initially, investigators seek to establish communication with representatives of the legal entity through requests, letters, and other correspondence aimed at encouraging cooperation. If the entity does not respond or independently decide to seek victim status, investigators and prosecutors begin sending more insistent letters urging it to do so.

These letters typically describe the factual circumstances of the alleged offence in a manner intended to eliminate any doubt regarding the existence of a criminal act. They often provide detailed references to evidence allegedly obtained by the prosecution, including forensic expert conclusions, and assert — almost categorically — that pecuniary damage in a particularly large amount has been caused.

Such letters frequently cite not only Article 55 of the CPC of Ukraine but also Article 128 of the CPC of Ukraine governing civil claims in criminal proceedings.

Most notably, the operative part of these letters often requests that the legal entity either provide written consent to recognition as a victim, independently apply for victim status, and file a civil claim against the suspects.

In essence, the investigative authority attempts to convince the legal entity that it has suffered damage, that it is entitled to victim status, and that it should pursue compensation by filing a civil claim.

Where the entity refuses to provide written consent — including on the grounds that it lacks documentary evidence confirming the amount of damage and therefore cannot substantiate a claim — additional letters are sent, often over the course of several months.

Ultimately, many legal entities agree with the prosecution’s position and provide written consent, after which the investigator issues a decision recognising the entity as a victim and serves the relevant procedural rights notice.

This naturally raises an important question: can such a decision genuinely be considered lawful and properly reasoned, where for years the legal entity itself had no sufficient basis to believe it had suffered damage and ultimately agreed only under procedural pressure?

Part 7 of Article 55 of the CPC of Ukraine was specifically intended to prevent investigative authorities from artificially or coercively involving persons — including legal entities — in criminal proceedings as victims without their voluntary written consent.

The existence of written consent in the case materials should therefore be viewed as evidence of the legal entity’s free expression of will and compliance with the statutory procedure for obtaining victim status.

However, where investigative authorities attempt, under any circumstances, to secure such consent from legal entities that, in the prosecution’s view alone, are victims of criminal offences, the lawfulness of such conduct is highly questionable.

The decision whether to obtain victim status in criminal proceedings is exclusively the right of the person concerned, based on the existence of sufficient and proper evidence confirming that damage has indeed been caused.

Under Part 1 of Article 55 of the CPC of Ukraine, a legal entity may be recognised as a victim only if pecuniary damage has been caused by a criminal offence. The rights and obligations of a victim arise from the moment the person files a complaint regarding the offence or applies for victim status.

Importantly, victim status not only grants procedural rights but also imposes procedural obligations.

Part 3 of Article 55 further provides that a person who did not initiate the proceedings may nevertheless obtain victim status if they suffered harm and subsequently apply for involvement in the proceedings as a victim.

Accordingly, if a legal entity discovers that it has suffered pecuniary damage, its representative has the right — but not the obligation — to exercise the rights provided under the CPC of Ukraine by filing a complaint or consenting to involvement as a victim.

A key issue in obtaining victim status is the ability to prove both:

1. the actual commission of a criminal offence; and
2. the existence of clearly identifiable damage caused by that specific offence.

This necessarily requires reliable documentary evidence confirming both the offence and the amount of damage, particularly given the potential criminal liability for knowingly false reporting of a criminal offence or misleading a court or authorised body.

Moreover, pecuniary damage under Article 191 of the CC of Ukraine is not static, as statutory thresholds depend on the annually changing subsistence minimum established by the State Budget Law of Ukraine.

Nevertheless, where damage on such a scale genuinely exists, it is difficult to imagine that the allegedly injured legal entity would remain unaware of it — especially where the offence is alleged to have been committed by its own officials.

Recognition of a legal entity as a victim therefore requires actual pecuniary damage supported by evidence capable of judicial examination during trial proceedings.

Unlike natural persons, legal entities cannot personally communicate their position orally in court. They can only confirm or deny the fact of damage through internal documentation, including financial, tax, and accounting records reflecting the existence and amount of alleged losses.

Absent such information in the entity’s records, a legal entity forcibly involved as a victim is, in substance, not a victim within the meaning of the CPC of Ukraine.

A separate issue concerns attempts by investigative authorities to pressure legal entities into filing civil claims.

Under Article 128 of the CPC of Ukraine, a person who has suffered pecuniary or non-pecuniary damage as a result of a criminal offence has the right to file a civil claim during criminal proceedings before the commencement of trial.

However, filing such a claim requires a properly substantiated calculation of damages supported by documentary evidence in the possession of the claimant.

Without indisputable evidence confirming both the offence and the amount of damage, a legal entity is effectively deprived of the ability to file a lawful and properly substantiated civil claim.

Nevertheless, prosecutors often attempt to overcome this difficulty by effectively assuming the role of civil claimant themselves.

In practice, prosecutors frequently petition investigating judges for seizure of suspects’ assets under Part 5 of Article 191 of the CC of Ukraine, citing the need to secure compensation for damage allegedly caused by the offence.

At the same time, no actual civil claim filed by the allegedly injured legal entity exists. Instead, prosecutors justify such applications by referring to the need to secure a “future civil claim.”

Despite the questionable legality of this practice, such applications are often granted by courts, even though seizure of assets on these grounds should only be possible where a substantiated civil claim already exists within the criminal proceedings.

Under the principle of dispositiveness established by Article 26 of the CPC of Ukraine, filing a civil claim is a procedural right of the injured party, not a mandatory obligation.

By effectively acting in place of both the victim and the civil claimant, the prosecution exceeds its procedural role.

It is also notable that investigative authorities are generally able to conduct pre-trial investigations without involving a legal entity as a victim until the stage of completing the investigation under Article 290 of the CPC of Ukraine and preparing the indictment for referral to court.

Typically, it is precisely before disclosure of the case materials to the defence that prosecutors begin actively requesting written consent from legal entities for their involvement as victims.

This suggests that, absent such consent, the prosecution encounters significant procedural difficulties during preparatory and trial proceedings.

Indeed, during preparatory court hearings, indictments often contain allegations that pecuniary damage was caused to a legal entity, while simultaneously failing to identify any recognised victim in the section listing victims’ details.

As a result, legal entities are effectively informed by the prosecution that:

1. a criminal offence was allegedly committed;
2. the entity allegedly suffered pecuniary damage; and
3. the entity is expected — or effectively required — to consent to victim status.

Consequently, where a legal entity does not voluntarily consent to involvement as a victim, does not recognise itself as injured, and does not confirm the existence of pecuniary damage, serious questions arise regarding both the legality of the investigation and its compliance with the objectives of criminal proceedings.

Without the voluntary acquisition of victim status by the legal entity, it becomes impossible to conclusively establish either:

• the existence of the criminal offence itself; or
• the existence and amount of pecuniary damage allegedly caused to the legal entity.

In conclusion, because the practice of coercively involving legal entities as victims in criminal proceedings has become widespread, defence lawyers increasingly attempt to challenge such practices before courts, including during trial proceedings, by appealing decisions recognising legal entities as victims and seeking their removal from the list of participants in criminal proceedings.

However, such complaints rarely receive adequate judicial scrutiny, forcing the defence to continue taking all available procedural measures to ensure compliance with the requirements of the CPC of Ukraine while hoping for future changes in judicial practice.