In this paper, arbitrability of disputes and respective Ukrainian laws and jurisprudence will be analyzed. As Ukrainian laws distinguish international commercial arbitration (foreign arbitration and commercial arbitration having the seat of arbitration in Ukraine) and domestic arbitration (arbitration between Ukrainian entities and individuals), in this paper only the matters related to enforcement of international commercial arbitration will be considered. This paper contains the results of the research conducted as a part of the comparative study of the concept of ‘arbitrability’, carried out under auspices of the International Bar Association Subcommittee on Recognition and Enforcement of Arbitral Awards.
- Ukrainian courts usually consider arbitrability in the context of validity of an arbitration agreement.
- Ukrainian law defines persons capable of being a party to an arbitration (‘subjective arbitrability’) and specifies disputes which are not capable of being resolved by arbitration (‘objective arbitrability’). Rules related to subjective arbitrability are part of lex arbitri. The specific restrictions of objective arbitrability are part of lex fori, they are applied by the competent court irrespective of the seat of arbitration or the law governing the arbitration agreement.
- After 2011 legislative amendments, Ukrainian courts still have not adopted a clear approach to the matter of arbitrability of corporate disputes and disputes out of public procurement contracts. Courts still mostly consider corporate disputes and disputes out of public procurement contracts non-arbitrable. Controversial jurisprudence only allows to come to a conclusion that disputes out of or in connection with agreements of alienation of participation interests might be considered not corporate and thus arbitrable.
By Konstantin Pilkov, Cai & Lenard
Ukraine has a reputation of a country with an imperfect justice system. No wonder that the country is also pictured by many arbitration practitioners as one unfriendly to arbitration, though refusals to grant the leave for enforcement of arbitral awards in Ukraine are relatively rare – 10% and 18% of all requests considered in 2013 and 2014 respectively, according to the Statistical Report “Ukraine. Arbitration-friendly jurisdiction: 2013-2014” prepared by Cai & Lenard.
Assignment of benefits of arbitral awards is a standard business practice worldwide, undertaken by companies involved in international trade and supported by credit insurers. However, this practice may face some obstacles in Ukraine considering contradictory and poorly developed court practice of granting leave for enforcement upon an application submitted by any person other than a person who was the party to arbitration. Courts are rather formalistic in deciding on that matter as Ukrainian laws do not directly envisage the possibility to an application for leave to enforce an international arbitration award to be submitted by any person other than a creditor (the meaning of this term is sometimes narrow, so that it is understood as a synonym to a party to arbitration). Actually, until recently there are not so many court cases, if any at all, in which the matter of assignment of benefits of arbitral award was clearly addressed.
IT’S ALL FOOLS’ DAY TODAY! DO ARBITRATION PRACTITIONERS EVER SMILE? RESULTS OF THE “MOST SERIOUS” SURVEY
Recently the “most serious” survey dedicated to All Fools' Day 2013 has been conducted in Ukraine. Profiles of 333 partners of 100 best law firms were carefully analyzed by the researchers with the only aim to find the answer to the question “How do the lawyers smile?”
The results are incredible. Here we share only some of them related to arbitration practitioners
SCC is one of the most frequently referred arbitration institutes among Ukrainian parties, after the International Commercial Arbitration Court (ICAC) at the Ukrainian Chamber of Commerce and Industry (UCCI). This trend is consistent with the general East-West footprint in the SCC case load. In the last decade parties from Ukraine have appeared in 45 disputes before the SCC. 12 of these disputes have been administered by the SCC in the period 2011-2012.
According to “Ukraine. Arbitration-friendly jurisdiction: 2011-2012 statistical report” the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC at the UCCI) holds the leadership position in terms of enforcement of arbitral awards in Ukraine.
Kiev Arbitration Days will take place in Kiev, Ukraine, on 15 and 16 November 2012 under the auspices of the Ukrainian Bar Association.
Ukrainian local common courts rarely refuse to grant the leave for enforcement of arbitral award (about 10% of the requests in 2011 and 6% of the requests in 2012). This statistics was presented in the research paper “Ukraine. Arbitration-friendly jurisdiction: 2011-2012 statistical report”.
Arbitration practitioners often put Ukraine below the average ranking of countries in terms of recognition of arbitration. Ukraine’s image of a not entirely arbitration-friendly jurisdiction is “promoted” with common thought about problematic enforcement of arbitral awards in Ukraine.
However, in recent years Ukrainian legal system demonstrated significant progress in adherence to the arbitration-friendly approach. That progress had been measured during the study resulted in the research paper “Ukraine. Arbitration-friendly jurisdiction: 2011-2012statistical report”.
What is the statistics of setting aside and recognition and enforcement of arbitral awards in Ukraine?
How often do Ukrainian courts grant the leave for enforcement of arbitral awards?
What are the reasons for refusing the enforcement of arbitral awards?
Do Ukrainian economic courts recognize arbitration agreements?
Are the courts inclined to "restore" arbitration agreements?
Is there any connection between international commercial arbitration and administrative court proceedings?
You may also download it here.
On March 15, 2011 the new version of the Order of protecting the rights and interests of Ukraine during the disputes, before the foreign jurisdictional authorities in cases involving a foreign entity and Ukraine came in force. The Order was approved by the Decree of the President of Ukraine.
The Ministry of Justice of Ukraine that is authorized to defend state interests in foreign courts and arbitration tribunals, currently is in the negotiation process for a peaceful settlement of 7 disputes with foreign investors, stated the Minister of Justice Oleksandr Lavrynovych in an interview to "Investgazeta" (Monday, March 14, 2011).
The Minister explained that in the process of developing strategies of protection of Ukraine's interests in every case of a dispute with a foreign investor Ministry comes primarily from the possibility of a peaceful settlement.
On February 3 2011 the Verkhovna Rada of Ukraine passed the Law amending the Law “On Arbitration Courts” which excludes the consumers’ disputes (including those related to consumers of services of banks and credit unions) out of the competence of arbitration courts. In our previous articles we commented that initiative and discussed the main “pro” and “cons” of arbitration in consumer cases.
Posted by International Arbitration Team
Some years ago Ukrainian courts established the approach that the transfer of funds as a contribution of a participant to the statutory capital had to be considered as a kind of agreement, and the company’s charter reflected that agreement. Later that approach was changed.
On November 24, 2010 the Supreme Court of Ukraine adopted its final ruling on RosUkrEnergo v. Naftogaz Ukrainy JSC case. The Court supported the position of the court of first instance and the appeal court. As we informed in our previous posts that after the arbitral tribunal had issued its award in favor of RosUkrEnergo, the respective motion on its enforcement was filed to the Ukrainian court. The court of first instance satisfied the motion, however its ruling was appealed.
Now, after the cassation instance ruled about the enforcement, there is a chance to challenge the court ruling on the grounds of new circumstances revealed or on the extraordinary grounds. The chance is rather theoretical.
After the award in Rosukrenergo (we followed the case in our previous posts) case was issued against the Ukrainian respondent, Ukrainian authorities and state officials announced several options of further actions, including filing an appeal against the award issues by the arbitral tribunal of the Arbitration Institute of the Stockholm Chamber of Commerce.
In addition to those measures the members of the Ukrainian Parliament invented another one.