In July this year several provisions of the Law of Ukraine On Ensuring Functioning of the Ukrainian Language as the State Language (“the Law”) came into effect, they specifically regulate the use of Ukrainian on the Internet. These norms are the first ones to pay attention to the global information exchange phenomenon in the context of the marketing. The laws in respect to the services (financial services, gambling, e-trading), as well as the laws on advertising have not yet had any discourse for cross-border marketing, and, while analyzing them, one gets the impression that the informational space of Ukraine is in a different cosmos than foreign noosphere. As the result of this “capsuled space” technique in the statutory law, the business registered in Ukraine is subject to restrictions and prohibitions but could evade them if it to register abroad or disseminate information on behalf of non-resident.
All the stakeholders have had three years to get ready for compliance with Sections 2 and 6 of Article 27 (“State Language in the User Interfaces of Computer Programs and Websites”) of the Law. First issue (Section 2), any goods with human interface that are sold in Ukraine should include Ukrainian at least to the extent of other language versions. Whereas compliance is related to the physical commodity, the implementation guidelines are straightforward in most cases, except that determining whether the sales were in Ukraine may be an issue, for instance, in e-commerce. Let us mention here that installable software (applications) sold in Ukraine had to be translated into Ukrainian as of 2019 – obviously, the transitional period for human interface was introduced for the goods that had already been imported or contracted for import in 2019, so that they could have been sold under the old rules.
The second rule (Article 27.6) refers to all websites and pages in social media: it requires business entities to offer information in the Internet by default in Ukrainian to users located in Ukraine, provided such business entity (1) is registered in Ukraine and (2) sells goods and services in Ukraine. Other-language versions of websites and pages in social media (Facebook, Instagram, Twitter, LinkedIn, as well as WhatsApp, Viber, Telegram, etc.) are not prohibited, but the Ukrainian version should be not smaller by size and information contents than the versions in other languages.
If foreign goods and services are sold in Ukraine and the entrepreneur is present in Ukraine via the registered representative office (including subsidiaries), the requirements to the Ukrainian website version are milder – such version can be smaller in size than the main other-language version. The contents of the Ukrainian version, however, must be sufficient for clear navigation and disclosure of the business objectives.
Since a number of cases have been falling, since Summer 2022, under regulation, some questions pop up with respect to business entities having no permanent representative office in Ukraine. Should they comply, and if so, how? For example, vendors of goods who do not target the views directly at Ukraine (and have no regular commodity supply channels to Ukraine – e.g., ebay) or the vendors offering such supply and even carrying out customs clearance in Ukraine on their own (e.g., UEFA merchandise distributors). Similar question is begged by the marketing and rendering of cross-border financial services by foreign financial institutions and professional capital market players do not have any registered representative office in Ukraine. For example, Ukrainian (potential) customer may learn about and receive from the foreign provider payment services, securities depositary, money credit, insurance, purchase & sale of securities and derivative contracts.
The lives of many Ukrainians are integrated into the societies of more than one country – they do business outside Ukraine, study, undergo medical treatment and recreational activities, have family ties and savings abroad. While staying in Ukrainian flats (or bomb shelters), our compatriots can use the services, for instance, of Interactive Brokers to purchase-sell securities, open card accounts in Barclays or deposit savings in Berliner Sparkasse, take loan from Santander, buy and sell crypto currency via wallets and exchange services WhiteBit or KUNA. These and other institutions may provide their services from foreign country to the Ukrainian territory where the customer is located, by way of telephone negotiations, dispatch of e-mails, sending messages and taking instructions through online “e-cabinets”.
Commodity sellers, online casinos, foreign financial institutions and investment firms do not necessarily target the marketing of their services at Ukraine. But they also do not restrict access, by the Ukrainian audience, to their “digital” marketing activities. Besides, posts, notices and other information about the goods, works and services are available, in large quantities, through the websites of the third persons, such as news agencies and news aggregators, foreign regulators, self-regulating organizations and foreign industry associations, conference (exhibitions, symposia) web-portals as well as platforms for public procurement – with no account for the Ukrainian legislation on the functioning of the Ukrainian language (or any other language, for that matter) in the Ukraine’s public domain.
Some providers of the cross-border trades are now regulated – namely, those that have representative office in Ukraine. While primarily this concerns registered offices, the tax laws deem non-resident’s permanent representation established event without formal registration in certain cases. For example, if a representative of a foreign company participates in the negotiations, concludes agreements in Ukraine (Article 14.1.193(в) of the Tax Code of Ukraine) these activities would amount to the permanent establishment (representation) in Ukraine.
Therefore, it is becoming more difficult to ignore other “unregulated” cases: the traders that are not regulated have competitive advantage thanks to a lesser compliance burden. The Ukrainian Language Ombudsman – the State Language Protection Commissioner has at his/her disposal limited tools for exerting influence, therefore one can hardly expect anything more than letters of address to foreign business entities trading goods and providing services in the free market, for example, “mail orders” or online / network games. But for the markets with special supervision authorities or independent regulators, such discrimination will require more activity. The State Architectural and Construction Inspection, the State Inspection for Nuclear Regulation of Ukraine, the Commission for Regulation of Gambling and Lotteries, the National Bank of Ukraine, the National Commission for State Regulation of Energy and Utilities, the National Commission for State Regulation in the Field of Communication and Informatization, the National Securities and Stock Market Commission etc. have got to position themselves with respect to the marketing of cross-border services, at least in relation to the language, in which information is disseminated (1).
Such official position can be manifested, as one could expect, as the demand to establish permanent representative office in Ukraine before placing an advertisement and/or other marketing materials. That is, the advertiser / marketer must register as a legal entity (subsidiary) or a branch in Ukraine; or, where the regulations allow, to get registration of a Ukrainian tax-payer without street address in Ukraine.
Another possible solution would be that providers restrict cross-border marketing to Ukrainian consumers, by blocking or requiring additional identification for users of e-services that have ІР address from the Ukraine’s Internet domains. A colorful example of a fight with cross-border marketing is the US law-enforcement persecuting the UK online betting and gambling, although they do it for other reasons than the language. In such case (demand to block out the Ukrainian audience), information on the platforms belonging to the third persons would present a problem – compliance with requirement of the advertiser / marketer to block users will contradict to the core model of the news agencies, other mass media and social media platforms.
Lastly, the regulatory authorities may continue ignoring such business practices of cross-border marketing, although with a higher risk for themselves. If domestic market actors complain about discrimination, the officers and agencies of the Ukrainian Government (executive branch) will have difficulties to claim that the domestic competition was not impaired or that such impairment was not a fault of the respective state authority of Ukraine.
(1) АНК intends to address the authorities for clarifications.
Dr. Oleh Zahnitko, Partner
Yurii Korchev, Senior Associate