Penalties on pre-war debts: can they still be recovered?

The short answer is yes. If a counterparty was already late with payment before 24 February 2022, contractual penalty interest and fines for that period can still be recovered today, despite martial law. The Joint Chamber of the Commercial Cassation Court of the Supreme Court of Ukraine settled the question in case No. 908/948/23 (ruling of 04.07.2025), and in January 2026 the Commercial Cassation Court applied that conclusion in case No. 910/6337/23.

Where the question came from

After the full-scale invasion began, the National Energy and Utilities Regulatory Commission (NEURC) adopted Resolution No. 332. One of its provisions suspends the accrual and collection of contractual penalties between electricity market participants for the entire period of martial law and for 30 days after it is lifted or ended. The provision has moved around the text several times: in the version of 26.04.2022 it was sub-paragraph 16 of paragraph 1, from 01.07.2024 it became sub-paragraph 15 of paragraph 1, and in the current version (as amended on 29.09.2026) it is sub-paragraph 12 of paragraph 1.

In 2024 the Joint Chamber held this provision to be mandatory, that is, binding on all market participants (ruling of 19.04.2024 in case No. 911/1359/22). At the same time, the court stressed that the Regulator had neither abolished liability nor imposed a moratorium on it; it had only temporarily suspended the accrual and collection of penalties.

A different question remained open: does this suspension also cover penalties for late payments that occurred before the war?

The Supreme Court contradicted itself

Throughout 2024, different panels of the Commercial Cassation Court answered this question differently. In a number of rulings (cases No. 908/818/22, No. 908/815/22, No. 908/816/22, No. 908/817/22, No. 910/4264/22 and No. 910/4273/22), the court concluded that Resolution No. 332 applies only to penalties for the period of martial law and does not extend to pre-war delays.

However, in its ruling of 15.10.2024 in case No. 924/1202/23, another panel set aside an award of penalty interest for the period from 01.09.2021 to 23.02.2022, that is, for purely pre-war months, relying on Resolution No. 332. In two further cases (No. 910/4269/22 and No. 910/4286/22), the court set aside awards of pre-war penalties and remitted the cases for retrial.

The panel hearing case No. 908/948/23 identified this conflict and referred the case to the Joint Chamber, proposing that it depart from the first approach, which would in effect have barred the recovery of pre-war penalties.

The Joint Chamber rejected that proposal. It upheld the first line of rulings and departed from the opposite approach taken in case No. 924/1202/23. The position is now uniform.

The story of one case

The dispute arose between NPC Ukrenergo, acting as the transmission system operator, and PJSC Zaporizhzhiaoblenergo. Ukrenergo issued invoices for electricity to settle imbalances for August 2021 and for the period from May 2022 to February 2023. The defendant did not pay, and the claimant sought, in addition to more than UAH 358 million in principal debt, penalty interest, a fine, 3% per annum and inflation losses.

Notably, Ukrenergo charged penalties only on two adjustment invoices that were due by 08.09.2021. It did not charge penalty interest or fines on the wartime debts, claiming only 3% per annum and inflation losses on them. The courts of first and appellate instance granted the claim in full.

The Joint Chamber found a problem with the calculation in those decisions. The delay began on 09.09.2021, and 168 days had passed by 24.02.2022. Yet penalty interest had been charged for 183 days, that is, effectively up to 11.03.2022, partly covering the period of martial law. In addition, the courts had overlooked discrepancies in the amounts themselves: according to the claimant’s own calculation, penalty interest came to UAH 30,912.29, whereas UAH 37,376.30 was awarded; the fine came to UAH 118,243.74 by calculation, whereas UAH 234,893.61 was awarded.

The Supreme Court therefore set aside the decisions in respect of penalty interest and the fine and remitted that part of the case to the court of first instance to check the calculations. The award of principal debt, 3% per annum and inflation losses was upheld in the part under appeal.

The Joint Chamber explained its reasoning as follows. Resolution No. 332 is designed for a special period: martial law and the 30 days that follow it. It contains no express indication of retroactive effect, so it cannot be applied to breaches that occurred earlier. Nor is there any basis for extending its interpretation to legal relationships from earlier periods.

The court concluded (our translation):

“The instructions on suspension for the period of martial law in Ukraine and for 30 days after it is lifted or ended relate exclusively to the accrual and collection of penalties for that very period and, accordingly, their effect cannot be extended to penalties the right to which arose earlier.”

The case law has settled

In January 2026, the Commercial Cassation Court applied this conclusion in case No. 910/6337/23, finding the legal relationships comparable. The appellate court in that case had refused to award penalty interest, citing sub-paragraph 16 of paragraph 1 of Resolution No. 332, but it was wrong to do so: the penalty interest had been charged for breaches of obligations that arose before 24.02.2022, so there were no grounds for refusal.

What this means in practice

Everything turns on the period for which the penalties were charged:

• the delay began and ended before 24.02.2022: penalties are recoverable within the limits set by law and the contract;
• the delay began before 24.02.2022 and continued afterwards: penalty interest is recoverable only for the days up to and including 23.02.2022;
• the delay began during martial law: the accrual and collection of penalties is suspended.

Case No. 908/948/23 also teaches a practical lesson: the court checks not only the legal basis but the arithmetic as well. If a penalty calculation runs even a few days past 24.02.2022, or if the amounts in the calculation and in the claim do not match, the decision may be set aside in that part. So if you hold pre-war receivables on the electricity market, it is worth recalculating penalty interest with this cut-off date in mind.

What about the limitation period?

Even correctly calculated penalty interest can only be recovered within the limitation period. For contractual penalties (penalty interest and fines), it is one year (Article 258(2)(1) of the Civil Code of Ukraine). In recent years the rules on how it runs have changed several times:

• during the COVID-19 quarantine, limitation periods were extended for its duration (Law No. 540-IX of 30.03.2020); the quarantine was lifted from 01.07.2023;
• from 17.03.2022, limitation periods were extended for the duration of martial law (Law No. 2120-IX of 15.03.2022);
• from 30.11.2023, the running of the limitation period was suspended for the period of martial law (Law No. 3450-IX of 08.11.2023);
• from 04.09.2025, this rule was repealed and the limitation period started running again (Law No. 4434-IX of 14.05.2025).

Each claim should therefore be checked separately to see whether the period has expired, taking all of these stages into account. That said, limitation does not apply automatically: the court takes it into account only if a party applies for it before judgment is given (Article 267(3) of the Civil Code of Ukraine). If the debtor does not raise it, penalty interest may be recovered even after the period has expired.

Full text of the Joint Chamber’s ruling in case No. 908/948/23 (in Ukrainian): https://reyestr.court.gov.ua/Review/128687646

Svitlana Dribas, Junior Associate, DEVOSO Law Firm