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Enforcement of Worldwide Freezing Orders in Ukraine

By Cai & Lenard

(Full article available at Publications).

I. General Aspects of Enforceability

English Worldwide Freezing Order (“WFO”) being called by Matthias Scherer and Simone Nadelhofer one of the “nuclear weapons” of commercial litigation and arbitration, is a preliminary injunction preventing a defendant from disposing of assets pending the resolution of the underlying substantive (arbitration or court) proceedings. Its issue in support of an arbitration proceeding significantly impacts further enforcement of an award. However, as WFOs are often sought without prior notice to the defendant, their recognition and enforcement may become problematic. Ukrainian courts only recently were addressed issues related to enforceability of WFOs.

There is no separate procedure for enforcement of foreign court orders on interim measures, thus formally the English WFO can be recognised and enforced as a foreign court judgement. Generally a foreign court judgment may be recognized and enforced in Ukraine either on the basis of a respective multilateral/bilateral international treaty of Ukraine, or in the absence of such treaty on the basis of the principle of reciprocity which existence is presumed by the domestic rules of civil procedure (the Code of Civil Procedure of Ukraine, the CCP). As there is no international treaty governing issues of recognition and enforcement of court judgments in civil and commercial matters between Ukraine and the United Kingdom, English court judgments are enforceable in Ukraine on the basis of the reciprocity principle.

Upon receiving an application for recognition and enforcement, the court shall notify the debtor against whom the recognition and enforcement is sought and establish a one month term for filing objections by the debtor. Upon receiving objections or upon the expiration of the term for objection, the court appoints the hearing and shall notify the parties of the place and time of the hearing at least 10 days before it takes place. During the hearing, the parties have the right to give statements and provide explanations. The court can hold the hearing and issue a ruling in absence of any of the parties, if that party was properly notified of the hearing. The court is obliged to issue its ruling within two months after the proceedings are instituted, but this term can be prolonged. The approximate time of the proceedings in the court of first instance (district court) is 2-7 months.

The law does not establish any particular terms in which the enforcement can be granted. The court is not entitled to make any changes to the foreign court judgments left to enforcement. As a WFO would be considered as a foreign court judgment, the competent Ukrainian court cannot impose any conditions of its enforcement (e.g. deposit or promise to compensate loss caused by that enforcement). Taking into account that a WFO is an interim relief and its enforcement does not require any Ukrainian interim measures, we also believe that Ukrainian courts would not grant any additional interim relief. The ruling of the court on recognition and enforcement of foreign court judgment and arbitration award is subject to an appeal following general procedure.

However, the competent Ukrainian court may refuse to recognize and enforce a WFO upon one of the grounds listed in Article 396 of the CCP. Among those grounds there is a situation when a defending party did not have an opportunity to participate in the court proceedings because it was not properly notified of time and place of the hearing. This makes foreign court judgments issued against individuals and legal entities which were not joined to the proceedings (non-cause of action defendants (“NCADs”)), practically unenforceable in Ukraine.

II. Enforcement of WFOs against shares

Even if a WFO has been issued against a cause of action defendant (‘CAD’) its enforcement against shares in an NCAD-resident of Ukraine, belonging to that CAD may face problems. An application for enforcement of a foreign court judgment is submitted to a general court at the location of the debtor (CAD in foreign proceedings). If the debtor has no location in Ukraine or the debtor’s location is unknown, the application shall be filed with the court having jurisdiction over territory of location of the debtor’s assets in Ukraine. (Full article available at Publications).

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  1. Can ne apply to the UK family courst for maintenance against a Ukrainian citizen who refuses to pay for the support of his or her children?

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