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20Oct/100

NO CONSUMER ARBITRATION IN UKRAINE

Let me start by stating that formally consumers’ rights in Ukraine are protected and even overprotected. They even may file claims which are free of court fees. However, recently new initiative appeared that was aimed at protection of consumers from “deprivation of rights to be protected by the state court system”. Today, October 20, the core committee of the Ukrainian Parliament gave its positive opinion to the bill that excludes the consumers’ disputes out of the competence of arbitration courts. The bill was registered with the Verkhovna Rada of Ukraine on September 9, 2010.

Currently there is a situation in which the Law on Protection of Consumers’ Rights establishes the right of consumers to apply to courts. In many aspects that provision was treated as one that gives a consumer the right to ask a court for protection even if there is a contract with an arbitration clause. It made an arbitration clause unenforceable against a customer. Now it goes to the situation in which the consumer contracts may not contain arbitration clauses.

Opponents to consumer arbitration agreements focus on the fact that many arbitration provisions are contained in contracts drafted by one party, and presented to the other to accept or reject as a whole. However, classic principles of national civil law allow a party to repudiate a contract - whether it be a contract of adhesion or otherwise. The assumption that consumers are disadvantaged by arbitration is wholly insupportable. Arbitration does not deprive parties of any substantive rights. Moreover, as follows from the arbitration statistics in arbitration-friendly countries, it greatly benefits consumers. That is why we oppose efforts to eliminate the use of arbitration agreements. As we can see instead of improving the legislative environment making arbitration more fair and independent, the legislator narrows its powers in those areas where particular misuses of this instrument take place.

Posted by Konstantin Pilkov, MCIArb

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