The right for parties to arbitrate their disputes in Ukraine is enshrined in national legislation and in various international treaties. In the event of a conflict between the national legislation and the provisions of an international treaty to which Ukraine is party, the latter shall prevail.

The international treaties to which Ukraine is party include the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards dated 10 June 1958 (“the New York Convention”), the European Convention on International Commercial Arbitration dated 21 April 1961, and the Minsk Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters dated 22 January 1993.

When discussing national legislation in Ukraine, it is important to note that there are separate legal regimes for international and domestic arbitration. The legal basis for any international arbitration proceedings to be conducted in Ukraine is the Law “On International Commercial Arbitration” No. 4002-XII dated 24 February 1994 (“the ICA Law”). Domestic arbitration, on the other hand, is governed by the provisions of Ukrainian Law No. 1701-IV “On Courts of Arbitration” dated 11 May 2004 (“the Law on Domestic Arbitration”).

The above national legislation is complemented by the Ukrainian Civil Procedure Code dated 18 March 2004 (“the Code”) – which regulates, for example, the procedure for recognition and enforcement of foreign court decisions (that procedure is also applicable for enforcement of international arbitration awards) and the Commercial Procedure Code dated 6 November 1991, which limits the types of dispute that can be submitted both to domestic and international arbitration.

As regards the recognition and enforcement of foreign arbitral awards in Ukraine, a useful analysis of court practice can be found in Resolution No. 12 (dated 24 December 1999) of the Plenum of the Supreme Court of Ukraine ­ “On the Court Practice of Entertaining Applications for the Recognition and Enforcement of the Judgments of Foreign Courts and Foreign Arbitral Awards Rendered in the Course of International Commercial Arbitration in Ukraine”.

General overview
The ICA Law is based on the provisions of the UNCITRAL Model Law on International Commercial Arbitration dated 21 June 1985 (“the UNCITRAL Model Law”) and divides the responsibility for assisting and supervising arbitration proceedings with their seat in Ukraine between the President of the Chamber of Commerce and Industry and the regional and municipal courts of Ukraine. In keeping with the legislative practice of the former USSR, the ICA Law establishes two permanent arbitration institutions under the auspices of the Ukrainian Chamber of Commerce and Industry, namely the International Commercial Arbitration Court (“the ICAC”) and the Maritime Arbitration Commission (“the MAC”). The powers and legal status of these local arbitration institutions are detailed in two Appendices to the ICA Law. At the present time, the ICAC and the MAC are the only institutions authorised to administer arbitration proceedings in Ukraine involving foreign parties.

It is also worth noting that the ICA Law is the mirror image of Russian Law No. 5338-1 “On International Commercial Arbitration” dated 7 July 1993, although the Ukrainian and Russian courts have not necessarily interpreted the provisions of their respective laws in the same way.

Scope of application and general provisions
Article 1.1 of the ICA Law stipulates that it shall apply to all international commercial arbitration proceedings where the place of arbitration is in Ukraine. Some provisions, however, apply even when the arbitration proceedings do not take place in Ukraine, for example:

• Article 8 (stay of court proceedings in favour of arbitration);
• Article 9 (interim measures granted by the court in support of arbitration proceedings); and
• Articles 35 and 36 (recognition and enforcement of arbitral awards).

As mentioned above, the ICA Law (Article 1.2) applies exclusively to international commercial arbitration. That is why the range of disputes capable of resolution by way of arbitration proceedings is limited to:

• disputes which arise out of contractual and other civil law relationships in the course of foreign trade and other types of international relations, provided that one of the parties is a commercial entity located overseas (i.e. outside Ukraine); and
• disputes involving entities with foreign investment, and international associations and organisations, established in the territory of Ukraine, between each other; or disputes between the participants thereof, or their disputes with other subjects of law in Ukraine.

Article 7 of the ICA Law defines an arbitration agreement as “an agreement between parties to refer to international commercial arbitration all or certain disputes, which have arisen or may arise between parties concerning their legal relationship irrespective of whether they are contractual or not”.

Formal requirements
The arbitration agreement must be in writing. It may be concluded in the form of a separate agreement, exchange of letters or in the form of a clause in a contract. An arbitration agreement is also deemed to have been validly concluded if the parties exchange a written claim and a written defence, in which one of the parties asserts, and the other party does not deny, the existence of an arbitration agreement.

The arbitration agreement should include the full name of any arbitration institution and the range of disputes that the parties have agreed to submit to arbitration. Parties should be careful to comply precisely with these requirements since in some cases the Ukrainian courts have held an arbitration agreement to be invalid on the basis of a mere misspelling in the name of the arbitration institution. Parties are also advised to indicate in the arbitration agreement the law governing the dispute, the procedure for appointing the arbitrator(s), and the place and language of the arbitration.

Article 2 of the ICA Law states that the parties are free to submit the disputes to ad hoc arbitral tribunals and may in such case either determine the procedure of arbitration themselves or choose some existing body of rules (for example, UNCITRAL Arbitration Rules). In practice this provision is very rarely, if ever, invoked. This is probably due to the numerous practical and technical complexities of conducting proceedings and attempting to enforce the subsequent arbitral award which will have to be certified as effective in order to be enforced in Ukraine. The lack of information about this procedure may also be an impediment to the growth of ad hoc arbitration. However, there is information in the public domain about certain high profile disputes over stakes in a major ferroalloy company between large business groups (Interpipe and Privat) which were submitted to ad hoc arbitration.

Arbitrability of disputes
There is no comprehensive list in the national legislation of those types of dispute that can or cannot be submitted to arbitration.

That said, Article 77 of Ukrainian Law No. 2709-IV “On Private International Law” dated 23 June 2005 (the “Law on Private International Law”) provides a useful list of those disputes that fall within the exclusive jurisdiction of the Ukrainian courts. The list includes, inter alia, disputes:

• concerning real estate property located in the territory of Ukraine;
• relating to the formalisation of intellectual property rights (e.g. registration or certification (patent) issues);
• relating to the registration or liquidation of foreign legal entities or sole traders in Ukraine;
• relating to the validity of information contained in state registries in Ukraine;
• relating to the issuance or cancellation of securities in Ukraine; and
• arising out of the bankruptcy of an entity established in Ukraine.

Further restrictions on the types of dispute that can be submitted to arbitration are imposed by Articles 234 and 235 of the Code (which render non-arbitrable all disputes relating to the establishment of legal facts, the disclosure of bank secrets, and the restoration of title for lost bearer securities or promissory notes) and Article 12 of the Commercial Procedure Code (which reserves to the local courts exclusive jurisdiction to hear disputes relating to the annulment of acts and the conclusion, amendment, termination and execution of contracts for the procurement of goods, work and services for “State needs”).

In addition, “Recommendations” issued by the High Commercial Court of Ukraine No 04-5/14 “On Application of Legislation in Resolving Cases Arising from Corporate Relations” dated 28 December 2007 suggest that corporate disputes, including corporate governance disputes, involving Ukrainian companies are non-arbitrable. Recently the Supreme Court supported this approach in its Ruling No. 13 “On the Court Practice of Resolving Corporate Disputes” dated 24 October 2008. It is therefore likely that arbitration awards on such issues will be deemed unenforceable in Ukraine.

Separability
The principle of separability is well recognised in Ukrainian law. Pursuant to this principle, an arbitration clause forming part of a contract shall be treated as an agreement independent from the other terms of the contract. In principle, therefore, a finding that the contract is null and void should not entail ipso jure the invalidity of the arbitration clause (see Article 16 of the ICA Law). Nevertheless – due to the relative inexperience of Ukrainian courts in handling arbitration disputes – there are cases in which the invalidity of the contract has been held to invalidate the arbitration clause (e.g. Telenor Communications AS vs. Storm LLC).

Mandatory/non-mandatory provisions
In keeping with the ethos of the UNCITRAL Model Law, most of the provisions of the ICA Law are non-mandatory and shall be applied “unless otherwise agreed by the parties”. The parties are, therefore, free to draft the arbitration agreement determining, for example, the number of arbitrators and the procedure, for their appointment, challenge or removal.

Constitution of the arbitral tribunal
Article 10 of the ICA Law provides that the tribunal shall consist of three members, unless otherwise agreed by the parties. Each party shall appoint one arbitrator and the arbitrators so appointed shall then agree upon the identity of the third arbitrator. Under the ICA Law the “third” arbitrator is not necessarily the chairman of the tribunal. But the ICAC Rules stipulate that the arbitrator appointed by the two members of the arbitral tribunal shall “automatically” be the chairman. If the parties do not agree upon the procedure for appointing the arbitrators or if, for example, one of the parties does not appoint an arbitrator, the arbitrator(s) shall be appointed by the President of the Chamber of Commerce and Industry of Ukraine upon the request of either of the parties. The President’s decision is binding on the parties and may not be appealed or cancelled.

Challenging and removing arbitrators
An arbitrator may only be challenged if he lacks the qualifications required by the parties in their arbitration agreement, or if the parties establish the existence of facts giving rise to justifiable doubts as to his impartiality or independence.

To limit the need for future challenges, Article 12 of the ICA Law requires an arbitrator prior to his appointment to disclose any circumstances which could give rise to reasonable doubts as to his impartiality and independence. This duty of disclosure is a continuing duty with the corollary that arbitrators must disclose any circumstances that arise during the course of the proceedings that could bring their impartiality or independence into doubt.

Each of the parties may challenge the arbitrator(s) within 15 days of the date on which they are notified of the constitution of the tribunal, or of the date on which they become aware of the circumstances allegedly giving rise to doubts as to the arbitrator’s impartiality or independence. If the arbitral tribunal rejects the challenge, the challenging party may – within 30 days of receipt of the rejection of the challenge – request the President of the Chamber of Commerce and Industry of Ukraine to rule on the challenge. The President’s decision on challenges is final and not made public.

There is no clear guidance as to whether the tribunal and the President of the Chamber of Commerce should apply the ‘appearance of bias’ test or the ‘actual bias’ test when ruling on challenges to arbitrators.

An arbitrator may also resign, die or have his mandate terminated in circumstances where he is de jure or de facto incapable of performing his functions. In such cases, a substitute arbitrator will be appointed in accordance with the same procedure as that used to appoint the replaced arbitrator.

Arbitrators’ fees, expenses and liability
The ICA Law is silent regarding the fees and expenses of the arbitrators as well as regarding their liability for breach of duty. But the ICAC Rules stipulate that the claimant shall pay registration and arbitration fees.

In ad hoc arbitrations, the arbitrators’ fees and expenses are subject to the parties’ and the arbitrators’ mutual consent.

Competence to rule on its own jurisdiction
Article 16 of the ICA Law provides that the arbitral tribunal is competent to rule on its own jurisdiction (including on issues relating to the existence or validity of the arbitration agreement). Procedurally, any challenge to the jurisdiction of the arbitration tribunal must be made not later than when filing a defence to the claim. Similarly, any objection based on an allegation that the tribunal acted in excess of its jurisdiction should be raised as soon as the facts underpinning such an objection arise in the course of the proceedings. The arbitral tribunal may rule on the challenge to its jurisdiction either as a preliminary issue (by rendering an interim award on jurisdiction) or in its final award on the merits. If the tribunal determines the issue of jurisdiction by way of an interim award, either party may challenge such award before the competent national court within 30 days of receipt of the interim award. The decision of the national court is not subject to any further appeal. Pending the outcome of the application to the national court, the arbitral tribunal may continue the arbitration proceedings and issue an award, which may subsequently be set aside if the court finds that the arbitral tribunal lacked or exceeded its jurisdiction.

Power to order interim measures
Both the ICA Law and the procedural rules of the two Ukrainian arbitration institutions permit arbitrators to grant interim measures at a party’s request. Such interim measures may be obtained at any stage of the proceedings as well as before proceedings commence. For example, on the President of the ICAC at the President of the MAC are authorised to grant interim measures and the party’s request even before the tribunal is constituted. After the tribunal’s constitution such measures may be granted by the arbitral tribunal. Local courts may also, however, grant interim measures in the course of arbitration proceedings, although seeking such measures may in practice prove difficult due to certain “gaps” in the Code. Both the institutional rules and the Appendices to the ICA Law allow the tribunal to grant interim measures on an ex parte basis, i.e. without giving any notice to the defendant.

Article 4.2 of the Rules of the ICAC provides that the award on interim measures is binding on the parties and remains in force until the end of the arbitration proceedings. Such interim measures are sometimes hard to enforce, however, not least because there is seemingly no provision under Ukrainian law entitling parties to apply to local courts to enforce such measures.

Interim measures can take many forms, including asset-freezing orders, anti-suit injunctions and orders for disclosure of documents. The President of the MAC can even grant interim measures in the form of attachment orders against ships or cargo currently located in a Ukrainian port (pursuant to Articles 41 and 42 of the Code of Merchant Navigation dated 23 May 1995).

Commencement of arbitration
According to the ICA Law, arbitration proceedings (whether institutional or ad hoc) are deemed to commence on the date when the request to submit a particular dispute to arbitration is received by the defendant. However, the Rules of the ICAC state that the proceedings are not deemed to have commenced until the claim has been filed at the ICAC and the registration fee has been paid.

General principles
The main principles of the Ukrainian arbitration legislation are as follows:

• independence and impartiality of the arbitrators;
• equal rights of the parties to participate in the arbitration proceedings and to provide the arbitral tribunal with their evidence; and
• party autonomy.

Procedural powers of the tribunal
The tribunal is entitled to conduct the arbitration proceedings in the manner it deems appropriate, unless the parties have determined it previously. Thus, for example, it falls to the tribunal to decide whether to hold an oral hearing or whether to render its award on a ‘documents only’ basis. That said, the tribunal must hold an oral hearing if the parties so wish.

The place and language of the arbitration
The place of the arbitration – if not chosen by the parties in their arbitration agreement – shall be determined by the arbitral tribunal, taking into account the circumstances of the case and the interests of the parties. It is important to emphasise, however, that the tribunal is at all times free to convene hearings and examine evidence at a location other than the place of arbitration.

In the absence of agreement between the parties, the tribunal shall choose the language of the arbitration and impose requirements on the parties relating to the translation of documents relevant to the proceedings.

Submissions
The ICA Law states that all declarations, documents and other information to be submitted to the tribunal shall be delivered simultaneously to the other party. Both parties shall also receive any other resolutions of experts, opinions or other documents which may be decisive for the arbitral tribunal.

The format and content of the parties’ submissions to the arbitration institutions – as well as the timetable for filing such submissions – shall be determined by the respective rules. For example, the ICAC Rules require all documents and other evidence to be submitted in no less than three copies. The ICAC Secretariat is responsible for dispatching all the documents in a timely manner. Copies of the claim or the Statement of Defence and other important documents may be delivered or handed to the parties in exchange for a receipt.

The ICA Law also allows the parties (subject to their consent) to change or amend their statements of case during the course of the proceedings unless the tribunal considers such changes or amendments to be inexpedient.

Waiver of a right to object
In keeping with the UNCITRAL Model Law, Article 4 of the ICA Law provides that if a party to arbitration proceedings is aware of any noncompliance with the mandatory provisions of national law or with the terms of the arbitration agreement, but fails to object to such noncompliance, then it will be taken to have waived its right to object.

Evidence
The ICA Law contains only limited provisions on evidence gathering. Each party has the burden of adducing evidence sufficient to prove the facts upon which it seeks to rely in support of its claims or defences. As under the UNCITRAL Model Law, the ICA Law requires that any information provided by one party to the tribunal shall be shared with all other parties to the arbitration proceedings.

The tribunal is also entitled to appoint an expert to report on specific issues. If such an expert is appointed, the parties may be required to provide the expert with relevant information and/or allow the expert access to relevant documents or goods. The expert does not need to be a certified expert according to Ukrainian Law No. 4038a-XII “On Forensic Experts” dated 25 February 2004.

The parties may also submit to the arbitral tribunal reports prepared by party-appointed experts confirming their claims or defence. Such reports may be treated as evidence. The arbitral tribunal is free to determine the weight that it wishes to attach to any evidence submitted by the parties.

Multi-party proceedings
The ICA Law is vague as regards multi-party proceedings. The ICAC Rules contain very few provisions to regulate such proceedings. Under Article 27.3, multiple claimants and multiple defendants shall each nominate an arbitrator. The claimants and defendants shall have 30 days to agree upon their respective nominee.

On a related issue, it is worth noting that the participation of a third party is allowed if all the parties consent in writing (Article 43 of the ICAC Rules). The parties may apply for a third party’s involvement only before the Statement of Defence is submitted to the arbitral tribunal.

Choice of law
The arbitral tribunal must resolve the dispute in accordance with the law chosen by the parties. Unless otherwise agreed, the parties’ agreement on the governing law refers only to the substantive law of the chosen State and not to its ­conflict of law rules (Article 28 of the ICA Law). In the absence of agreement between the parties on the governing law, the arbitral tribunal shall apply the law determined by the conflict of law rules that it considers appropriate.

Termination of proceedings
Arbitration proceedings may result either in termination or in a final award. Article 32.2 of the ICA Law provides that the arbitral tribunal is free to terminate the proceedings:

• if the claimant withdraws its claim and the respondent does not object thereto or the tribunal does not recognise such objections as reasonable;
• if the parties agree to terminate the proceedings; or
• if, for any other reason, the tribunal considers that continuation of the proceedings would be unnecessary or impossible.

The principle of res judicata is accepted in Ukraine. Therefore, the courts shall also terminate the proceedings if an arbitral award or court decision in the same case on the same subject matter, between the same parties and on the same grounds already exists.

If the parties reach a settlement of their dispute during the course of the arbitration proceedings, such agreement – at the parties’ request – may be recorded in the form of an award and will be binding on the parties and enforceable in the same way as an ordinary award.

Form, content and effect of arbitration awards
Article 31 provides that an arbitral award must comply with the following formal requirements:

• it shall be made in writing and shall be personally signed by the arbitrator or arbitrators; and
• it shall contain the date and place of the arbitration, the reasons upon which it is based, the tribunal’s findings on the issues submitted for consideration and the allocation of costs between the parties.

The dissenting opinions of the arbitrators may be set forth in the arbitration award, though it is not mandatory. After the award has been made each party shall receive a copy of the award, signed by the arbitrator (if the dispute has been resolved by a sole arbitrator) or by the majority of arbitrators at least (if the arbitral tribunal consists of three members). The reasons for the absence of any signatures shall be indicated in the award.

Interest
Arbitral tribunals are empowered to award interest upon the claimant’s request. Such interest is limited to the rates (if any) stipulated in the contract between the parties. Moreover, the current legislation of Ukraine prohibits recovering penalties, which exceed double the discount rate of the National Bank of Ukraine for the relevant period.

Costs
The ICA Law does not provide any clarification regarding the allocation of the costs of the arbitration between the parties. The claimant may receive reimbursement for the arbitration costs and fees paid, provided the parties have agreed to do so.

The ICAC Rules provide that all the costs and fees shall be reimbursed by the unsuccessful party to the successful one, unless otherwise agreed by the parties.

Correction and interpretation of the award
Article 33 of the ICA Law allows the arbitral tribunal (at the parties’ request or on its own initiative) to correct any errors (misprints, errors of calculations’, etc.) in the award. The parties have 30 days to apply for such corrections from the date upon which the award is received by the parties. The arbitral tribunal may also clarify anything that is unclear in the arbitration award (subject to the parties’ consent). Such corrections or clarifications shall become integral parts of the arbitration award.

The parties may also request the arbitral tribunal to make an additional award. Such awards may cover issues that were submitted to the tribunal for consideration but were not resolved in the “main” award. If such requests are considered by the arbitral tribunal to be proper, it has 60 days to make an additional award.

Appeals
The arbitration award is considered to be final and binding upon the parties. The award is not subject to appeal, although it may be set aside by the local courts on certain limited grounds (see below). The parties cannot exclude any of these grounds or expand the list of grounds in the arbitration agreement.

Jurisdiction
Article 5 of the ICA Law prohibits national courts from intervening in arbitration proceedings except in the circumstances expressly prescribed by the ICA Law. The circumstances in which national courts are entitled to intervene include:

• ruling on the jurisdiction of the arbitral tribunal; and
• ruling on applications to set aside awards.

Stay of court proceedings
In keeping with the provisions of the UNCITRAL Model Law and the New York Convention, Article 8 of the ICA Law provides that the court must stay its proceedings as soon as it becomes aware – through an application by the defendant contesting the court’s jurisdiction (which must be made no later than in the defence on the merits) – of the existence of a binding arbitration agreement. However, if both parties declare that they do not wish the dispute to be resolved by arbitration, then the court may proceed to hear the case. The court will also accept jurisdiction to hear a case if it establishes that under Ukrainian law the case is non-arbitrable, that the arbitration agreement is invalid, inoperative or incapable of being performed, that the claim falls outside the jurisdiction of the arbitrators or that the relevant arbitration institution has refused to deal with the case.

Where proceedings are stayed and arbitration proceedings are filed on the same issues, the legal effects of the original action shall remain unaffected (e.g. the claim is deemed to have been issued on the date of commencement of the court proceedings for the purposes of calculating the relevant limitation period).

Where court proceedings were issued after the commencement of arbitration proceedings challenging the existence, validity or scope of the arbitration agreement, the court must stay such proceedings until the arbitrators have ruled upon their own jurisdiction. If the tribunal decides that it has jurisdiction, the court must refuse jurisdiction. That said, the parties may later challenge the tribunal’s assumption of jurisdiction by applying to the court to set aside the tribunal’s award for lack of jurisdiction.

Obtaining evidence
Article 27 of the ICA Law entitles the arbitral tribunal or a party to the arbitration proceedings (subject to obtaining the prior consent of the tribunal) to request the assistance of the national courts in obtaining evidence for use in arbitration proceedings. Ukraine is a party to the Hague Convention on the Service Abroad of Judicial and Extra-Judicial Documents in Civil and Commercial Matters dated 15 November 1965 and to the Hague Convention on Taking of Evidence Abroad in Civil or Commercial Matters dated 18 March 1970. However, gaps in the Code make these provisions difficult to implement in practice.

Interim measures
The absence of an appropriate procedural framework renders meaningless the ICA Law provision on interim measures in support of foreign and Ukrainian arbitrations (see above).

Grounds for setting aside awards
Article 34 of the ICA Law contains an exhaustive list of the grounds for setting aside an arbitral award, which mirrors the grounds contained in the UNCITRAL Model Law, namely:

• if the party making the application furnishes proof that:
  • a party to the arbitration agreement was under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under Ukrainian law; or
  • the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
  • the award deals with 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, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or
  • 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 Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with the ICA Law; or
• if the court finds that:
  • the subject matter of the dispute is not capable of settlement by arbitration under Ukrainian law; or
  • the award is in conflict with Ukrainian public policy.

In practice, the most popular (and successful) ground for challenging awards is that the award is contrary to Ukrainian public policy. This ground is popular in part due to the broad definition of “public policy” contained in Resolution No. 12 of the Plenum of the Supreme Court of Ukraine No. 12 dated 24 December 1999, and in part due to the tendency of the courts to use this ‘catch-all’ ground to set aside awards that are felt to be contrary to Ukrainian national interests.

The award may be set aside by the court of its own motion or on the application of one of the parties. The application to set aside the award must be submitted to the court within three months of receipt of the award by the challenging party, although this time limit may be extended by the court in certain circumstances. The arbitration award may not be enforced in Ukraine if challenge proceedings are pending.

If the award is set aside, the dispute may be resolved by another arbitral tribunal, unless the dispute is considered to be non-arbitrable.

Competent courts for hearing applications to set aside awards
Since 29 September 2005, it has been possible to challenge all awards rendered by an arbitral tribunal constituted under the auspices of the ICAC or MAC before Shevchenko District Court. The decision of Shevchenko District Court can then be appealed to Kyiv Court of Appeal and finally to the Supreme Court of Ukraine. Needless to say, the existence of these various avenues of appeal can result in substantial delays in the enforcement of arbitral awards.

General overview
Foreign arbitration awards in Ukraine are treated as decisions of foreign courts and may be enforced in Ukraine only after being recognised by the Ukrainian courts. The most important international agreement for Ukraine concerning recognition and enforcement is the New York Convention, pursuant to which Ukrainian courts should in principle recognise and enforce foreign arbitral awards.

Ukraine, however, registered a reciprocity reservation with the result that Ukraine is only obliged to enforce awards originating in countries that have also ratified the Convention. In practice, this reciprocity reservation has sometimes (wrongly) been used by the Ukrainian courts to refuse recognition and enforcement to awards rendered in countries that are signatories to the Convention but have in practice refused (for legitimate reasons) to recognise and enforce one or more awards rendered in Ukraine.

Awards are enforceable for three years of the date on which the award was served on the parties, though Ukrainian court practice suggests that this term may be extended by the courts “on the basis of valid excuses”.

Domestic awards, if not honoured by the parties voluntarily, shall be enforced on a basis of a writ of execution issued by the local courts. Such enforcement is regulated by the Law of Ukraine No. 1701-IV “On Courts of Arbitration” dated 11 May 2004 and by the Law of Ukraine No. 606-XIV “On Enforcement Proceedings” dated 21 April 1999. According to this law, the initiating party must submit the application with a writ of execution to the State enforcement office at the location of the defendant’s operating office or the place at which the defendant’s property is situated.

Grounds for refusing recognition and enforcement
Article 36 of the ICA Law sets out the grounds upon which recognition and enforcement of foreign awards may be refused by a Ukrainian court. In summary, the grounds for refusing recognition and enforcement are the same as those for setting aside an award (see above), but with one additional ground: Article 36.1 (1) (v) of the ICA Law provides that the Ukrainian courts may refuse recognition and enforcement if the award has not yet become binding on the parties, or was annulled or terminated by the courts of the country where or under whose law it was made.

Recent court practice demonstrates that Ukrainian courts interpret the notion of “public policy” quite broadly and often invoke this ground to refuse enforcement of foreign arbitral awards.

The Law on Domestic Arbitration sets out the grounds upon which recognition and enforcement of a domestic arbitration award may be refused in Ukraine, namely when:

• the award deals with a non-arbitrable dispute;
• the award is rendered on a dispute not covered by the arbitration agreement or on matters beyond the scope of competence of the arbitral tribunal;
• the arbitration agreement is considered to be invalid by the competent court; or
• the composition of the arbitral tribunal was not in accordance with the relevant provisions of the Law on Domestic Arbitration.

Enforcement procedure
In Ukraine, foreign arbitration awards are enforced under the “partial” control of the courts, i.e. the award is considered to be binding on the parties from the date upon which it is received by the parties, but may be enforced only upon application in writing to the competent court. Decisions of foreign courts shall be recognised and enforced in Ukraine by the general courts of first instance at the place of the defendant’s domicile or – if the defendant has no domicile in Ukraine or his domicile is unknown – at the place in which his property is situated.

The decision of the Court of First Instance may be appealed to the local Courts of Appeal (appeal instance) and to the Supreme Court of Ukraine (cassation instance). The case may even be referred back to the Court of First Instance by the Appeal Court or the Supreme Court if the party furnishes proof that the procedural legislation of Ukraine has been violated in the course of the court hearings. Needless to say, such appeals will delay enforcement of the arbitration award.

When making an application to recognise and enforce an award, a party must submit the following documents:

• a duly certified copy of the award;
• an official document certifying that the award has entered into force (if the award itself is silent on this issue);
• a document certifying that the party against whom the award was rendered and who took no part in the proceedings was duly notified about the place and time of the hearings;
• a document (if any) stipulating whether enforcement is being sought fully or in part in another country; and
• if the award is in a language other than Ukrainian or Russian, the party must also produce a translation of such document certified by an official or sworn translator or by a diplomatic or consular agent.

In addition to the listed above documents, the New York Convention also requires parties in the context of a foreign arbitral award to produce a copy of the arbitration agreement and a certified Ukrainian translation.

Moreover, if the application is filed by a representative of a party, that representative must file a power of attorney certifying his or her power to represent the party in question.

Accruing interest
The party seeking recognition and enforcement of an arbitral award in Ukraine should be aware that it is extremely difficult to recover interest accruing on any sum of money forming part or all of an award, even if the award – or the court decision allowing enforcement of the award – expressly envisages the recovery of interest in such circumstances. In practice, therefore, a party should only expect to recover the principal sum cited in the award.

Recourse to arbitration as a means of resolving commercial disputes is becoming more and more popular in Ukraine. Generally speaking, Ukraine can boast a healthy legislative framework for the conduct of arbitration proceedings and is party to all the main international conventions. The principal obstacle to be overcome in Ukraine at the present time is the relative inexperience of the judiciary in handling the sometimes complex issues that can arise in the context of arbitration proceedings. Until judicial attitudes change, parties must expect a degree of unpredictability when it comes, for example, to the issue of enforcing foreign arbitral awards in Ukraine.

CMS Cameron McKenna LLC
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Olexander Martinenko
T +380 44 391 33 77
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Yaroslav Petrov
T +380 44 391 33 77
F +380 44 254 08 64
E yaroslav.petrov@cms-cmck.com