Enforcement of Arbitration Awards in Ukraine Ivan Lishchyna, Counsel.

Enforcement of Arbitration Awards in Ukraine

Ivan Lishchyna, Counsel


1.Legal basis on the enforcement.

2.Enforcement mechanism.

3.Refusal of enforcement and recognition.

4.Ukrainian case law.

Contents of the presentation:

LEGAL BASIS ON THE ENFORCEMENT



Acts governing recognition and enforcement of arbitration awards in Ukraine:– the Code of Civil Procedure;– the Law of Ukraine “On International Commercial Arbitration”, based on the

UNCITRAL Model Law;– the Law of Ukraine “On International Private Law”;– the Decree 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 of 24 December 1999, No. 12 (Decree No.12).

Most recent developments took place on 16.02.2010 when the Law of Ukraine № 1837 – VI “On amendments of certain legislative acts of Ukraine with the aim to clarify certain aspects of private international law” came into force establishing common procedure for recognition and enforcement of both foreign court judgments and foreign arbitration awards.

Legal basis


•After 1991, Ukraine concluded a number of bilateral agreements providing for the recognition and enforcement of foreign judgments and arbitration awards which can be classified into two groups:

(1) agreements on providing legal assistance in civil, criminal, family, etc. cases entered into between Ukraine and Azerbaijan (1993); Russia (1993); Kirgisia (1993); China (1993); Belarus (1993); Lithuania (1993); Moldavia (1994); Poland (1994; 1998); Estonia (1995); Georgia (1995); Latvia (1995); Mongolia

(1995); Greece (1996); Turkmenistan (1996); and Turkey (2000); and

(2) agreements on mutual encouragement of investments which provide for mutual recognition and enforcement of court/arbitration judgments as far as investments are concerned. Such agreements were concluded with Denmark (1992); Egypt (1992); Poland (1993); Germany (1993); United Kingdom (1993); Vietnam (1994); Armenia (1994); Lithuania (1994); U.S.A. (1994); Slovak Republic (1994); the Netherlands (1994); Argentina (1995); Bulgaria (1995); Estonia (1995); France (1995); Georgia (1995);Canada (1995); Kazakhstan (1995); Korea (1995); Czech Republic (1995); Sweden (1995); Austria (1996); Benelux (1996); Belarus (1996); Lebanon (1996); Chile (1996); Cuba (1996); Greece (1996); Hungary (1996); Israel (1996); Italy (1996); Moldavia (1996); Switzerland (1996);

Turkey (1996); Azerbaijan (1997); Croatia (1997); Latvia (1997); Indonesia (1997); Iran (1997); Spain (1998); Macedonia (1998).

Legal basis


Ukraine is a party to - the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards;- the 1965 Washington Convention on the Settlement of Investment Disputes Between States and

Nationals of Other States;- the 1961 European Convention on International Commercial Arbitration

Also, Ukraine two multilateral agreements providing for the enforcement mechanism within the Commonwealth of Independent States:

− the 1992 Agreement on Procedure of Settling Disputes with Regard to Carrying out Business Activities (the Kiev Agreement of 20 March 1992);

− the 1993 CIS Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Cases (the Minsk Convention of 22 January 1993).

Legal basis


Arbitration awards are enforced according to the procedure described in the Code of Civil Procedure.

Pursuant to Article 390 of the CPC, Ukrainian courts shall grant enforcement of arbitration awards provided that:

− recognition and enforcement are permitted under an international treaty ratified by the Verkhovna Rada of Ukraine (Parliament); or

− on the basis of reciprocity principle under an ad hoc agreement with a foreign country, whose court decision shall be enforced in Ukraine.

Enforcement mechanism


Procedure:

− The party seeking recognition and enforcement of a foreign arbitration award in Ukraine should file an application with the first instance court of general jurisdiction at the location of a person against whom the enforcement is requested (this means, for practical purposes, the registered address of the company or individual) or, if that may not be determined, the location of the said person’s property.

− The application must be filed within three years of the effective date of the award (except in the case of an award providing for recovery of periodic payments, which may be presented for enforcement during the entire payment period).

− The application must contain the name and address of the applicant, the award creditor, the name and address of the debtor or the location of the debtor’s property, and describe the legal grounds for the application.

− The application must be accompanied by documents required by an international treaty.



According to Article 394 of the CPC, the application for enforcement shall be accompanied with the documents as provided for by the respective international treaty. In particular, Article IV (1) of the New York Convention provides that the motion for enforcement shall be accompanied by the following documents:

− the duly authenticated original award or a duly certified copy thereof; − the original agreement referred to in Article II or a duly certified copy thereof.

Similar requirements are set out in Article 35 (2) of the Law of Ukraine on International Commercial Arbitration. According to Article 394 of the CPC and Article 35 of the Law, all the documents submitted together with the application for enforcement should be accompanied with a translation thereof into Ukrainian or another language as set out in the applicable international treaty.

However, the application of this rule is complicated in practice.



Procedure (continuation):

Upon receipt of the application for enforcement, the competent court sends a written notification to the opposing party within five days providing a period of one month to present its objections.

After the debtor submits written objections or refuses to do so, the court delivers a ruling setting the time and date of the hearing.

Having considered the application for enforcement and heard the arguments of the parties, the judge renders a ruling on granting or denying recognition and enforcement of foreign arbitration award. The said ruling serves as the basis for issuing the writ of execution triggering the executive procedure.

In case of partial enforcement of the arbitral award abroad prior to its recognition and enforcement in Ukraine, the court determines the part of the award that remains to be enforced in Ukraine.

The application for enforcement may only be considered within the specific limits set by the New York Convention and the Law on ICA providing that the competent courts may not examine the correctness of the said judgment, nor may they introduce any changes therein.


REFUSAL OF RECOGNITION AND ENFORCEMENT



Grounds for refusal of recognition and enforcement are slightly different for foreign court judgments and foreign arbitral awards.

The New-York Convention provides an exhaustive list of grounds for refusal of recognition and enforcement of foreign arbitration awards and it is duplicated in Article 36 of the Law of Ukraine “On international commercial arbitration”.

According to laws of Ukraine some of the disputes cannot be settled by arbitration proceedings and must be referred to courts. They include:

− disputes with respect of invalidation of statutory and non-statutory acts;− disputes arising from conclusion, amendment, termination or performance of commercial

contracts related to state needs;− where the dispute relates to immovable property located in Ukraine; − disputes arising with respect to IP rights which were registered and/or certified in Ukraine; − disputes related to registration or dissolution of legal entity within the territory of Ukraine; − disputes involving commercial paper officially issued and/or registered in Ukraine.

Refusal of recognition and enforcement


Article 36 of the Law on International Commercial arbitration, which is almost identical to the provisions of Article V of the New York Convention, provides that recognition or enforcement of arbitration awards, irrespective of the country in which it was made, may be refused only:if the party opposing enforcement furnishes evidence that:

− a party to arbitration agreement was under some incapacity or arbitration agreement was invalid,

− that the party was unable to present its case during arbitration, − that the award falls beyond the scope of the arbitration agreement, − that the composition of the arbitral tribunal was undue or− that the award has not become binding upon the parties or has been set aside.

The recognition and enforcement can also be refused if the court itself finds that:

− the award contradicts public policy or− the subject matter of the dispute is not abitrable under the laws of Ukraine.

Refusal of recognition and enforcement

UKRAINIAN CASE LAW


Ukrainian Case Law

The most frequent ground for refusal of recognition of awards in the Ukrainian courts is the alleged breach of Public Order, the mistakes in the identification of the arbitral institution and failure to duly notify the respondent.

Public Order the case of Telenor Mobile Communications AS v. Storm, LLC (corporate disputes); Carlsbad Enterprises Limited v. Public Bureau (Embassy) of the Great Socialist Libyan Arab

Republic (sovereign immunity);


The correct identification of the arbitral institution

Explanation by the Higher Commercial Court on certain issues concerning the practice of consideration of cases involving foreign companies and organisations of 31.05.2002: “An arbitration agreement cannot be enforced if the parties incorrectly stated the name of an arbitration court or indicated an arbitral institution, which does not exist”.

LLC Kremenetske Milk v. AGROCOMPLEX Sp.Z о.о. “Arbitration Court of Ukraine at Chamber of Commence in Kyiv” – unenforceable pursuant to Ruling of Shevchenko District Court of Kyiv of 29.11.2012

Zaporozhie Vodokanal v. Dogus “International Economic Arbitration Court at Ukrainian Chamber of Commerce” – invalid under Judgment of the Kyiv City Commercial Court.

Ukrainian Case Law


THANK YOU FOR YOUR ATTENTION!


Ivan Lishchyna, Counsel

AstapovLawyers International Law Group Business Center «Sophia»,

6 Rulskyi lane., 6th floorKyiv, 01001, Ukraine

T: +38 (044) 490 70 01F: +38 (044) 490 70 02

[email protected]

Enforcement of Arbitration Awards in Ukraine Ivan Lishchyna, Counsel.

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