1 Arbitration Agreements
1.1 What, if any, are the legal requirements of an arbitration agreement under the laws of Ukraine?
Under Ukrainian law, an arbitration agreement must be in writing whether in the form of an arbitration clause in a contract or in the form of a separate agreement. An arbitration agreement is considered to be in writing if it is contained in a document signed by the parties or in an exchange of letters, telegrams or other means of communication that provide for recording of such agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause also constitutes an arbitration agreement, provided that the contract is in writing and the reference is such as to make that clause part of the contract.
1.2 What other elements ought to be incorporated in an arbitration agreement?
Ukrainian law does not provide for any specific requirements as to the content of an arbitration agreement. However, since an arbitration agreement is considered to be a separate agreement independent of terms and conditions of the contract(s) covered by such arbitration agreement (clause), it should contain the parties’ consent to refer disputes between them to arbitration. From a practical perspective, one of the most essential elements of an arbitration agreement is the correct name of the particular arbitration institution or a precise reference to ad hoc arbitration, since any defects in this respect (e.g., mistakes, omissions, typos, conflicts between bilingual versions, etc.) may result in an arbitration agreement being recognised as invalid, non-enforceable or not concluded, as well as in setting aside the arbitral award by Ukrainian courts.
In addition, an arbitration agreement shall contain a description of the parties and legal relationships covered by the respective arbitration agreement, the scope of issues (disputes) to be referred to the arbitration, reference to the particular rules of arbitration and other procedural details agreed by the parties (number of arbitrators, language and place of arbitration, terms of arbitral proceedings, etc.).
1.3 What has been the approach of the national courts to the enforcement of arbitration agreements?
Should the parties accurately conclude an arbitration agreement specifying essential elements therefor as provided in question above, Ukrainian courts tend to enforce such arbitration agreements. In particular, a Ukrainian court would stay its proceedings and refer the parties to arbitration if the subject matter of an action brought before such court is covered by an arbitration agreement.
However, an arbitration agreement may be recognised as not enforceable in Ukraine under the following circumstances:
- requirements as to an arbitration agreement are not met (seу questions 1.1 and 1.2 above);
- a dispute covered by an arbitration agreement is not arbitrable under Ukrainian law;
- the arbitration agreement is recognised as null and void, inoperative or unenforceable;
- if the party waived its right to duly present the jurisdictional objections to the Ukrainian court where an action is brought in a matter which is the subject of an arbitration agreement; or
- parties have agreed to terminate an arbitration agreement.
2 Governing Legislation
2.1 What legislation governs the enforcement of arbitration proceedings in Ukraine?
The main national legislation rules governing international arbitration (with the seat of the tribunal in Ukraine) are set forth by the 1994 Act of Ukraine “On International Commercial Arbitration” (the “ICA Act”) as well as by the Civil Procedural Code of Ukraine setting forth procedural rules for challenging and enforcing arbitral awards by Ukrainian courts.
2.2 Does the same arbitration law govern both domestic and international arbitration proceedings? If not, how do they differ?
Ukrainian legislation provides for two separate regulations for domestic arbitration proceedings and international commercial arbitration proceedings in Ukraine.
Domestic arbitration covering disputes between Ukrainian parties (legal entities and/or individuals) is primarily governed by the 2004 Act of Ukraine “On Arbitral (Treteyski) Courts” (the “Domestic Arbitration Act”), the provisions of which differ from the regulation offered by the UNCITRAL Model Law. Disputes involving a foreign party do not fall within the jurisdiction of such domestic arbitration courts, and may be referred to an international arbitration or national courts.
2.3 Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the two?
The ICA Act governing international arbitration in Ukraine is almost completely based on the 1985 UNCITRAL Model Law with only a few differences.
The major difference between the ICA Act and the 1985 UNCITRAL Model Law is that, instead of the international arbitration definition provided in Article 1 (3) of the 1985 UNCITRAL Model Law, the ICA Act defines the particular disputes which may be referred to international commercial arbitration pursuant to an agreement of the parties, namely:
(i) disputes resulting from contractual and other civil law relationships arising in the course of foreign trade and other forms of international economic relations, provided that theplace of business of at least one of the parties is situated abroad; and
(ii) disputes arising between enterprises with foreign investment, international associations and organisations established in the territory of Ukraine; disputes between the participants of such entities, as well as disputes between such entities and other subjects of the law of Ukraine, except for the dispute referred to the exclusive jurisdiction of Ukrainian courts.
2.4 To what extent are there mandatory rules governing international arbitration proceedings sited in Ukraine?
The ICA Act provides for only a few mandatory rules on international arbitration proceedings in Ukraine:
- the arbitration agreement shall be in writing (article 7(2) of ICA Act);
- the arbitration tribunal must treat the parties equally and provide them with a full opportunity to present their cases (article 18 of ICA Act);
- the arbitral award shall be made in writing and shall be signed by the sole arbitrator or by a majority of the arbitral tribunal (article 31(1) of ICA Act);
- the arbitral award must be reasoned (article 31(2) of ICA Act); and
- the parties may not derogate from the procedure applicable under the Ukrainian law for setting aside the arbitral awards (article 34 of ICA Act).
3.1 Are there any subject matters that may not be referred to arbitration under the governing law of Ukraine?What is the general approach used in determining whether or not a dispute is “arbitrable”?
Article 12 of the Commercial Procedural Code of Ukraine prohibits the reference to arbitration (both domestic and international) to the following types of disputes (which fall exclusively within the competence of the commercial courts of Ukraine):
- disputes on invalidation of acts;
- disputes arising out of the conclusion, amendment, termination and performance of public procurement contracts;
- disputes arising out of corporate relations between a company and its participant (founder, shareholder), including a former participant, as well as between the participants (founders, shareholders) of the company related to establishment, activities, management and liquidation of such company, but excluding labour disputes; and
- other disputes established by Ukrainian law.
The above list can also be supplemented by the following categories of disputes, which may not be referred to arbitration under Ukrainian laws:
- insolvency cases if the debtor was established under Ukrainian legislation;
- disputes concerning unfair competition;
- disputes concerning intellectual property (IP) that require registration of IP rights or issuance of a certificate (patent) in Ukraine; and
- disputes involving the issuance or destruction of securities registered (issued) in Ukraine.
The Domestic Arbitration Act sets forth its own list of non-arbitrable disputes.
3.2 Is an arbitrator permitted to rule on the question of his or her own jurisdiction?
Pursuant to the ICA Act, an arbitrator may rule on her/his own jurisdiction, including any objections as to the existence or validity of the arbitration agreement.
3.3 What is the approach of the national courts in Ukraine towards a party who commences court proceedings in apparent breach of an arbitration agreement?
Upon a party’s request (jurisdictional objections), a Ukrainian court shall stay its proceedings initiated by another party in an apparent breach of an arbitration agreement and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or unenforceable. The said jurisdictional objections shall be made not later than the submission of the respondent’s first statement on the merits.
3.4 Under what circumstances can a court address the issue of the jurisdiction and competence of the national arbitral tribunal? What is the standard of review in respect of a tribunal’s decision as to its own jurisdiction?
A court may address the issue of the jurisdiction and competence of the arbitral tribunal sited in Ukraine in the following cases:
(i) If the arbitral tribunal (with a seat of arbitration in Ukraine) renders a preliminary ruling that it has jurisdiction, this decision may be then appealed to a local court at the place of arbitration, which shall finally decide on the issue of jurisdiction. Such decision of a local court is not subject to any further appeal.
(ii) If the party initiates an action before the national court which is covered by an arbitration agreement, such national court shall ensure that such arbitration agreement is enforceable, and if it is, such court shall stay the proceedings and refer the parties to arbitration (which directly affects the tribunal’s competence and jurisdiction).
(iii) If the party argues the competence and jurisdiction of the arbitral tribunal after the final arbitral award is rendered as abasis for setting aside or refusal to enforce the final award.
3.5 Under what, if any, circumstances does the national law of Ukraine allow an arbitral tribunal to assume jurisdiction over individuals or entities which are not themselves party to an agreement to arbitrate?
Ukrainian law is silent on the issue of a third party’s participation in international arbitration.
Under the 2007 Rules of the International Commentarial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC at UCCI) as amended on 2012, a third party may join in the arbitral proceedings only upon the consent of the parties to the dispute and the consent of such third party. The consent of a third party to participate in arbitration shall be in writing and the invitation of a third party may only be requested prior to submission of the statement of defence.
3.6 What laws or rules prescribe limitation periods for the commencement of arbitrations in Ukraine and what is the typical length of such periods? Do the national courts of Ukraine consider such rules procedural or substantive, i.e., what choice of law rules govern the application of limitation periods?
Under Ukrainian arbitration law, the arbitral proceedings shall commence on the date of the receipt of a request for arbitration by the respondent, unless the parties have agreed otherwise.
The limitation periods are set forth by the Civil Code of Ukraine; this is a substantive law issue. The general period of limitation is 3 (three) years as of the date when a person becomes aware of or ought to become aware of the violation of her/his rights. The specific limitation periods are set for certain types of claims by the Ukrainian law, as well certain international treaties which Ukraine is a party to.
3.7 What is the effect in Ukraine of pending insolvency proceedings affecting one or more of the parties to ongoing arbitration proceedings?
Any and all of the claims to a Ukrainian debtor being in an insolvency procedure shall be submitted to the competent commercial court considering the insolvency case within the 30- day period as of the time of the official announcement that the insolvency procedure has been initiated. Claims which were not duly submitted to the national court within the above period may be considered and settled without any priority after all the others in the liquidation procedure (irrespective of the fact that such claims are considered by the tribunal in ongoing arbitration proceedings involving such a debtor). However, a Ukrainian entity, which is subject to insolvency proceedings, is allowed to participate in the ongoing arbitration proceedings as a claimant/creditor. In addition, a motion for enforcement of the arbitral award against an insolvent Ukrainian debtor which is rendered prior to initiation of the insolvency proceeding may be separately filed with a competent court irrespective of the court considering the insolvency case.
4 Choice of Law Rules
4.1 How is the law applicable to the substance of a dispute determined?
An arbitral tribunal shall decide the dispute in accordance with the applicable law agreed by the parties. If the parties fail to choose the applicable rules of law, the arbitral tribunal shall determine them in accordance with the conflict of laws’ rules. The conflict of laws’ rules applicable to contracts in Ukraine are set forth in the Act of Ukraine “On Private International Law” (the “PIL Act”).
4.2 In what circumstances will mandatory laws (of the seat or of another jurisdiction) prevail over the law chosen by the parties?
Pursuant to the PIL Act, mandatory provisions of Ukrainian legislation prevail over, and are to be respected and given effect by, the courts and tribunals in all cases, even where a foreign law is applicable. Furthermore, the ICA Act directly provides that the parties may not derogate from the procedures applicable under Ukrainian law for setting aside the arbitral awards.
4.3 What choice of law rules govern the formation, validity, and legality of arbitration agreements?
As a general rule, lex loci contractus shall apply to these issues, but the mandatory laws of Ukraine shall in any case be taken into account (see question 4.2 above).
5 Selection of Arbitral Tribunal
5.1 Are there any limits to the parties’ autonomy to select arbitrators?
The ICA Act does not provide for any restriction as to who may act as an arbitrator, provided that such arbitrator is impartial and independent. Ukrainian laws governing international arbitration do not provide for other special requirements towards a person acting in an arbitrator’s capacity.
However, certain limits as to the parties’ autonomy to select arbitrators are provided by the international arbitration institutions. Under the 2007 Rules of ICAC at UCCI, the parties may appoint only those arbitrators who are listed in the Recommendatory Lists of Arbitrators as approved by the Presidium of UCCI. Such Recommendatory Lists of Arbitrators include arbitrators possessing the requisite specialised knowledge in settling disputes within the jurisdiction of ICAC at UCCI.
In domestic arbitration, the requirements and restrictions as to the choice of arbitrators are much stricter. In particular, under the Domestic Arbitration Act, the arbitrator shall have: (i) no criminal record; (ii) the qualification agreed by the parties and/or provided under the respective arbitration rules; and (iii) a higher legal education (this requirement is provided for a sole/presiding judge only). Also, the judges of the courts of general jurisdiction and the Constitutional Court of Ukraine are not allowed to serve as arbitrators in domestic arbitration.
5.2 If the parties’ chosen method for selecting arbitrators fails, is there a default procedure?
If the parties’ chosen method for selecting arbitrators fails, any party may request the President of the Ukrainian Chamber of Commerce and Industry (the “President of the UCCI”) to take the necessary measures, unless the agreement on the appointment procedure provides other means for securing the appointment. A decision of the President of the UCCI on the above matter shall be subject to no appeal.
In appointing an arbitrator, the President of the UCCI shall have due regard to any qualifications required of the arbitrator by the arbitration agreement and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator. In the case of a sole or third arbitrator, he shall take into account the advisability of appointing an arbitrator of a nationality other than those of the parties.
5.3 Can a court intervene in the selection of arbitrators? If so, how?
National courts are not allowed to intervene in the selection of arbitrators under Ukrainian law, unless such selection was done in breach of the arbitration procedure which may be a potential basis for a national court to set the arbitral award aside.
5.4 What are the requirements (if any) as to arbitrator independence, neutrality and/or impartiality and for disclosure of potential conflicts of interest for arbitrators imposed by law or issued by arbitration institutions within Ukraine?
An arbitrator shall disclose any circumstances that may give rise to justifiable doubts as to her/his impartiality or independence. The ICA Act and Rules of the ICAC at UCCI provide for the parties’ ability to challenge an arbitrator if circumstances exist that give rise to justifiable doubts as to her/his impartiality or independence or if he does not possess qualifications required by the agreement of the parties.
The IBA Guidelines on Conflicts of Interest in International Arbitration (IBA Guidelines) are often referred to in the parties’ counsels’ motions to justify the challenge to an arbitrator, although neither the ICA Act nor the rules of Ukrainian permanent arbitration institutions refer to IBA Guidelines and/or other provisions clarifying the requirements and duties of arbitrators in this respect.
6 Procedural Rules
6.1 Are there laws or rules governing the procedure of arbitration in Ukraine? If so, do those laws or rules apply to all arbitral proceedings sited in Ukraine?
Apart from the procedural rules established by the ICA Act, the parties are free to agree on the procedure of arbitration. In the absence of such agreement between the parties, the arbitral tribunal may conduct the arbitral proceedings in a manner it deems appropriate provided that provisions of the ICA Act are duly met.
There are also the rules of the permanent arbitration institutions in Ukraine (ICAC and MAC at UCCI) providing for more specific regulation of the arbitration proceedings administered by the mentioned institutions.
6.2 In arbitration proceedings conducted in Ukraine, are there any particular procedural steps that are required by law?
The ICA Act provides for the mechanism for commencing arbitral proceedings: the statement of claim is to be submitted within thetime agreed by the parties or determined by the arbitral tribunal. Failure to comply with the above procedure will result in the termination of the proceedings. Otherwise, the ICA Act vests the power to agree on the particular procedural steps on the parties who are also free to choose the arbitration rules governing the procedure.
Under the ICA Act, arbitral proceedings shall commence on the date of the receipt of a request for arbitration by the respondent, unless the parties have agreed otherwise.
Rules of the permanent arbitration institutions in Ukraine provide that the arbitration proceeding is initiated by the order of the president of ICAC or MAC, respectively. This order is issued by filing a statement of claim with the arbitration institution and the payment of the registration fee. The statement of claim shall be signed by the authorised person (confirmed by the respective powers of attorney) and contain the name of the arbitration institution, names and contact details of the parties, value of the claim, justification of the arbitration competence, claimant’s demands, factual background of the dispute and legal position for the claim.
At the same time as sending the order for the initiation of the proceedings to the claimant, the arbitration institution shall communicate the amount of the arbitration fee to be paid by the claimant within 30 days of receipt of the proposal. If the claimant fails to pay the arbitration fee within the above period, the arbitral proceedings in the case shall be terminated.
6.3 Are there any particular rules that govern the conduct of counsel from Ukraine in arbitral proceedings sited in Ukraine? If so: (i) do those same rules also govern the conduct of counsel from Ukraine in arbitral proceedings sited elsewhere; and (ii) do those same rules also govern the conduct of counsel from countries other than Ukraine in arbitral proceedings sited in Ukraine?
There are no particular rules in the ICA Act governing the conduct of counsel from Ukraine in arbitral proceedings sited in Ukraine. The rules of permanent arbitration institutions in Ukraine set forth only general obligations for both parties’ counsels, from Ukraine or abroad, to make fair use of their procedural rights, refrain from abusing such rights and observe the time limits established by the tribunal.
6.4 What powers and duties does the national law of Ukraine impose upon arbitrators?
Arbitrators are obliged to provide for equal treatment of the parties and to give full opportunity to each party to present its case. Also, arbitrators are under a continuing obligation throughout the arbitration to immediately disclose all circumstances giving rise to reasonable doubts as to their impartiality and independence.
It is also worth mentioning that arbitrators should give proper notice in advance of any hearing or meeting in arbitration proceedings, as well as ensure that the final arbitral award is rendered in compliance with all the requirements established by the ICA Act and the respective arbitration rules, if any.
The ICA Act empowers the arbitrators to order interim measures at the request of a party, unless otherwise agreed by the parties.
6.5 Are there rules restricting the appearance of lawyers from other jurisdictions in legal matters in Ukraine and, if so, is it clear that such restrictions do not apply to arbitration proceedings sited in Ukraine?
There are no limitations for the foreign lawyers to represent a party in arbitration proceedings in Ukraine.
Formally, except for criminal proceedings, Ukrainian law does not pose any considerable barriers on foreign representatives of the parties (lawyers) to appear in legal matters before Ukrainian national courts. However, the rights, guarantees and privileges established by the 2012 Act of Ukraine “On Bar and Advocacy” (the “Advocacy Act”) apply only to the attorneys admitted to the bar in Ukraine. At the same time, a foreign attorney can also be admittedto advocacy (bar) in Ukraine subject to the requirements established
under the Advocacy Act.
6.6 To what extent are there laws or rules in Ukraine providing for arbitrator immunity?
Ukrainian law addresses neither the issue of arbitrators’ immunity, nor the issue of liability for their conduct in the international arbitration (unless the issue of fraud is involved in the latter case).
6.7 Do the national courts have jurisdiction to deal with procedural issues arising during an arbitration?
Ukrainian national courts deal with the following procedural issues during an arbitration:
(a) staying court proceedings and referring the parties to arbitration in disputes covered by an arbitration agreement (see questions 1.3 and 3.3 above); and
(b) deciding on the arbitral tribunal’s jurisdiction (see question 3.4 above).
7 Preliminary Relief and Interim Measures
7.1 Is an arbitrator in Ukraine permitted to award preliminary or interim relief? If so, what types of relief? Must an arbitrator seek the assistance of a court to do so?
The arbitral tribunal is entitled by the ICA Act to order interim measures at the request of a party, unless otherwise agreed by the parties.
The arbitration rules of currently the only international arbitration institutions in Ukraine – ICAC and MAC at UCCI – provide for the powers of the Presidents of ICAC and MAC at UCCI (prior to the formation of the arbitration tribunal) or the arbitral tribunal (if already composed) to determine the amount and the form of
the security for the claim. Neither the ICA Act nor the arbitration rules of ICAC and MAC at UCCI provide for the particular types of relief. In practice, such interim relief measures include prohibition to dispose of money on accounts and/or alienate certain assets. Provisions of the above arbitration rules of ICAC and MAC directly provide that an arbitral order for security of the claim is binding upon the parties and shall be in force until a final arbitral award is made. However, the enforcement of such arbitral order for security of the claim through the national courts is practically impossible under current Ukrainian procedural legislation.
7.2 Is a court entitled to grant preliminary or interim relief in proceedings subject to arbitration? In what circumstances? Can a party’s request to a court for relief have any effect on the jurisdiction of the arbitration tribunal?
Pursuant to the ICA Act, it is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, a court to order interim measures of protection and for a court to make a decision granting such measures.
Such a request does not cause any prejudice to the issue of jurisdiction of the arbitral tribunal.
7.3 In practice, what is the approach of the national courts to requests for interim relief by parties to
Since no procedural rules for granting interim measures in support of arbitration proceedings and no competent court is defined for such matters by the Ukrainian procedural laws, it would be practically impossible to apply the above provision and obtain such interim measures in Ukrainian courts. However, it is also worth noting that due to recent amendments of Ukrainian civil procedural legislation, it is now possible to obtain the interim measures at the stage of recognition and enforcement of the foreign or international arbitral award in Ukraine. See also question 15.1 below.
7.4 Under what circumstances will a national court of Ukraine issue an anti-suit injunction in aid of an arbitration?
In the framework of current Ukrainian legislation and jurisprudence, Ukrainian courts do not issue anti-suit injunctions in support of an arbitration (see also question 7.3 above).
7.5 Does the national law allow for the national court and/ or arbitral tribunal to order security for costs?
Ukrainian law does not allow the national court to order security for arbitration costs. Under Article 17 of the ICA Act, arbitrators are entitled to grant any interim relief they think fit. See also question 7.1 above.
It should be noted that the arbitration fees in the arbitration proceedings at ICAC and MAC at UCCI are paid by the parties in advance. As regards other expenses (arbitrators’ travelling expenses, accommodation, translation, hearings outside the arbitration institution, etc.), the arbitration institution may require either of the parties to deposit an advance for the additional costs of the arbitral proceedings or to grant a respective guarantee to compensate these costs.
8 Evidentiary Matters
8.1 What rules of evidence (if any) apply to arbitral proceedings in Ukraine?
Pursuant to the general rule established by the ICA Act, the parties to arbitration are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. Unless so agreed by the parties, the arbitral tribunal has the power to conduct the arbitration in such a manner as it considers appropriate, including the power to determine the admissibility, relevance, materiality and weight of any evidence.
Subject to any contrary agreement by the parties, the arbitral tribunal decides whether to hold oral hearings for the presentation of evidence or not. Witnesses, experts, documents and inspections are admissible as evidence sources under the ICA Act.
8.2 Are there limits on the scope of an arbitrator’s authority to order the disclosure of documents and other disclosure (including third party disclosure)?
With regards to the rules for the taking of evidence, Ukrainian arbitration laws do not provide any specific rules regarding disclosure. However, the arbitral tribunal has the power to require a party to give the expert any relevant information or to produce, or provide access to, any relevant documents, goods or other property for an expert’s inspection.
The 2007 Rules of ICAC at UCCI empower the Secretary General of ICAC at UCCI to request from the parties additional documents or information concerning any written statements submitted by them. Failure to submit the requested information or documents may confer upon the ICAC President the power to terminate the arbitral proceedings.
The IBA Rules on Taking Evidence in International Arbitration are not generally taken into consideration as binding by the arbitral tribunals in Ukraine.
8.3 Under what circumstances, if any, is a court able to intervene in matters of disclosure/discovery?
Pursuant to Article 27 of ICA Act, the arbitral tribunal, or a party with the approval of the arbitral tribunal, may request from a competent court of this state assistance in taking evidence. The court, guided by its rules on taking evidence, may execute the request within its competence. However, as a matter of practice, Ukrainian courts are reluctant to interfere in taking evidence for the purposes of arbitration.
8.4 What, if any, laws, regulations or professional rules apply to the production of written and/or oral witness testimony? For example, must witnesses be sworn in before the tribunal or is cross-examination allowed?
Witnesses, experts, documents and inspections are admissible as evidence sources under the ICA Act. The 2007 Rules of ICAC at UCCI provides for the rights of arbitrators to call and hear witnesses of the parties. See also questions 7.1 and 7.2 above.
Furthermore, Ukrainian laws do not contain specific rules governing witness testimony procedure (including cross-examination), and thus this issue is left at the discretion of the parties and/or the arbitral tribunal. Witnesses are not sworn in prior to testifying before the arbitral tribunal.
8.5 What is the scope of the privilege rules under the law of Ukraine? For example, do all communications with outside counsel and/or in-house counsel attract privilege? In what circumstances is privilege deemed to have been waived?
The laws of Ukraine are silent as to confidentiality rules on communications between counsels within arbitration proceedings. However, the confidential character of attorney-client relations (including communications and documents) is secured by the Advocacy Act.
9 Making an Award
9.1 What, if any, are the legal requirements of an arbitral award? For example, is there any requirement under the law of Ukraine that the Award contain reasons or that the arbitrators sign every page?
The arbitral award shall be made in writing and shall be signed by the majority of the arbitral tribunal. The award shall state the reasons for the decision, whether the claim is granted or rejected, the amount of the arbitration fee and costs, and their apportioning, and also the date and the place of arbitration.
The ICA Act sets forth that the award, having been dated and signed by the arbitrators, shall be delivered to each party, while the exact time limits for delivery of such award are not provided therein.
The arbitration rules of ICAC and MAC at UCCI supplement the above content of the arbitral award by the name of the arbitration institution, case registration number, full names of the arbitrators, names of the parties in dispute and other persons participating in the arbitral proceedings and subject matter of the dispute and a summary of the circumstances of the case.
10 Challenge of an Award
10.1 On what bases, if any, are parties entitled to challenge an arbitral award made in Ukraine?
International arbitral awards rendered in Ukraine may be set aside by the national court at the place of arbitration if any of the following grounds exist:
- a party to the arbitration agreement was under some incapacity to enter into it, or the said agreement is not valid under the law to which the parties have subjected it, or, failing any indication thereon, under the law of Ukraine;
- the party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present its case;
- the award was made regarding a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration;
- the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of the ICA Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with the ICA Act;
- the subject-matter of the dispute cannot be settled by arbitration under the law of Ukraine; or
- the award is in conflict with the public policy of Ukraine.
10.2 Can parties agree to exclude any basis of challenge against an arbitral award that would otherwise apply as a matter of law?
Pursuant to the ICA Act, the parties may not derogate from the procedure applicable under Ukrainian law for setting aside arbitral awards.
10.3 Can parties agree to expand the scope of appeal of an arbitral award beyond the grounds available in relevant national laws?
No. The list of grounds for setting the arbitral award aside established by Article 34 of the ICA Act is exhaustive. Please see question 10.2 above.
10.4 What is the procedure for appealing an arbitral awardin Ukraine?
The motion for setting aside an arbitral award shall be filed with the local (first instance) court at the place of arbitration within three months from the date of award or receipt of the award.
The local court ruling on setting aside the arbitral award or rejecting the challenge may be further appealed in the respective appellate court, where the court proceeding approximately lasts two to four months.
The appellate court’s ruling may be subject to cassation appeal to the Superior Specialised Court of Ukraine on Civil and Criminal Matters with the proceeding lasting two to four months. The last appeal option is a review on very limited grounds of a ruling of the Superior Specialised Court of Ukraine by the Supreme Court of Ukraine.
Since January 2015, the court fee for filing the motion for setting the arbitral award aside amounts to UAH 609.00. A party filing the appeal or cassation appeal to the local court ruling on challenge of an arbitral award will be additionally charged a court fee amounting to UAH 121.80.
11 Enforcement of an Award
11.1 Has Ukraine signed and/or ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards? Has it entered any reservations? What is the relevant national legislation?
Ukraine is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), which has been in force in Ukraine since 8 January 1961. As regards the awards made in non-contracting states, Ukraine will apply the New York Convention only under the reciprocity principle.
As regards the international arbitral awards rendered in Ukraine, the enforcement of such awards is covered by the ICA Act and Chapter VIII of the Civil Procedural Code of Ukraine, while the awards of domestic arbitration courts are enforced pursuant to the Domestic Arbitration Act and respective provisions of the Civil Procedural Code (Chapter VII¹) or the Commercial Procedural Code of Ukraine (Chapter XIV-1) depending on the status of the parties involved in the disputes (i.e., legal entities or individuals).
Apart from the above sources, some other rules concerning international and domestic arbitration are also found in the Act of Ukraine “On Enforcement Proceedings” (Enforcement Proceedings Act) and the Act of Ukraine “On Private International Law” (PIL Act).
11.2 Has Ukraine signed and/or ratified any regional Conventions concerning the recognition and enforcement of arbitral awards?
Among the regional conventions concerning the recognition and enforcement of arbitral award, which are signed and ratified by Ukraine, the following international instruments should be mentioned: the 1961 European Convention on International Commercial Arbitration; and the 1992 Kyiv (CIS) Convention on the Settlement of Commercial Disputes.
11.3 What is the approach of the national courts in Ukraine towards the recognition and enforcement of arbitration awards in practice? What steps are parties required to take?
Should all formal requirements be met, Ukrainian courts tend to grant enforcement of foreign or international arbitral awards provided that recognition and enforcement are permitted under an international treaty ratified by Ukraine or on the basis of the reciprocity principle. If the recognition and enforcement of the foreign court’s decision depends on the reciprocity principle, it shall be presumed that reciprocity exists unless it is proven otherwise.
A party seeking recognition and enforcement of the foreign or international arbitral award shall file, within three years from the time such awards became effective, a respective written motion with the local court at the place of residence or location of the debtor. Such motion for enforcement shall be accompanied by the duly authenticated power of attorney, a receipt confirming the court’s fee payment, as well as the list of documents provided under Article IV (1) of the New York Convention. Failure to observe the formal requirements as to the documents submitted to the court will result in returning the motion for enforcement of arbitral award to the applicant without consideration. The motion for enforcement may only be considered within the specific limits set forth by the New York Convention and the ICA Act providing that the competent courts may not examine correctness of the said award, nor may they introduce any changes therein.
11.4 What is the effect of an arbitration award in terms of res judicata in Ukraine? Does the fact that certain issues have been finally determined by an arbitral tribunal preclude those issues from being re-heard in a national court and, if so, in what circumstances?
Under Ukrainian procedural laws, an arbitral award has the same res judicata effect as a court decision and, respectively, if an arbitral award exists concerning the same dispute between the same parties on the same grounds, court proceedings shall be terminated.
11.5 What is the standard for refusing enforcement of an arbitral award on the grounds of public policy?
The notion of public policy is not clearly established in Ukrainian legislation and court practice, and, therefore, the courts may invoke this provision in quite unexpected cases. However, the Decree of Plenum of the Supreme Court of Ukraine “On Courts’ Practice Regarding Recognition and Enforcement of the Decisions of Foreign Courts and Arbitral Tribunals and Setting Aside Arbitral Awards Rendered within the Territory of Ukraine” No. 12 dd. 24 December 1999 provided for certain indications as to how public order (the expression is almost identical to “public policy”) should be understood by referring to the legal order of the state and the determining principles as being fundamentals of the existing state order, and connected to its independence, integrity, inviolability, main constitutional rights, freedoms, guarantees, etc.
While considering enforcement of the SCC Award in a high profile involving the Ukrainian state oil and gas enterprise and RosUkrEnergo AG (Austria), on 24 November 2010 the Supreme Court of Ukraine rejected the debtor’s arguments on contradiction of the SCC award to the public policy of Ukraine due to a huge amount of gas volumes seized as groundless, since “the awards are binding only upon [the parties] and do not influence on the independence, integrity, sovereignty and inviolability, basic constitutional rights, liberties, guarantees as basis of Ukraine’s existent regime”.
12.1 Are arbitral proceedings sited in Ukraine confidential? In what circumstances, if any, are proceedings not protected by confidentiality? What, if any, lawgoverns confidentiality?
The ICA Act does not contain any direct provisions regarding the confidentiality of arbitration proceedings. Therefore, the confidentiality of an arbitration proceeding is ensured either by the arbitration agreement or by the arbitral tribunal/arbitration institution. However, the arbitration hearings and case files are not public as such.
Under the 2007 Rules of the ICAC at UCCI, the ICAC President and Vice Presidents, arbitrators and the ICAC Secretariat shall refrain from disclosing information about disputes, settled by the ICAC at UCCI, which they become aware of. The hearings in the ICAC are held in camera. However, upon consent of the parties, the arbitral tribunal may allow persons who do not participate in the arbitral proceedings to attend the hearings.
12.2 Can information disclosed in arbitral proceedings be referred to and/or relied on in subsequent proceedings?
Ukrainian laws do not contain any restrictions as to the use of such information in subsequent proceedings. Furthermore, the confidentiality of information disclosed in arbitration is effected by the court proceedings in respect of enforcement and setting aside procedures, which are public in Ukraine and require disclosure of the arbitral award, and transfer of the arbitration case files to the court (in case of setting aside).
13 Remedies / Interests / Costs
13.1 Are there limits on the types of remedies (including damages) that are available in arbitration (e.g., punitive damages)?
There are none, provided that the remedies comply with the applicable substantive law and are compatible with the private law nature of arbitration (they may not bind public officials, declare public acts invalid, etc.), and the public policy of Ukraine (e.g.,punitive damages, which are not available under the Civil and Commercial Codes may be impossible).
13.2 What, if any, interest is available, and how is the rate of interest determined?
The arbitral tribunals may award the interests for principal claims only, if they are provided under the material law applicable to the dispute. As a rule, such interest is calculated in a lump sum by the date of arbitral tribunal at the latest. The provisions of an award specifying for interest as a percentage to be accrued on a lump sum until the actual payment date would be rather difficult to enforce in Ukraine.
The Civil Code of Ukraine provides for 3% annual interest, payable by the debtor in case of a payment default, unless otherwise established by a contract or law.
13.3 Are parties entitled to recover fees and/or costs and, if so, on what basis? What is the general practice with regard to shifting fees and costs between the parties?
The ICA Act sets forth only a general rule that, in the final award, the arbitral tribunal shall state the total amount of the arbitration fee and costs and their allocation, but does not provide any specific rules for such allocation. Parties are free to agree on allocation of the arbitration fee in the arbitration agreement.
The Schedule on Arbitration Fees and Costs attached to the 2007 ICAC Rules provides the detailed rules on allocation of costs in the award. In particular, unless otherwise agreed by the parties, the arbitration fee shall be charged to the losing party. If the claim is granted partially, the arbitration fee shall be allocated between the parties proportionally. The costs of arbitration proceedings relating to the dismissed claim’s amount shall be borne by the claimant.
As regards the parties’ expenses (including travelling expenses, legal fees, etc.), they shall be borne by each party on its own. However, the expenses of the winning party under the arbitral awardmay be charged to the losing party to the extent that the arbitral tribunal finds the amount of such costs reasonable and confirmed. The recent ICAC practice in this respect shows a positive tendency towards granting the successful party’s requests for compensation of legal fees and expenses.
13.4 Is an award subject to tax? If so, in what circumstances and on what basis?
The arbitral award itself is not subject to tax in Ukraine. However, revenues due according to the award may be subject to tax. The Tax Code of Ukraine provides for certain exemptions from taxation of the payment received under the arbitral award in Ukraine depending on the type of revenue (income), particular expenses of the winning party and the tax status of the beneficiary.
13.5 Are there any restrictions on third parties, including lawyers, funding claims under the law of Ukraine? Are contingency fees legal under the law of Ukraine? Are there any “professional” funders active in the market, either for litigation or arbitration?
Ukrainian laws do not provide any rules in respect of the possibility to fund claims in Ukraine. Lawyers are free to agree with the clients any types of fees, including contingency fees. As to our knowledge, there are no funders officially offering such service as funding claims in litigation or arbitration in Ukraine.
14 Investor State Arbitrations
14.1 Has Ukraine signed and ratified the Washington Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (1965) (otherwise known as “ICSID”)?
Ukraine is a state party to the 1965 Washington (ICSID) Convention on the Settlement of Investment Disputes between States andNationals of Other States (in force for Ukraine since 7 July 2000)
14.2 How many Bilateral Investment Treaties (BITs) or other multi-party investment treaties (such as the Energy Charter Treaty) is Ukraine party to?
Apart from the ICSID Convention, Ukraine is also a party to the 1994 Energy Charter Treaty (in force in Ukraine since 27 January 1999) and EU-Ukraine as well as to 73 bilateral investment treaties (BITs) for the promotion and reciprocal protection of investmentswith the following states: Albania (not in force), Algeria (not in force), Argentina, Armenia, Austria, Azerbaijan, Belarus, BLEU (Belgium-Luxembourg Economic Union), Bosnia and Herzegovina, Brunei Darussalam, Bulgaria, Canada, Chile, China, Congo (not in force), Croatia, Cuba, Czech Republic, Denmark, Egypt, Equatorial Guinea (not in force), Estonia, Finland, France, Gambia (not in force), Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Israel, Italy, Japan (not in force), Jordan (not in force), Kazakhstan, Republic of Korea, Kuwait, Kyrgyzstan, Latvia, Lebanon, Libya (not in force), Lithuania, Macedonia, Moldova, Mongolia, Morocco, Netherlands, Oman (not in force), Panama (not in force), Poland, Portugal, Russia, San Marino, Saudi Arabia (not in force), Serbia, Singapore (not in force), Slovakia, Slovenia, Spain, Sweden, Switzerland, Syrian Arab Republic (not in force), Tajikistan, Turkey, Turkmenistan, UAE, UK, USA, Uzbekistan, Vietnam, Yemen (not in force).
14.3 Does Ukraine have any noteworthy language that it uses in its investment treaties (for example in relation to “most favoured nation” or exhaustion of local remedies provisions)? If so, what is the intended significance of that language?
Ukraine does not employ a particular model for all BITs.
14.4 What is the approach of the national courts in Ukraine towards the defence of state immunity regarding jurisdiction and execution?
Ukrainian courts enforce the arbitral awards against Ukraine as a state and Ukrainian state enterprises under procedural rules applicable to enforcement of foreign or international arbitral awards requiring to receive a permit for enforcement and a write of execution (exequatur) through a local court of Ukraine at the place of a debtor. However, Ukrainian companies where 25% or more of shares are held by the state enjoy certain immunity at the execution stage due to the moratorium on the forced sale of their property
15.1 Are there noteworthy trends in or current issues affecting the use of arbitration in Ukraine (such as pending or proposed legislation)? Are there any trends regarding the type of disputes commonly being referred to arbitration?
Within new 2015 judicial reform in Ukraine, arbitration practitioners widely discuss proposals on new changes and amendments which are needed for reforming Ukrainian arbitration law and rules, including mechanisms enabling issuance of interim measures by the courts in support of arbitration which are currently not practically available under Ukrainian procedural legislation, and also a possibility to uplevel competence to consider challenges to arbitral awards in Ukraine from local courts to appellate courts.
On 22 May 2015 the Verkhovna Rada (Parliament) of Ukraine adopted also the Act of Ukraine on amendment of the Court Fee Act, which is now pending signing by the President of Ukraine to come into force. This Act provides for, inter alia, increasing a court fee for initiating proceedings on setting aside or enforcing arbitral awards in Ukraine to the amount of 50% of the minimum wage (being currently equal to UAH 609).
15.2 What, if any, recent steps have institutions in Ukraine taken to address current issues in arbitration (such as time and costs)?
In 2014 both the ICAC and MAC at the UCCI took certain steps towards reducing the financial costs of business entities referring their disputes to the mentioned institutions. In particular, on 24 April 2014, the Presidium of the Ukrainian Chamber of Commerce and Industry (UCCI) amended paragraph 1 of Section III of the Schedule of Arbitration Fees and Costs (being an appendix to the Rules of the ICAC and MAC, respectively), which reduced the amount of the arbitration fee if the claim price is USD 2,000,001 and above.