Commercial Arbitration

Last verified on Tuesday 28th March 2023

Commercial Arbitration: Ukraine

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1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

Ukraine

Yes, Ukraine is a party to the New York Convention. It was ratified in 1960 by the Ukrainian Soviet Socialist Republic (SSR) (as a part of the former Soviet Union). Following the declaration of independence in 1991, Ukraine confirmed its obligations under all international treaties entered into by the Ukrainian SSR, including the New York Convention.

Upon ratification of the Convention, Ukraine made a declaration to the effect that the Convention will apply to foreign arbitral awards rendered in the territory of non-contracting states only based on the principle of reciprocity.

Moreover, in 2015, following the occupation of Ukrainian territories by the Russian Federation, Ukraine also issued a notification to the effect that Ukraine does not guarantee the application of the Convention in relation to occupied territories and other territories over which Ukraine does not exercise its control.

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2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

Ukraine

Yes, Ukraine is also a party to the European Convention on International Commercial Arbitration 1961, having ratified it in 1963 without any declarations or reservations, or both. However, this Convention has gained limited application in Ukraine, since the courts primarily rely on the provisions of the New York Convention.

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3. Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

Ukraine

Yes, in 1994, Ukraine implemented the Law of Ukraine On International Commercial Arbitration (ICA Law). It is based on the provisions of the 1985 UNCITRAL Model Law on International Commercial Arbitration and incorporates the provisions of the 1985 UNCITRAL Model Law (without 2006 amendments) virtually verbatim with minor deviations.

ICA Law applies to all foreign arbitral proceedings with their seat in Ukraine. However, the provisions of the ICA Law, which govern the interim measures in aid of arbitration proceedings, enforcement of arbitration agreements, recognition and enforcement of the arbitral awards, are also applied to the arbitral proceedings with their seat abroad.

Notably, ICA Law does not apply to domestic arbitration proceedings, which in Ukraine represent a separate legal regime, different from that of international arbitration. In particular, international arbitration, which is governed by the ICA Law, covers the following disputes with foreign element:

  • disputes arising out of contractual and other civil law relations in the course of foreign trade and other forms of international economic relations if the place of business of at least one of the parties is situated abroad;
  • disputes arising between enterprises with foreign investment, international associations and organisations established in Ukraine; disputes between the participants of such entities, as well as disputes between such entities and other subjects of the law of Ukraine; and
  • disputes between the bond issue administrator and the bond issuer or persons who provide security for such bonds, if at least one of the parties to the dispute is an enterprise with foreign investments.

In its turn, domestic arbitration proceedings are governed by the Law of Ukraine On Domestic Arbitration Courts and cover the disputes between Ukrainian parties only.

Moreover, alongside the ICA Law, certain arbitration-related matters are also covered by the Civil Procedure Code of Ukraine (CivPCU), and Commercial Procedure Code of Ukraine (ComPCU). While the ICA Law provides the foundations of the operation of international arbitration in Ukraine, the procedural codes deal with specific procedural issues related to international commercial arbitration. For instance, the CivPCU governs the procedural issues related to the set aside of arbitral awards, recognition and enforcement of arbitral awards, court-ordered interim measures in aid of international arbitration proceedings. In its turn, the ComPCU lists arbitrability rules, and sets forth a presumption of validity and enforceability of an arbitration agreement.

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4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

Ukraine

According to the ICA Law, there are only two Ukrainian international arbitration institutions that are currently in operation and are authorised to administer international arbitration proceedings: (i) the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC) and (ii) the Ukrainian Maritime Arbitration Commission was established at the Ukrainian Chamber of Commerce and Industry (UMAC).

As a general rule, neither ICAC nor UMAC act as appointing authority, although they possibly could take on such a role should the parties agree so in their arbitration agreement. Instead, according to ICA Law, it is the President of the Ukrainian Chamber of Commerce and Industry who acts as appointing authority should the parties fail to agree on the appointment of sole arbitrator or should the two arbitrators fail to agree on the appointment of presiding arbitrator.

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5. Can foreign arbitral providers operate in your jurisdiction?

Ukraine

As of now, neither ICA Law nor any other Ukrainian law explicitly allows the operation of foreign arbitral institutions in Ukraine. It should be noted that despite an absence of a direct prohibition, the procedure for registration of foreign arbitral institutions remains moot. The ICA Law also allows for an ad hoc arbitration, which may be administered by a foreign arbitral institution, however, as a matter of practice, this has not been tested yet.

Notably, on 8 April 2021, the Ukrainian Parliament registered Draft Law No. 5347 On amendments to certain legislative acts of Ukraine on improving the arbitration activities. Among other things, this Draft Law aimed to introduce the legal foundation for creation, registration and operation in Ukraine of new permanent arbitral institutions, including the branch offices of already existing foreign arbitral institutions. However, as of now, the Draft Law has not been adopted into law and has been subject to significant criticism from the Ukrainian arbitration community.

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6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

Ukraine

There is no specialist arbitration court in Ukraine. Arbitration-related matters are dealt with general civil and/or commercial courts, depending on the matter in question. For instance, acting as a first instance court the Kyiv Court of Appeal is has an exclusive competence to consider the applications for recognition and enforcement of foreign arbitral awards. The Supreme Court acts as appellate and final instance. The court of appeal at the place of arbitration (usually also the Kyiv Court of Appeal) considers the applications for set aside of the international arbitral awards rendered in Ukraine. In addition, the commercial or civil court seized with the contractual dispute is also competent to refer parties to arbitration upon an application of the party unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

Ukrainian court's approach towards international arbitration could be generally characterised as pro-arbitration, especially following major judicial reform in 2017, causing the shift in jurisprudence of the reformed Supreme Court. In particular, the judicial reform brought significant changes to the arbitration-related procedures envisaged by the ICA Law, CivPCU and ComPCU, which formed part of what now represents the current international arbitration legal framework in Ukraine, namely:

  • introducing a two-tier system for review of arbitral awards, which replaced the previously existing burdensome and time-consuming multi-tiered review system – most of the arbitration-related disputes (recognition and enforcement and annulment of the arbitration awards) are subject to the jurisdiction of the Kyiv Court of Appeal and the Supreme Court;
  • introducing the principle of interpretation of arbitration agreement in favour of its validity and enforceability;
  • detailing a mechanism of the courts’ powers to grant interim measures, preservation and taking of evidence in support of arbitration;
  • introduction of a simplified procedure of voluntary compliance with arbitral awards, namely, the debtor willing to voluntarily comply with the award may apply to the court and get respective court ruling (eg, for complying with currency control restrictions); and
  • declaring corporate disputes in general as arbitrable (subject to certain requirements).

However, Ukrainian court approaches to arbitration-related procedures in certain cases may still appear to be inconsistent and quite conservative, especially with respect to concepts such as an extension of the arbitration agreement on non-signatories, which have not been sufficiently tested in the court jurisprudence.

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Agreement to arbitrate

7. What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

Ukraine

The ICA Law requires an arbitration agreement to be in writing. For this purposes, an arbitration agreement "in writing” means:

  • an agreement contained in a document signed by the parties or in an exchange of letters or other means of telecommunication that provides a record of the agreement;
  • 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; and
  • a reference in a contract to a document containing an arbitration clause, provided that the contract is in writing and the reference is such as to make that clause part of the contract.

The ICA Law does not provide for any other specific requirements for the substantive validity of an arbitration agreement and, therefore, the general rules of applicable contract law shall apply.

As already noted above, Ukrainian law sets forth a presumption of validity and enforceability of an arbitration agreement.

Under the ICA Law, the arbitration agreement can cover both future disputes and already existing disputes. Depending on whether it covers future or existing disputes, an arbitration agreement may be in the form of an arbitration clause in a contract (for future disputes) or in the form of a separate agreement.

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8. Are any types of dispute non-arbitrable? If so, which?

Ukraine

The ComPCU lists the following types of disputes, which are non-arbitrable under Ukrainian law:

  • disputes relating to the invalidation of public acts;
  • disputes relating to state registration and recording of real estate and securities rights;
  • disputes in relation to the registration, invalidation and termination of intellectual property rights, and the recognition of trademarks as well known;
  • disputes arising out of bankruptcy proceedings, including related disputes such as the invalidation of agreements with a debtor subject to bankruptcy proceedings;
  • disputes between a legal entity and its chief officer, including a former officer, relating to the recovery of damages caused to the legal entity by that officer; and
  • certain disputes relating to challenging the decisions of companies or their chief officers.

At the same time, the civil aspects of the following disputes are arbitrable under Ukrainian law;

  • disputes arising out of public procurement contracts;
  • disputes relating to the privatisation of state property (not including the state residential fund); and
  • certain disputes concerning unfair competition.

Corporate disputes involving company shareholders can only be submitted to arbitration if the company and all of its shareholders have entered into the arbitration agreement. This applies to disputes such as:

  • disputes between a company and its shareholders or former shareholders; and
  • disputes between the shareholders of a company related to the establishment, activities, management and liquidation of the company, other than labour disputes.

Moreover, the Law of Ukraine On Private International Law also lists types of disputes with a foreign element that fall within the exclusive jurisdiction of Ukrainian courts and that, in practice, the Ukrainian courts tend to consider to be also non-arbitrable:

  • if the immovable property, in respect of which a dispute arose, is located on the territory of Ukraine, except for cases related to the conclusion, modification, termination and execution of contracts concluded within the framework of public-private partnership, in particular concession contracts, according to which the immovable property is the object of such a partnership, in particular the object of a concession, and the dispute does not concern the emergence, termination and registration of property rights to such an object;
  • if in a case concerning legal relations between children and parents, both parties have a place of residence in Ukraine;
  • if in the inheritance case the testator is a citizen of Ukraine and had a place of residence there;
  • if the dispute is related to the registration of an intellectual property right that requires registration or issuance of a certificate (patent) in Ukraine;
  • if the dispute is related to the registration or liquidation on the territory of Ukraine of foreign legal entities, natural persons – entrepreneurs;
  • if the dispute concerns the validity of entries in the state register, the cadastre of Ukraine;
  • if in bankruptcy cases the debtor was created in accordance with the legislation of Ukraine;
  • if the matter concerns the issue or destruction of securities issued in Ukraine; and
  • cases related to adoption, which was carried out or is being carried out on the territory of Ukraine.

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9. Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

Ukraine

There are no legislative provisions in the Ukrainian law that would provide for a third party to be bound by an arbitration clause in certain circumstances.

Similarly, Ukrainian courts have not yet developed case law extending arbitration agreements to third parties similar to those existing in other jurisdictions. Therefore, the existence of arbitration agreement between all the parties to dispute is a prerequisite under Ukrainian law. However, there exists certain examples where non-signatories have been found bound by the arbitration agreement (ie, the Ukrainian court would likely consider a non-signatory to the arbitration agreement in the case of assignment of the contract with an arbitration agreement).

The Ukrainian arbitration law does not contain any specific provisions on the joinder of third parties that are not party to the arbitration agreement. Therefore, the issue of joinder primarily depends on the applicable arbitration rules. For instance, ICAC Arbitration Rules provide that a third party is allowed to join or to be involved in the arbitral proceedings if:

  • all the parties and the third party are bound by one arbitration agreement; or
  • all the parties and the third party have agreed to conduct the arbitral proceedings with the participation of that third party within the time limit of 15 days from the date of the request receipt, unless the Secretary General of the ICAC or the Arbitral Tribunal has established a longer period having regard to the relevant circumstances.

It is unlikely that the ICAC tribunal will allow the participation of a third party in any other manner, except as provided above.

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10. Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

Ukraine

Ukrainian law is silent on the competence of arbitral tribunal to consolidate separate arbitral proceedings under one or more contracts.

The ICAC Rules also do not explicitly envisage the power of the tribunal to consolidate disputes. However, the ICAC Rules indirectly recognise the possibility of consolidation by stating that when the arbitral proceedings in several cases are consolidated into one arbitral proceeding, the total amount of the arbitration fee is determined by summing up the arbitration fees.

Moreover, the ICAC Rules do mention that where the statement of claim contains claims arising from several contracts, it shall be accepted for arbitration provided that there is an arbitration agreement covering all such claims, as well as the fulfilment of obligations under these contracts, cannot be separated under separate claims.

If these requirements are not satisfied, the Secretary General of the ICAC shall propose to the claimant to separate the claims and bring independent claims under each contract.

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11. Is the "group of companies doctrine" recognised in your jurisdiction?

Ukraine

As a civil law jurisdiction, Ukraine does not have the common law doctrine of piercing the corporate veil or group of companies doctrine in their classical sense. However, certain Ukrainian law provisions, for instance, in insolvency and banking law, provide for a similar rationale, imposing the liability for the actions of the company (bank) upon its shareholders in certain cases.

However, as already noted above, the Ukrainian courts have not yet developed a jurisprudence on using such concepts to extend the applicability of arbitration agreements to third parties. This is further signified by the limited arbitrability of the corporate disputes involving the shareholders of the company, as explained above.

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12. Are arbitration clauses considered separable from the main contract?

Ukraine

The ICA Law mirrors the approach established in the UNCITRAL Model Arbitration Law with respect to the separability of an arbitration agreement in that, for purposes of the tribunal's jurisdiction, an arbitration clause that forms part of a contract shall be treated as an agreement independent of the other terms of the contract and a decision by the arbitral tribunal that the contract is null and void shall not entail the invalidity of the arbitration clause.

The jurisprudence of the Ukrainian courts also extended the separability principle to the issue of applicable law, noting that the arbitration agreement and the contract can be governed by different sets of laws.

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13. Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal's jurisdiction and competence?

Ukraine

The ICA Law recognises the concept of competence-competence, mirroring article 16 of the UNCITRAL Model Law. Thus, when a party challenges the jurisdiction of the arbitration tribunal, it is a matter for the tribunal to rule on its own jurisdiction.

A party to an arbitration is precluded from seeking the Ukrainian court’s ruling on an issue relating to the tribunal’s jurisdiction and competence before the award is rendered by the tribunal. However, a party can challenge an award given by a tribunal seated in Ukraine in the competent court or raise a jurisdictional defence when the award is brought for enforcement before the court.

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14. Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

Ukraine

To avoid any potential risks connected with the enforcement of an arbitration agreement and arbitral award, it is recommended to use the model arbitration agreement offered by the ICAC, which could be found in the ICAC Rules and on the ICAC website.

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15. Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

Ukraine

Institutional arbitration is rather more common among arbitration users in Ukraine than ad hoc international arbitration. Should the parties opt for ad hoc arbitration, the UNCITRAL Rules are commonly used to govern such arbitration proceedings.

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16. What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

Ukraine

Considering the absence in Ukrainian law of any specific rules on joinder of third parties and consolidation of disputes, it is recommended that the arbitration agreement incorporates the arbitration rules, which explicitly allow joinder and consolidation and provide for procedural guidance in this regard.

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Commencing the arbitration

17. How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

Ukraine

According to the ICA Law, arbitration proceedings shall be commenced when the respondent receives a request for arbitration, unless the parties agreed otherwise. From the practical perspective, arbitration proceedings in Ukraine are commenced with the submission of the request for arbitration and issuing of a respective resolution on the commencement of the arbitral proceedings.

The ICA Law does not establish any limitation periods for submission of the request for arbitration.

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Choice of law

18. How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Ukraine

Pursuant to the ICA Law, the arbitral tribunal shall resolve the dispute in accordance with such rules of law that the parties have chosen as applicable to the substance of the dispute. Thus, the primary point for the tribunal to determine the applicable substantive law would be the law of dispute chosen by the parties.

Moreover, unless otherwise intended by the parties, any provision of the law or system of law of any state shall be construed as referring directly to the substantive law of that state and not to its conflict of law rules.

In the absence of any instructions from the parties as to the applicable law in their contract, the arbitral tribunal is endowed with the discretion to determine the applicable law in accordance with the conflict of laws rules that it considers applicable.

Moreover, in all cases, the arbitral tribunal makes a decision in accordance with the terms of the contract and taking into account the trade customs related to this contract.

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Appointing the tribunal

19. Does the law of your jurisdiction place any limitations in respect of a party's choice of arbitrator?

Ukraine

The ICA Law does not place any limitations in respect of a party’s choice of arbitrator. The only requirement is for arbitrators to be independent and impartial.

Under the ICAC Arbitration Rules, only arbitrators listed in the Recommendatory List of the ICAC Arbitrators can be appointed by the parties or by the President of the Ukrainian Chamber of Commerce and Industry. Thus, from a practical point of view, the parties may appoint arbitrators out of the list only for ad hoc arbitrations.

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20. Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

Ukraine

The ICA Law does not place any limitations in respect of nationality of arbitrators. To the contrary, it explicitly mentions that no person shall be deprived of the right to act as an arbitrator by reason of his or her nationality, unless the parties have agreed otherwise. There are no immigration or licensing requirements for a person to act as an arbitrator in Ukraine.

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21. How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

Ukraine

Under the default rules in the ICA Law, in case of arbitration with a sole arbitrator, parties jointly appoint a sole arbitrator. In an arbitration with three arbitrators, each party appoints one arbitrator and the party-appointed arbitrators, in turn, jointly appoint the presiding arbitrator. In the case of default in any of the above, the President of the Ukrainian Chamber of Commerce and Industry appoints the arbitrators. Notably, in the case of a sole or third arbitrator, the President of the Ukrainian Chamber of Commerce and Industry preferably appoints an arbitrator of a nationality other than those of the parties.

It should be noted that the decision of the President of the Ukrainian Chamber of Commerce and Industry on the appointment of arbitrators is final and is not subject to appeal.

Moreover, where one of the parties does not follow the agreed procedure for the appointment of arbitrators, or the parties or two arbitrators cannot reach an agreement under such procedure, or the third person, including the arbitral institution, does not perform any function assigned to it according to such procedure, any party may request the President of the Ukrainian Chamber of Commerce and Industry to take necessary measures to ensure the compliance with the agreed procedure for the appointment of arbitrators.

The national courts are not allowed to intervene in the procedure for the appointment of arbitrators.

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22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

Ukraine

Neither the ICA Law nor any other Ukrainian legislative act provide for legal rules governing the immunity of arbitrators.

However, the ICAC Arbitration Rules envisages that the arbitrators (alongside the tribunal’s reporters, tribunal-appointed experts, the ICAC and Ukrainian Chamber of Commerce and Industry themselves and their employees) shall not be liable for any act or omission in connection with the arbitral proceedings.

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23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

Ukraine

The ICA Law explicitly empowers the arbitral tribunal to order the parties to pay the provisional advance on costs of the arbitration costs (including the arbitrator’s fees).

In the ICAC arbitrations, advance on costs is to be paid to the account of the Ukrainian Chamber of Commerce and Industry. Furthermore, unless the advance is paid, the case will not be processed and it is ground to terminate the arbitral proceedings.

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Challenges to arbitrators

24. On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

Ukraine

A party may challenge an arbitrator based on lack of impartiality, independence or qualifications as agreed by the parties. Under the default scenario envisaged by the ICA Law, a party must challenge an arbitrator in writing within 15 days of becoming aware of the formation of the arbitral tribunal or existence of the ground for challenge. If a challenged arbitrator does not withdraw voluntarily or the other party does not agree with the challenge, the decision on the challenge is to be taken by the arbitral tribunal. If the arbitral tribunal dismisses the challenge, a party can as a last resort apply to the President of the UCCI within 30 days of notification of the dismissal to decide this issue.

The ICAC Arbitration Rules provide for a similar procedure for challenging an arbitrator, with the only differences from the default procedure under the ICA law being:

  • The challenge must be made not later than 15 days after a party is notified of an arbitrator appointment or having become aware of circumstances that can serve as a ground for a challenge, but not later than the termination of the hearing. If a party fails to raise a challenge in the above-mentioned time frame, it shall be deemed to have waived his or her right to challenge an arbitrator in future.
  • The decision on challenge is taken not by the arbitrator tribunal, but by the ICAC Presidium.

Although neither the ICA Law, not the ICAC Arbitration Rules make a reference to the IBA Guidelines on Conflicts of Interest in International Arbitration, in practice, these are commonly relied on by the parties to substantiate the challenge of an arbitrator.

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Interim relief

25. What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

Ukraine

An arbitral tribunal has wide discretion to order interim relief under the ICA Law. In particular, an arbitral tribunal can, at the request of a party, order any interim measure of protection that the arbitral tribunal considers necessary in respect of the subject matter of the dispute.

Moreover, based on a request of a party to the arbitration, the Ukrainian court may also order interim relief in aid of arbitration proceedings, including to freeze the assets, prevent the party or third person from taking certain action, etc. Anti-suit injunctions are not specifically mentioned, but may potentially be effectuated by the court order to prevent the party from taking certain action.

The application for interim measures in aid of arbitration may be submitted to the court only after the arbitration proceedings are initiated.

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26. Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

Ukraine

The ICA Law explicitly empowers the tribunal to order parties to provide security for arbitration costs in relation to the arbitral proceedings or for a specific measure. The same applies to the court, which is entitled to order the proper security from the applicant.

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Procedure

27. Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

Ukraine

As a general rule, pursuant to the ICA Law, in the absence of the procedure agreed by the parties, the arbitral tribunal may, in compliance with the provisions of the ICA Law, conduct arbitration proceedings in such a manner as it deems appropriate.

However, there are a number of mandatory rules, which shall be complied with by the tribunal and failure to comply with which could serve as a ground for setting aside the arbitral award or for refusal to enforce the arbitral award. These rules could be found, apart from the ICA Law, in other legislative acts and could be summarised as follows:

  • limited powers of a national court to intervene into arbitral proceedings;
  • written form of the arbitration agreement;
  • equal treatment of the parties and provision of all possibilities for a party to present its case;
  • proper notification of the parties on appointment of a hearing and of parties' submissions; and
  • specific requirements for an arbitration award.

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28. What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

Ukraine

Unless otherwise agreed by the parties, the ICA Law mirrors the approach taken by the UNCITRAL Model Law and envisages the following procedural rules to be followed if a respondent fails to participate in an arbitration:

  • if the respondent fails to submit a statement of defence (complying with the requirements as to the contents of a statement of defence established by the ICA Law), the arbitral tribunal shall continue the arbitration proceedings without treating such failure in itself as an admission of the claimant’s claims;
  • if the respondent fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the arbitral proceedings and render the award based on the evidence before it; and
  • if the respondent fails to produce evidence at the request of an arbitral tribunal, it may draw adverse inferences by recognising the factual circumstance for the substantiation of which the evidence should have been presented, or by refusing to recognise it, or consider the case based on the evidence available before it.

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29. What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

Ukraine

The ICA Law does not provide for detailed provisions on evidence. It vests the arbitral tribunal with wide powers to determine the admissibility, propriety, materiality and significance of any evidence. In practice, the tribunals tend to heavily rely on documentary evidence, submitted by the parties with their respective written submissions (eg, contractual documents, invoices, correspondence). In addition, witness and expert statements are also admitted with the procedure to be determined by applicable arbitration rules.

The ICA Law does not make a reference to either IBA Rules on the Taking of Evidence in International Commercial Arbitration, or the Prague Rules (the Rules on the Efficient Conduct of Proceedings in International Arbitration). The tribunals tend to rely on the IBA Rules, although the agreement of the parties on its application is desirable. The Prague Rules have not yet gained popularity among Ukraine-seated tribunals.

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30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

Ukraine

The Civil Procedure Code provides Ukrainian courts with procedural powers to support arbitration proceedings by obtaining evidence, including by ordering the production of evidence or examination of witnesses and evidence.

The Ukrainian court exercises these powers only based on a request of the arbitral tribunal or, with the tribunal’s consent, based on an application by a party to the arbitral proceedings.

The jurisdiction to consider the above-mentioned requests or applications is vested with the appellate civil court at the place of the action to be performed.

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31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

Ukraine

The parties are free to agree on the rules of document production and the ICA Law does not specify any default rules in this regard. Ukrainian law provides arbitral tribunals with wide discretion in relation to document production. Moreover, as noted above, arbitral tribunals may apply to local courts to order the production of documents.

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32. Is it mandatory to have a final hearing on the merits?

Ukraine

As a matter of Ukrainian law, there is no general requirement for the tribunal to hold a final hearing on the merits, unless otherwise agreed by the parties. However, the tribunal is obliged to hold a hearing if one of the parties requests so, unless the parties previously agreed not to hold a hearing.

If the parties have not agreed to hold an oral hearing and neither party requests to hold such hearing, it would be up to the arbitral tribunal to decide whether to hold an oral hearing or to decide the case based on the written evidence and other materials submitted by the parties.

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33. If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

Ukraine

The ICA Law does not establish any restrictions on the place of the hearings and procedural meetings. The ICAC Arbitration Rules explicitly allow the parties to agree to hold hearings outside the ICAC location in Kyiv, Ukraine. However, the parties would need to bear all additional expenses arising in connection with the hearings held outside Kyiv.

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Award

34. Can the tribunal decide by majority?

Ukraine

The ICA Law does not elaborate specifically on whether the award could be rendered by the majority of arbitrators. Instead, it focuses on the signing of the award, providing that the award must be in signed by the sole arbitrator or arbitrators. In the case of a panel of arbitrators, it is sufficient to have the signatures of the majority of all members of the tribunal, provided that the reason for the absence of other signatures is indicated.

ICAC Arbitration Rules, in its turn, explicitly provide that in arbitral proceedings with three arbitrators the award shall be made by a majority vote.

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35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

Ukraine

The ICA Law does not impose any restrictions on the arbitral tribunal with respect to the type of relief it can grant. Ukraine-seated arbitral tribunals can grant the same remedies as Ukrainian courts, which are listed in article 16 of the Civil Code of Ukraine.

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36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Ukraine

Although the ICA Law does not explicitly mention dissenting opinions, it is generally agreed that such dissenting opinions are permitted. This is further signified by the fact that the ICAC Arbitration Rules explicitly entitle any arbitrator disagreeing with the award to express in writing his or her dissenting opinion, which shall be attached to the award.

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37. What, if any, are the legal and formal requirements for a valid and enforceable award?

Ukraine

The ICA Law establishes the following requirements that an award must comply with:

  • The award shall be made in writing and shall be signed by the sole arbitrator or arbitrators. In the case of a panel of arbitrators, it is sufficient that the award is signed by the majority of all members of the tribunal, provided that the reason for the absence of other signatures is indicated.
  • The award shall contain the date and seat of the arbitration, the reasons upon which it is based, the arbitral tribunal’s findings on the issues submitted for consideration and the allocation of costs between the parties.

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38. What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

Ukraine

The ICA Law does not specify the time limit for the tribunal to render the award.

Unless another time limit is agreed by the parties, the applications for correction and/or interpretation of the award shall be submitted by the parties within 30 days of the date of receipt of the award. The tribunal, if it finds the application to be justified, shall provide respective clarifications and/or make necessary corrections within 30 days of receiving the application (if necessary, the tribunal may extend this time limit).

Moreover, unless otherwise agreed by the parties, either of the parties may request the tribunal to issue the additional award within 30 days of the date of receipt of the award. The tribunal, if it finds the application to be justified, shall issue the additional award within 60 days of receiving the application (if necessary, the tribunal may extend this time limit).

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Costs and interest

39. Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

Ukraine

However, the ICA Law does not specifically address the manner in which the costs shall be allocated between the parties, and the parties are free to agree on this or, in case there is no such agreement in place, the issue would fall within the discretion of the arbitral tribunal.

Under the ICAC Arbitration Rules, the general rule is that the losing party bears the arbitration fee, and the arbitration fee is allocated proportionally between the parties if a claim is granted in part. As far as parties’ own expenses connected with arbitration concerned, the general rule is that parties bear their own expenses unless the arbitral tribunal finds that the winning party’s costs are reasonable and justified, and, thus, should be borne by the losing party. Moreover, the tribunal may consider a party’s bad faith actions or tactics and order such party to pay the additional expenses incurred by the other party as a result of such actions and tactics.

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40. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

Ukraine

The ICA Law does not offer any guidance as to the interest on the award in the case of Ukraine-seated arbitration proceedings. The issue of interest is generally determined in accordance with the law applicable to the dispute at hand.

For instance, if Ukrainian law applies to the dispute, arbitral tribunals will be empowered to award interest upon the claimant’s request. The interest rate stipulated by the parties in their contract will be applied. If the contract is silent on the interest rate, 3 per cent per annum rate is likely to be applied.

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Challenging awards

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

Ukraine

An award cannot be appealed on the merits before the Ukrainian courts. However, an award issued by a Ukraine-seated arbitral tribunal may be subject to set aside on an exhaustive list of grounds specified in the ICA Law and CivPCU.

Both the ICA Law and CivPCU mirror the grounds for setting aside of an award envisaged by the UNCITRAL Model Law.

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42. Are there any other bases on which an award may be challenged, and if so what?

Ukraine

Apart from the set-aside of an award, as mentioned above, there are no other grounds to challenge an award.

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43. Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Ukraine

The ICA Law does not allow the parties to waive any rights to seek a challenge against the award.

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Enforcement in your jurisdiction

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Ukraine

Mirroring article V of the New York Convention, the ICA Law and CivPCu provide such ground for refusal of enforcement of an award as "the award has not yet become binding on the parties, or has been set aside or its enforcement suspended by the court of the state in which or under the law of which it was made”.

However, the notable difference between article V of the New York Convention, on the one hand, and the CivPCU, on the other hand, is that article 478 of the CivPCU (which lists the grounds for refusal of enforcement), unlike the New York Convention’s discretionary “may”, frames these grounds as mandatory for the courts to apply.

Therefore, according to the CivPCU, if the Ukrainian court finds that an award has been set aside, it is the obligation of the court to refuse the enforcement of such an award.

If the foreign arbitral award is being challenged before the foreign courts, and put for enforcement before the Ukrainian court, it would have a discretion as to the suspension of enforcement proceedings, not an obligation. Therefore, in some cases, the Ukrainian courts rejected an application to suspend proceedings and ruled to recognise and enforce the foreign arbitral award irrespective of the set-aside proceedings abroad.

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45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

Ukraine

Overall, the recent trend of pro-arbitration approach from the Ukrainian courts remains to be in place. The courts have detached themselves from the practice existing in 2000s and 2010s, when the recognition and enforcement applications have been rejected on formalistic grounds (ie, minor mistakes in the name of arbitral institution, stringent approach to notification requirements, etc).

Notably, the Ukrainian courts have revised their approach to public policy as a ground for refusal in recognition and enforcement. On the one hand, the Supreme Court explained that this ground indeed relates to fundamental principles of existence of Ukrainian statehood, while alleged incorrect application of the law by the arbitral tribunal does not amount to the public policy ground. On the other hand, foreign arbitral awards against corruption allegations, sanctioned persons and Russian nationals would be closely scrutinised, and frequently refused, especially given the background of Russia’s full-scale invasion of Ukraine.

In the past, the Supreme Court has already elaborated on this public policy ground in the context of sanctions and national security considerations, refusing the enforcement of awards rendered in favour of a sanctioned Russian creditors against Ukrainian strategic enterprises based on the ground of public. This has been further reinforced by introduction to the Law of Ukraine On Public International Law of a new provision, according to which the decisions of foreign courts, including the foreign arbitral tribunals, cannot be recognised and enforced in Ukraine in cases related to debt recovery from the enterprise of the defence sector in favour of a legal entity of the aggressor state and/or the occupying state or a legal entity with foreign investments or a foreign enterprise of the aggressor state and/or the occupying power.

As a result, there has since been a widespread practice of parties objecting to the enforcement of awards in favour of Russia or Russia-related entities or individuals. The Ukrainian courts, however, have been more reluctant to refuse the enforcement of an award in cases where the debtor was not a Ukrainian strategic enterprise. Moreover, in cases where the creditor under the award was not a Russian enterprise or individual and rather the connection of such creditor with Russia was alleged, the courts usually required solid evidence of such connection and dismissed the public policy argument in the absence thereof.

Considering the context of Russia’s military aggression against Ukraine and the introduction of new legislative provisions imposing a moratorium on payments in favour of Russian entities, we therefore anticipate that denying recognition and enforcement of arbitral awards in favour of Russian entities or individuals is highly likely to become the new approach of Ukrainian courts.

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46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Ukraine

According to article 79 of the Law of Ukraine On Private International Law, foreign states enjoy absolute immunity in respect of themselves and their property from (i) suit, (ii) provisional measures and (iii) execution of court judgments. The only two exceptions to this rule include: waiver of immunity by the competent authority of a state in question, or if an applicable international treaty provides otherwise.

However, neither the Ukrainian law nor relevant court jurisprudence elaborate on the manner in which the waiver of immunity can be made. Thus, it is presumed that the states may indeed raise a defence of sovereign immunity, provided that such immunity was not waived.

Also notable is the recent judgment of the Supreme Court in a resolution dated 14 April 2022 in case No. 308/9708/19, which allowed the courts to ignore the sovereign immunity of the Russian Federation in certain cases. In particular, the Supreme Court concluded that a necessary requirement "for compliance with the principle [of sovereign immunity] is reciprocal recognition of sovereignty of a state, hence when RF objects as to existence of the sovereignty of Ukraine and commits the war of aggression, there is no obligation to respect and observe the sovereignty of this country”.

This is still to be developed and tested in the arbitration-related context, following the anticipated number of investor-state arbitrations against the Russian Federation, but immediate implications seem to be straightforward, there may be no defence with state immunity for the Russian Federation in Ukrainian courts. The approach with Belarus is more nuanced and remains to be developed with the jurisprudence.

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Further considerations

47. To what extent are arbitral proceedings in your jurisdiction confidential?

Ukraine

The ICA Law does not explicitly provide for the confidentiality of Ukraine-seated arbitration proceedings. Accordingly, the scope of confidentiality will depend on the specific rules applicable to respective arbitration proceedings. However, in practice, the Ukraine-seated arbitration proceedings remain confidential and, thus, arbitral awards are not made public in full.

For instance, the ICAC Arbitration Rules provide that the consideration of cases and other related activities of the ICAC are confidential, unless otherwise agreed by the parties. However, in ICAC arbitration proceedings, the ICAC Presidium may publish excerpts from awards in a manner that does not enable the identification of the parties of the arbitral proceedings, unless the parties have objected to publication within 30 days of receipt of the arbitral award.

In terms of national courts, launching the set-aside or recognition proceedings do not lift confidentiality over the arbitral award in question. The documents in the court docket are available only for the parties and the court, without direct access of third parties to the pleadings and attached documents. That being said, the hearings in such matters will be open to public, as well as court decisions in the proceedings.

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48. What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

Ukraine

As noted above, the arbitration proceedings in Ukraine are usually deemed to be confidential. The confidentiality extends to the parties’ written submissions and evidence submitted in the course of arbitration proceedings. Thus, as a general rule, such submissions and evidence are not public and could not be relied on in other proceedings.

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49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Ukraine

Ukrainian law does not impose any specific ethical obligations upon foreign counsel and arbitrators that participate in Ukraine-seated arbitration proceedings. However, Ukrainian counsel and arbitrators who are qualified lawyers in Ukraine are subject to the Ethical Rules for Attorneys-at-Law, non-compliance with which may result in disciplinary proceedings in relation to such counsel or arbitrator.

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50. Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

Ukraine

Other than what has already been highlighted above, there are no specific procedural expectations or assumptions for counsel or arbitrators to be aware of.

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51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

Ukraine

The concept of third party-funding is not regulated by Ukrainian law. As a result, there are neither restrictions nor explicit authorisations for the parties to resort to funding their claims in Ukraine-seated arbitration proceedings.

Considering the lack of regulation and relative lack of awareness of third-party funding concept among arbitration users in Ukraine, it gained very limited popularity in the Ukrainian jurisdiction.

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