Recovery of penalty for failure to return property from lease through the prism of court practice in commercial disputes

The article is devoted to a comprehensive study of the penalty provided for in Part 2 of Article 785 of the Civil Code of Ukraine (CC of Ukraine), which establishes liability for violation of the obligation to return leased (rented) property after termination of contractual relations. The article considers a number of problematic issues: the legal nature of the provision of Part 2 of Article 785 of the CC of Ukraine; doctrinal approaches and judicial practice regarding the essence of the sanction in relation to the general provisions of § 2 of Chapter 49 of the CC of Ukraine; the issue of the statute of limitations; the subject of proof; the content of appropriate actions and measures for the return of property; the possibility of reducing the amount of the penalty by the court. The study showed that the incentive to fulfill the obligation to immediately return property is an atypical penalty both in its structure and severity. It was found that the penalty under study does not correspond to the classic structures of a fine or penalty, but at the same time, it tends to be similar to a penalty in terms of its content. It has been proven that the legislator’s approach to the amount of the penalty for breach of the obligation to return property is unjustified, as it does not comply with the principles of fairness and proportionality. The need for legislative improvement of Part 2 of Article 785 of the CC of Ukraine has been substantiated by revising it to ensure a balance between the interests of the lessee and the lessor and not to turn the penalty into a severe and unjustified punishment. The authors of the article analyze the legal position of the Joint Chamber of the Commercial Court of Cassation within the Supreme Court dated August 16, 2024 in case № 910/14706/22, which represents an evolutionary departure from previous judicial practice as a result of a reassessment of the essence of the sanction, as well as an expansion of the subject matter of proof. The consequences of the change in the approach to the interpretation of part 2 of Article 785 of the CC of Ukraine for law enforcement are considered. The article focuses on the possibility of reducing the amount of the penalty in order to ensure a fair balance of interests between the parties, and highlights the essential circumstances that are accepted by judicial practice as grounds for reducing the amount of the sanction. The study was conducted through the prism of judicial practice at all levels and is useful for practicing lawyers, law students, and anyone interested in problematic aspects of contract law.