Enforcing arbitral awards in Ukraine15. Juni 2022
Mariia a.k.a. Masha is Ukrainian and, as part of the Safe Harbor for UA Students initiative, joined our team as intern from March to June 2022. Masha is to graduate soon with an LL.B. in International Law from the Institute of International Relations of Taras Shevchenko National University of Kyiv this summer. Next to her legal studies, she worked for a Kyiv-based law firm last summer, joined Arbitrator Intelligence as a research assistant and ambassador earlier this year and is a committed Vis mootie.
Ukraine has been known as a hub for commercial activity since ancient times. Due to its beneficial geographical position, Ukraine has been referred to as “The Gates of Europe”. No wonder, then, that the groundwork for the functioning of arbitration in Ukraine has a long history.
That being said, acquiring independence from the USSR in 1991 started a new page for the development of arbitration in Ukraine. Apart from the domestic mechanisms inherited from the Soviet Union, Ukraine has developed a practice for solving international disputes that meets international standards. That is why it has become an attractive jurisdiction for arbitration.
The International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (hereinafter “ICAC at the UCC”) is now one of the most reputable arbitration institutions in Central and Eastern Europe, considering 300-600 cases every year. Moreover, in recent years Ukraine put a lot of effort in creating a favourable environment for businesses. All of this has led to considerable demand for arbitration in Ukraine and its further development.
What is the applicable procedural law/arbitration act for recognition and enforcement of an arbitral award in your jurisdiction and which is the relevant section?
The recognition and enforcement of arbitral awards in Ukraine is governed by:
- the Ukrainian Civil Procedure Code 1618-IV which entered into force on 1 September 2005 (hereinafter “CPC”);
- section VIII of the Law No. 4002-XII on International Commercial Arbitration which entered into force on 20 April 1994 (and is based on the UNCITRAL Model Law) (hereinafter “Law on International Commercial Arbitration”);
- the Law No. 1404-VIII on Enforcement Proceedings which entered into force on 5 October 2016 (hereinafter “Law on Enforcement Proceedings”);
- the Law 2709-IV on Private International Law which entered into force on 1 September 2005 (hereinafter “Law on Private International Law”);
- section VII of the Law No. 1701-IV on Arbitral Tribunals which entered into force on 16 June 2004 (hereinafter “Law on Arbitral Tribunals”); and
- the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter “New York Convention”) which entered into force on 7 June 1959 under the Act No. 995_070, alongside other international treaties as applicable.
There are three types of arbitral awards that may be recognized and enforced in Ukraine:
- So-called Judgements issued by domestic arbitral tribunals in disputes arising from domestic civil and economic legal relations (hereinafter “Domestic Award(s)”), while international disputes are outside of the scope of the jurisdiction of these domestic arbitral tribunals;
- International commercial arbitral awards issued by international commercial arbitral tribunals in Ukraine, either ad hoc or under the ICAC at the UCC;
- International commercial arbitral awards issued by arbitral tribunals outside of Ukraine (hereinafter “Foreign Awards”).
The last two types of arbitral awards are governed by the same procedure, and will therefore hereinafter be jointly referred to as “International Commercial Arbitral Award(s)”.
Is your jurisdiction party to the 1958 New York Convention? If yes, what is the date of entry into force of the Convention? Was there any reservation made under Article I (3) (reciprocity reservation) of the Convention?
Yes, the Parliament of the Ukrainian Soviet Socialist Republic (hereinafter “Ukrainian SSR”), of which Ukraine is a successor, has signed the New York Convention on 29 December 1958. It was ratified by way of the Decree of the Ukrainian Parliament dated 22 August 1960, and it entered into force on 8 January 1961. There is a reciprocity reservation, which provides that Ukraine will apply the provisions of the New York Convention in respect of arbitral awards made in the territories of non-contracting States only to the extent those States grant reciprocal treatment.
Furthermore, on 20 October 2015, the Government of Ukraine made a communication to the Secretary-General of the United Nations, arising from the armed aggression of the Russian Federation against Ukraine and the occupation of the Autonomous Republic of Crimea and some parts of Donetsk and Luhansk regions. Ukraine declared that from 20 February 2014 on, and for the entire duration of the temporary occupation by the Russian Federation of a part of the territory of Ukraine, the application and implementation by Ukraine of its obligations under the New York Convention is limited and is not guaranteed. These restrictions are to remain in effect until constitutional law and order and effective control by Ukraine over the occupied territories is completely restored.
Similar communication was made on 4 March 2022, as a consequence of the war of the Russian Federation against Ukraine launched in February 2022. In this respect, Ukraine declared it is unable to guarantee full implementation of its obligations under the New York Convention due to the armed aggression of the Russian Federation until the complete cessation of encroachment on the sovereignty, territorial integrity and inviolability of Ukraine.
Jurisdiction & procedure before court
Which national court has jurisdiction over an application for recognition and enforcement of arbitral awards?
Applications for the recognition and granting permission on enforcement of arbitral awards (hereinafter “recognition and enforcement of arbitral awards”) must be filed before:
- The courts of appeal (as a first instance) at the place of arbitration, for Domestic Awards and International Commercial Arbitral Awards if the place of arbitration is in Ukraine;
- The court of appeal which has territorial jurisdiction for the city of Kyiv (as a first instance), for Foreign Awards.
The Ukrainian Supreme Court (hereinafter “Supreme Court”) acts as a second-instance court of appeal in cases regarding the recognition and enforcement of arbitral awards.
How does one initiate court proceedings for the enforcement of an award in your home jurisdiction?
At the outset, one must note that in respect of the enforcement of International Commercial Arbitral Awards, there is a statutory limitation period in place. The application for recognition and enforcement of International Commercial Arbitral Awards must be submitted to the competent court of appeal within three years from the date when the arbitral award was made. An application submitted after the expiration of this period shall be returned without consideration. Upon the award-creditor’s application, however, the court may renew this period, if it finds reasonable grounds for the award-creditor’s omission.
The application for recognition and enforcement of International Commercial Arbitral Awards must be submitted in written form and must be signed either by the award-creditor or its representative. An application for recognition and enforcement of International Commercial Arbitral Awards is then considered by a sole judge within two months from the date of its receipt by the court.
Article 476 of the CPC specifies that the application for recognition and enforcement of International Commercial Arbitral Awards shall contain:
- the name of the court where the application is filed;
- the name (if any) and composition of the international commercial arbitral tribunal, which rendered the award;
- the names (including titles) of the disputing parties in the arbitration proceedings (as well as their representatives), and their place of residence or location;
- the date on which the international commercial arbitral award was made and the place of arbitration;
- the date of receipt of the international commercial arbitral award by the award-creditor; and
- the award-creditor’s request for the issuance of a writ of enforcement of the international commercial arbitral award.
After the recognition of the International Commercial Arbitral Award, either the award-creditor or the award-debtor (in case of voluntary enforcement) may apply for the writ of execution.
In order to enforce Domestic Awards, on the other hand, the award-creditor must file the application for the writ of enforcement of the Domestic Award to the appellate court at the place of arbitration. This application (similarly to International Commercial Arbitral Awards) must be filed within three years from the date when the arbitral award was made.
An application for the writ of enforcement of the Domestic Award must be considered by a sole judge within 15 days from the date of its receipt by the court. Otherwise, the same rules as for International Commercial Arbitral Awards apply regarding the necessary documentation.
Are there any requirements for the court to have jurisdiction over an application for recognition and enforcement of arbitral awards? If yes, what are they? Must the applicant identify assets within the jurisdiction of the court?
There are no additional requirements besides the rules on territorial jurisdiction as set out in the answer to question #3 above.
How high are the court fees that must be paid? What kind of criteria is used to determine their amount? Amount in dispute? Or are there also other criteria?
According to the Law No. 3674-VI on Court Fees which entered into force on 1 November 2011 (hereinafter “Law on Court Fees”), the court fee is charged depending on the living wage for persons with full legal capacity established by law on 1 January of the relevant calendar year. The subsistence minimum for persons with full legal capacity in Ukraine as of 1 January 2022 is UAH 2481 (EUR 77,10 as of 10.04.2022).
On that basis, the court fee for the application for the recognition and enforcement of an arbitral award is a fixed fee and currently amounts to:
- 50% of the living wage for persons with full legal capacity (e. UAH 1240,50, or EUR 38,50 as of the exchange rate on 10.04.2022), if the application is filed by a legal entity or an individual entrepreneur;
- 20% of the living wage for persons with full legal capacity (i.e. UAH 496,20, or EUR 15,40 as of the exchange rate of 10.04.2022), if the application is filed by a natural person.
How are the costs of the enforcement proceedings allocated?
The “loser pays” principle applies. The unsuccessful party in the enforcement proceeding will be ordered to reimburse the opposing party’s court and lawyer fees.
Are the proceedings in your jurisdiction adversarial or ex parte?
Recognition and enforcement proceedings for International Commercial Arbitral Awards have both ex parte and adversarial features. The first phase of the proceeding is ex parte, in which the interested party must file an application with the competent domestic court for recognition and enforcement of the International Commercial Arbitral Award.
After the court decides on the recognition, the award-creditor must apply for the writ to enforce the decision. This second phase is adversarial, subject to both the opposing party’s potential challenge to the decision and the enforcement proceedings against it.
Enforcement proceedings for Domestic Awards, on the other hand, are predominantly adversarial.
Formal and practical requirements
What documentation is required to obtain recognition of an arbitral award? For instance, must the award be submitted in original or a certified copy? Does the original arbitration agreement have to be submitted?
The following documents must be attached to the application for recognition and enforcement of International Commercial Arbitral Awards:
1) the original of the duly certified arbitral award or a copy of such award certified by a notary;
2) the original of the arbitration agreement or a copy of such agreement certified by a notary;
3) confirmation of the payment of court fees;
4) sufficient copies of the application for recognition and enforcement of the international commercial arbitral award;
5) a power-of-attorney, if the application is not filed by the award-creditor itself;
6) a duly certified translation of the documents listed in items 1–3 and 5 into Ukrainian (if in a foreign language).
The application for the writ of enforcement of a Domestic Award, on the other hand, shall be submitted with:
- the original or a duly certified copy of the domestic award (a copy of the domestic award issued by the permanent arbitral tribunal must be certified by the presiding arbitrator of the tribunal, while a copy of the domestic award issued by an ad hoc tribunal must be certified by a notary);
- the original or a duly certified copy of the arbitration agreement;
- confirmation of the payment of court fees;
- sufficient copies of the application for recognition and enforcement of the domestic award;
- a power-of-attorney, if the application is not filed by the award-creditor itself.
The applications themselves, on the other hand, must satisfy the requirements set out above in the answer to question #4.
If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation together with an application to obtain recognition of an arbitral award? If yes, in what form is the translation required to be?
Yes, items 1–3 and 5 in the first list contained in the answer to question #9 must be translated into Ukrainian. The translations must be certified by a sworn translator.
What are the other practical requirements relating to recognition and enforcement of arbitral awards? For instance, do you need to be represented by a lawyer from the particular jurisdiction?
There are no further requirements besides the ones contained in the answer to question #9.
There is also no requirement for a party to the enforcement proceedings to be represented by a lawyer. Any party can represent itself directly. However, if a representative is put in place, that representative, generally, must be a lawyer.
Said lawyer must either be admitted to practice law in Ukraine, or must be a foreign lawyer possessing the permit to act as a representative in Ukraine from the Qualification Chamber of the Qualification and Disciplinary Commission of the Bar (hereinafter “Qualification Commission”).
Where a Ukrainian state enterprise is a party to court proceedings, representation by a lawyer is required.
When is service of judicial and extrajudicial documents deemed to be affected in your home jurisdiction and what does the procedure and legal framework look like? What about service to a party outside of your jurisdiction?
Service of judicial and extrajudicial documents in Ukraine is validly effected by regular postal mail.
Are there any differences in the procedure of the enforcement of domestic and foreign arbitral awards?
Apart from the differences as to the competent court (see question #3), the proceedings on enforcement of Domestic Awards and International Commercial Arbitral Awards do not materially differ. The only difference, which is connected to the recognition phase and not the enforcement phase, however, is that Domestic Awards are recognized by default. Domestic Awards thus only need to be enforced.
Do courts recognize and enforce partial or interim awards or only final awards?
Yes, partial and interim awards that finally settle a matter in dispute between the parties may be recognized and enforced in Ukraine (see, for instance, Supreme Court judgement of 24 November 2010 in the case Rosukrenergo v. Naftogaz Ukraine).
 See, for the reasoning of the case, https://sccinstitute.com/media/62034/rosukrenergo_v_naftogaz_ukraine_2010_supreme_court_of_ukraine_ua.pdf.
What are the grounds based on which an award may be refused recognition? Do the relevant provisions differentiate between domestic and foreign arbitral awards? If yes, what are the differences in their requirements?
Pursuant to Article 478 of the CPC, which replicates the provisions of Article 5 of the New York Convention, the competent court shall refuse recognition and enforcement of an International Commercial Arbitral Award only if:
a) the party to the arbitration agreement was under some incapacity; or said agreement is null and void under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
b) the party against which the award is invoked was not given proper notice of the appointment of an arbitrator or the arbitration proceedings or was otherwise unable to present its case; or
c) the award was made regarding a dispute not contemplated by or not falling within the terms of the arbitration agreement, or contains resolutions on matters beyond the scope of the arbitration agreement, however, if the resolutions on issues covered by the arbitration agreement can be separated from those not covered by such agreement, only that part of the award which contains resolutions on issues covered by such agreement may be recognized and enforced; or
d) the composition of the international commercial arbitral tribunal or the arbitration procedure did not comply with the agreement of the parties or, in the absence of such agreement, did not comply with the law of the country in which the place of arbitration was;
e) the award has not yet become binding on the parties or has been revoked or suspended by a court of the state in which, or under the law of which, that award was made.
Additionally, International Commercial Arbitral Awards may be refused recognition and enforcement if:
a) the dispute, given its subject matter, may not be referred to international commercial arbitration for resolution according to Ukrainian law; or
b) the recognition or enforcement of the award is contrary to the public policy of Ukraine.
The grounds for the non-enforcement of Domestic Awards are distinct. Pursuant to Article 486 of the CPC, the court shall refuse enforcement of a Domestic Award if:
a) the arbitral award has been revoked by a competent court;
b) the case subject to the arbitral award is not within the jurisdiction of the arbitral tribunal according to law;
c) the period for applying for a writ of enforcement has not been complied with, and the grounds for the omission have not been accepted as reasonable;
d) the arbitral award has been issued in a dispute not provided for in the arbitration agreement, or the award resolved issues that exceed the scope of the arbitration agreement;
e) the arbitration agreement has been declared null and void;
f) the composition of the arbitral tribunal that issued the award did not meet legal requirements;
g) the arbitral award grants a form of relief to the parties which is not provided for under Ukrainian law;
h) the permanent arbitral tribunal has failed to submit the relevant case file to the competent court although requested to do so;
i) the arbitral tribunal has decided on rights and obligations of persons or entities who did not participate in the arbitration proceedings.
How does your home jurisdiction interpret and construe the public policy violation defence?
There is no statutory definition of “public policy” in Ukrainian legislation. However, the Supreme Court tried to define this concept several times.
For the first time, the definition was specified in the Resolution of the Plenum of the Supreme Court of Ukraine No. 12 of 24 December 1999 „On the practice of court consideration of applications for the recognition and enforcement of the foreign judgments and arbitral awards and on cancellation of the decisions made by international commercial arbitral tribunals in the territory of Ukraine“ (hereinafter “Resolution”). Part 8, clause 12 of the Resolution declared that in the context of the enforcement proceedings, „public policy“ is composed of the legal order of a state and the fundamental principles that form the basis of said legal order (particularly with regard to the state’s independence, integrity, self-sufficiency and inviolability, fundamental constitutional rights, freedoms, guarantees, etc.). There are no specific criteria defining the limitations of public policy though.
However, later in November 2021, the Supreme Court summarized its approach to public policy in the Odesa Port Plant v. Ostchem case as follows: “[the] public policy reservation is a mechanism which secures priority of state interests over private interests, and thereby protects public policy of the state from any negative impacts; this reservation does not allow enforcement in the territory of the state of such an arbitral award, as a result of enforcement of which actions will be taken, that are prohibited by law and that cause harm to sovereignty or security of the state, are incompatible with the principles of economic, political and legal systems in the state”. In this case, for the first time, the Supreme Court concluded that enforcement of an arbitral award against a Ukrainian company of “strategic importance to the economy and security of the State” operating high-risk facilities violates Ukrainian public policy.
In this vein, it is also important to note that in 2018, the Law on Private International Law was supplemented by part 2 of Article 81, which prohibits recognition and enforcement of foreign judgements and arbitral awards against companies from the Ukrainian military and defense sector, as any such enforcement would favor the Russian Federation as the aggressor state in Ukraine. This must be taken into consideration when contemplating the public policy defence in Ukraine
Effects, remedies & procedural requests
What is the effect of a decision recognizing the award in your jurisdiction? Is it immediately enforceable?
In Ukraine, the decision recognizing the award is enforceable after the period for appeal expires. This period is 30 days starting from the date of pronouncement of the decision. After that time-period, the court issues the writ to enforce a decision upon the application of the award-creditor.
Are any remedies available against a decision recognizing an arbitral award in your jurisdiction and, if yes, what are they?
The court decision on recognition and enforcement may be appealed by the parties under the appellate procedure provided for by the CPC for the appeal of regular judgments. The period for appeal is 30 days starting from the date of pronouncement of the decision.
Since the court of appeal is the first instance court in enforcement cases (see question #3), the Supreme Court is competent to consider appeals.
What remedies, if any, are available against a decision refusing to recognize an arbitral award in your jurisdiction?
That same appeals procedure as described in the answer to question #18 is applicable to decisions refusing recognition.
Are any additional defences such as a set-off claim possible in enforcement proceedings?
There is no statutory provision covering set-off claims in Ukrainian legislation. Therefore, Ukrainian courts do not apply this procedural mechanism.
Is it possible to obtain the recognition and enforcement of an award that has been fully or partly set aside at the seat of the arbitration? In case the award is set aside after the decision recognizing the award has been issued, what remedies, if any, are available against this decision?
Since Ukraine is a party to the European Convention on International Commercial Arbitration (hereinafter “European Convention”), the reasons to refuse recognition and enforcement of an arbitral award set aside in another member state are limited to the ones listed in article IX of the European Convention. If the award does not violate the public policy of Ukraine, it may nonetheless be recognized and enforced.
When the award is set aside after the decision recognizing the award has been issued, such decision may be appealed according to the general procedure of appeal of decisions on recognition and enforcement.
Are interim measures against assets in your jurisdiction available? And if yes, what kind of measures are they?
According to Article 477 of the CPC, upon application of the award-creditor, the court may take certain temporary measures provided for by the CPC to secure the claim in enforcement proceedings. Security for a claim may be ordered at any stage of consideration of the enforcement application, if a failure to take such measures disrupts or prevents the enforcement of the International Commercial Arbitral Award. For instance, the seizure of the assets which are the subject of the dispute may be ordered.
In which cases may a security for costs be requested?
As a measure of securing the court fees, taking into account the specific circumstances of the case, the court can order the requesting party to deposit certain sums in the court’s deposit account to secure possible reimbursement of the responding party’s lawyer’s fees and other costs possibly incurred.
Such security for court costs can be ordered by the court if:
- the claim shows signs of being manifestly unfounded or bears other signs of procedural abuse; or
- the requesting party does not have a registered place of residence in Ukraine or any property in the territory of Ukraine in an amount sufficient to reimburse the responding party’s presumable fees.
Such security for court fees may also be ordered if the court is provided with evidence that the requesting party’s property status or actions to dispose of property or other similar actions may make it impossible to enforce an order for the reimbursement of fees.
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