Ukrainian High Court Summarises Case Law on the Enforcement and Setting Aside of International Arbitration Awards

ukraine courtOn 11 December 2015, the Highest Specialised Court of Civil and Criminal Cases of Ukraine (the “HSC“) approved its Overview of case law related to the recognition and setting aside of international arbitration awards by Ukrainian courts (the “Overview“). The Overview was officially published in February 2016.

By means of this Overview, the HSC confirmed its overall pro-arbitration approach, thus increasing the level of certainty for foreign parties seeking enforcement of their arbitration awards in Ukraine. Some HSC statements, however, appear to be quite unexpected and may provide grounds for further controversies in court practice.

This article will cover the role of the Overview as a tool for the unification of case law, the main concepts adopted by the HSC and some of the questionable interpretations expressed by the court.

The role of the Overview

The Ukrainian legal system does not generally accept the concept of a precedent. Accordingly, it is possible that the same court, including the high court, will deliver contradictory decisions in similar cases.

An overview of case law is a special legal instrument used by Ukrainian high courts to summarise and unify case law in a particular field of law. Although such overviews are formally only of a recommendatory nature, they are in fact used extensively by lower courts as guidelines in similar cases (you may find more information on the Ukrainian court system and typical procedures here).

The current Overview is particularly important, as it is the first such document on international arbitration matters issued by a high court since the Resolution on the same subject issued by the Plenum of the Supreme Court of Ukraine 16 years ago.

The Overview addresses a number of technical and legal issues. Many of the approaches pronounced by the HSC are well-known in more developed jurisdictions, but Ukrainian courts have, until recently, been having difficulty navigating through these issues.

Prevalence of the international law rules over the national law rules

According to the Overview, the courts must look for relevant international agreements when considering cases on setting aside or on recognising and enforcing an arbitral award. The HSC states that, where there is an international treaty governing recognition and enforcement procedure, only the requirements for refusal of recognition and enforcement stipulated in that international agreement or treaty shall apply.

In the past, Ukrainian courts sometimes applied the rules of the Ukrainian Code of Civil Procedure, which were less favourable for parties seeking enforcement, instead of the more favourable (but less familiar to the courts) rules of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. It is hoped that the HSC position communicated by means of the Overview will put an end to this misapplication.

Defining the seat of arbitration

The HSC sets out the difference between the place of arbitration as agreed in the arbitration clause, and the de-facto place of hearing or of deliberations. Only the former is relevant for establishing which court is competent to consider applications to set the award aside.

As applicable to Ukraine, however, the HSC commented that Article 10 of the current Rules of the ICAC, Ukraine’s leading arbitration institution, does not allow parties to the arbitral award to choose any place other than Kyiv, Ukraine. This rule automatically subjects all possible challenges to any ICAC award to jurisdiction by those Ukrainian local courts that have jurisdiction for the current location of the ICAC office in Kyiv.

The above interpretation, however, appears to contradict the ICAC’s model arbitration clause, which specifically allows parties to choose a “place of arbitration.” Accordingly, if parties to the ICAC arbitration agreement choose a place of arbitration other than Kyiv, then this may easily lead to a situation where two courts accept jurisdiction over the setting aside of the arbitral award, one court being the Ukrainian court at the location of the ICAC office, and the other being a court at the place of arbitration chosen by the parties.

Consequently, and to avoid such parallel proceedings, foreign parties are advised to only choose ICAC Rules in their contracts when they agree that Ukrainian courts would be competent to set aside the award and that Ukrainian procedural law would apply in that respect.

Application of public policy grounds

The HSC rightfully points out that the concept of “public policy” has been difficult for Ukrainian courts due to its “non-specific and relative nature.” In fact, the HSC joined the courts in this uncertain attitude and avoided providing any clear definition or specific criteria that would help a court to establish a case of contradiction to public policy.

Instead, the HSC listed some situations where the application of the public policy concept would be unsuitable. For example, the application of foreign law by an arbitral tribunal does not constitute a contradiction to public policy per se, even if foreign law rules appear to be contradictory to Ukrainian law rules.

The overall tone and context of the relevant part of the Overview, despite all its vagueness, leaves an impression that the HSC is of an opinion that courts should normally refrain from using the application of “public policy” as grounds for refusing to recognise a foreign arbitral award. If the court, however, believes that there was a breach of public policy, then it should perform a thorough analysis of the case and give full and specific substantiation for the application of “public policy” grounds.

This position of the HSC is of high value because Ukrainian lawyers have been stating for years that the application of “public policy” grounds is one the biggest risks for a foreign party seeking enforcement of its arbitration award in Ukraine. Now we can report that this risk has been considerably decreased by the HSC position expressed in the Overview.

Mixing courts and tribunals

Despite the overall pro-arbitration context, the Overview contains some unexpected statements. One striking example is the HSC’s occasional inability to distinguish between a foreign court and an arbitral tribunal, which may lead to quite unexpected conclusions.

For example, Article 4 of the Agreement “On Procedure of Settling Disputes with Regard to Carrying out Business Activities” of March 20, 1992 (Kyiv Agreement) provides that “Claims of commercial entities for title to real estate should be considered exclusively by a court of the state …, in which the property is located.”

The HSC interprets this rule as establishing the exclusive jurisdiction of national courts and prohibiting arbitral tribunals from considering this type of case.

The 1992 Kyiv Agreement had been ratified and is valid for Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine (as per data available in 2008). Accordingly, if an arbitral tribunal makes an award in a dispute, for example, between a Russian and a Kazakh company on title to real estate located in Ukraine, then the Ukrainian court may declare that the tribunal acted outside its competence, and, consequently, the relevant award may be set aside or denied recognition and enforcement. By this means, the HSC effectively establishes a curious but dangerous case of party residence dependent non-arbitrability in real estate cases.

The practical outcome of such a move by the HSC is that a party wishing to enter into an arbitration agreement with a Ukrainian party or with another Ukrainian element has to look into arbitration agreement compliance, not only with regards to Ukrainian arbitration law, but also with regards to Ukrainian law rules governing selection of court by parties.

Parallel proceedings in cases of debtor insolvency

The HSC states that “commencement of insolvency proceedings and the creditor’s application to a commercial court for registration of his or her claims on the grounds of a foreign decision should not serve as grounds for refusal in applications for recognition and enforcement of the said decision.

With this statement, the HSC essentially indicates that two parallel proceedings arising from the same award in two different domestic jurisdictions exists. While the enforcement and recognition of international arbitration awards lies within the exclusive jurisdiction of general courts, insolvency proceedings are administered by commercial courts, which form a separate branch of the Ukrainian court system.

As far as we have been able to establish from the relevant case law, the commercial courts do not have any clear position on the HSC’s opinion regarding parallel proceedings of this kind. It is not uncommon for Ukrainian courts of different jurisdictions to provide different interpretations of the same rules of law. It therefore remains to be seen whether commercial courts will allow and accept the HSC’s approach and how they will avoid the risk of delivering conflicting decisions.


The Ukrainian court system has, with this Overview, made another step towards ensuring a more consistent approach to enforcing foreign arbitral awards. The same Overview, unfortunately, enshrines in the system some legal interpretations that are difficult to comprehend within the internationally accepted practice for recognising foreign arbitral awards.

As Ukrainian legislation and case law is evolving quickly in this field, we may believe that these misinterpretations will be corrected. In the meantime, parties are advised to seek advice from a local Ukrainian lawyer before including arbitration clauses in their contract with a Ukrainian element, or, at the latest, before filing a request for arbitration.

Taras Tertychnyi
Senior Associate, CMS Reich-Rohrwig Hainz TOV
Kyiv, Ukraine


Note: The full name of the Overview commented in this article is the Overview of Court Practice on Cases on Challenging of the Decisions of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry and on Granting Recognition and Enforcement of the International and Foreign Arbitral Awards, approved by the Highest Specialized Court of Civil and Criminal Cases of Ukraine Plenum Ruling No. 11 dated 11 December 2015. The text of the Overview in Ukrainian is available at the web site of the Highest Specialised Court.

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