Article 364 of the Criminal Code of Ukraine in the New Supreme Court Practice: Risks for Company Executives

Authors: Markiian Vysotskyi, Attorney, Counsel at Grain Law Firm
Anna Korniienko, Paralegal at Grain Law Firm

In 2025, officials and executives of state-owned and municipal enterprises, as well as private businesses, continue to remain under heightened scrutiny by law enforcement authorities. This is driven by ongoing political and social developments, continuous legislative changes, and increased state control over business activities. Such scrutiny is particularly evident in the area of criminal liability for corruption-related offenses, including abuse of authority or office under Article 364 of the Criminal Code of Ukraine.

This provision applies to officials performing organizational, administrative, and managerial functions as special subjects of the offense, including directors of state-owned and municipal enterprises and other persons specified in Note 1 to Article 364 of the Criminal Code of Ukraine.

A key issue in prosecuting individuals under Article 364 is the following question: Is it necessary, for a conviction under Article 364, to establish the official’s motive and personal interest in another person obtaining an unlawful benefit, as well as the existence of a prior arrangement between the official and the beneficiary?

This issue is particularly important because Ukrainian court practice in recent years has demonstrated inconsistent approaches to the application of Article 364 in determining the grounds for criminal liability of officials. To better illustrate these differing approaches, it is worth examining several legal conclusions formulated by the Supreme Court.

Earlier Supreme Court Approaches

Between 2022 and 2023, court practice developed the position that the existence or absence of prior arrangements between an official and the direct beneficiary does not prevent qualification of the official’s actions under Article 364 of the Criminal Code of Ukraine. According to this approach, an official who abuses authority or office with the aim of obtaining any unlawful benefit for another individual or legal entity may be held liable under Article 364, even where the official acted in the interests of a third party without informing that party of the nature or content of such actions (rulings of the panel of judges of the Third Judicial Chamber of the Criminal Cassation Court of the Supreme Court dated 2 November 2022 in case No. 724/1590/19 and dated 2 February 2022 in case No. 520/15641/15-к).

However, in 2024, courts began applying a substantially different approach. Under this later interpretation, the subjective element of abuse of office is characterized by direct intent, while an essential element of the offense is the purpose of obtaining an unlawful benefit — either material gain or avoidance of material expenses — for oneself or another individual or legal entity, together with a selfish (mercenary) motive.

Accordingly, where the benefit is obtained by another person, it is necessary to prove that the accused official had a specific interest in that person receiving such benefit. Failure to establish these elements excludes criminal liability under Article 364, even if mistakes or procedural violations occurred in the exercise of official powers.

The Supreme Court emphasized that the existence of an intent to obtain unlawful benefit for oneself or another person is precisely the element distinguishing abuse of office from other irregularities or questionable managerial decisions. Such an approach serves as a safeguard against criminal prosecution merely because a decision or action was later challenged or invalidated in subsequent legal procedures (Supreme Court rulings dated 23 April 2024 in cases No. 686/25943/18 and No. 278/1664/20).

Position of the Joint Chamber of the Supreme Court

The existence of these fundamentally different approaches ultimately led to the issue being referred to the Joint Chamber of the Criminal Cassation Court within the Supreme Court.

In its resolution dated 10 February 2025 in case No. 757/11969/18-к, the Joint Chamber concluded that the subjective element of the offense under Article 364 is characterized by direct intent and a special purpose of obtaining unlawful benefit for oneself or another individual or legal entity, while a selfish motive is not a mandatory element of the offense.

The Court noted that the legislator expressly provided that the recipient of unlawful benefit may be either the perpetrating official or another individual or legal entity. Where the unlawful benefit is received directly by the official committing the abuse, the official clearly understands that the abuse will result in such benefit. However, where the benefit is received by third parties, this connection may not be as apparent.

Thus, according to the Joint Chamber, the key element of the offense is the conscious abuse by the official of authority or office contrary to the interests of service. If an official knowingly acts against the interests of service, and as a result another individual or legal entity unlawfully obtains material or non-material benefits, this may constitute sufficient grounds for qualification under Article 364, provided all other elements of the offense are present.

At the same time, the Supreme Court clarified that an erroneous action by an official that unintentionally results in third parties obtaining unlawful benefit does not constitute abuse of office, since such conduct lacks the direct intent required for the offense.

Problematic Aspects of the New Approach

In our view, however, this conclusion is not entirely consistent. The existence of direct intent as a mandatory element of the offense is intrinsically connected with establishing the official’s motive aimed at obtaining unlawful benefit for themselves or another person. Where such motive exists, it becomes difficult to argue that the official merely made an error while exercising official powers.

The Joint Chamber effectively concluded that establishing abuse of office resulting in unlawful benefit for third parties requires:

• proving the official consciously used authority or office contrary to the interests of service;
• proving awareness that such abuse resulted in unlawful benefit for the official or third parties; and
• recognizing the possibility of qualification under Article 364 even without prior arrangements between the official and the beneficiary.

Nevertheless, this reasoning gives rise to significant practical concerns.

If an official must be aware that a third party is receiving unlawful benefit, how can such awareness be proven without establishing a corresponding selfish motive or interest?

Similarly, if no selfish motive is required, what precisely constitutes the unlawfulness of the official’s conduct, and how should Article 364 then be distinguished from other corruption-related offenses?

For example, distinguishing Article 364 from Article 367 of the Criminal Code of Ukraine (official negligence) becomes significantly more complicated. Under Article 367, an official may also cause substantial damage through improper performance of official duties due to negligent attitude toward such duties.

Another problematic issue concerns distinguishing Article 364 from Article 191 of the Criminal Code of Ukraine (misappropriation, embezzlement, or conversion of property through abuse of office). In cases of “self-serving abuse of office,” the official does not necessarily appropriate property but rather derives benefit from abusing official powers while causing financial harm to the owner. By contrast, where the conduct contains all elements of embezzlement — including unlawful appropriation of property removed from the owner’s possession — Article 191 should apply instead.

If an official abuses authority without appropriating property for personal use, but instead causes financial harm by other means or secures unlawful benefit for third parties, such conduct may fall under Article 364. Both offenses require proof of intent, special purpose, and harmful consequences (Criminal Cassation Court ruling dated 23 August 2018 in case No. 0912/1638/12).

Risks for Private Companies and Contractors

Another issue arises in situations where the head of a private legal entity — who is not a direct subject of Article 364 — receives unlawful benefit as a result of abuse committed by a public official.

In such circumstances, court practice allows the actions of the private company executive to be qualified as aiding and abetting the offense under Article 364, provided that the guilt of the public official and the existence of shared intent are established (Judgment of the High Anti-Corruption Court dated 8 November 2022 in case No. 991/8783/21).

Accordingly, this approach itself presupposes the existence of common intent between the official and the beneficiary, which further demonstrates inconsistencies in the current interpretation of criminal law provisions.

Taking into account the legal position of the Joint Chamber of the Supreme Court, significant risks now exist both for executives of private companies involved in public procurement and state contracts, and for managers of state-owned and municipal enterprises responsible for administering public funds.

The most common violations in public procurement procedures involve influencing responsible officials through unlawful benefits to secure victory in tenders or coordinating actions among procurement participants — so-called “tender collusion” — aimed at obtaining excessive profits without actual performance of works or services.

At the same time, even participants fully complying with procurement legislation may become subjects of criminal investigations based on formal grounds or as a means of exerting pressure on business activities.

As a result, law enforcement authorities may seek to prosecute individuals performing organizational and managerial functions under Article 364 without properly establishing selfish motive or criminal intent. In practice, it may be sufficient for the prosecution to rely on forensic economic examinations alleging substantial damage to state interests or other persons, combined with proof that a third party received unlawful benefit.

Under the current approach adopted by the Supreme Court, it may become irrelevant whether:

• the third party knew about the official’s conduct;
• the third party had any connection with the official; or
• the official had any personal interest in the third party obtaining benefit.

Conclusions

The risk of unjustified prosecution under Article 364 lies in the possibility that incomplete establishment of factual circumstances and failure to prove all mandatory elements of the offense may nevertheless result in incorrect legal qualification and unlawful criminal liability.

To substantially minimize such risks, businesses should ensure:

• thorough legal review of documentation, especially in the field of public procurement;
• effective anti-corruption compliance policies;
• strict adherence to procurement legislation and tender procedures;
• enhanced monitoring and compliance control mechanisms;
• comprehensive due diligence of counterparties; and
• proper supervision over fulfillment of contractual obligations under public procurement agreements.

Given the evolving and still controversial Supreme Court practice, proactive legal risk management and compliance measures are becoming critically important for both public-sector managers and private business executives operating in cooperation with the state.