Arbitration
UNCITRAL Model Law
Is the arbitration law based on the UNCITRAL Model Law?
The Law of Ukraine ‘On International Commercial Arbitration’ is based on the UNCITRAL Model Law of 1985.
Arbitration agreements
What are the formal requirements for an enforceable arbitration agreement?
Under the New York Convention and the Law of Ukraine ‘On International Commercial Arbitration’, the arbitration agreement must be in writing and should be put into the ‘container agreement’ signed by the parties. The arbitration agreement could be a part of the main contract (article 7 of the Law of Ukraine ‘On International Commercial Arbitration’). It is also recommended to avoid any inaccuracies in the arbitration agreement because the Supreme Court, in its Resolution dated 18 October 2017 in case No. 910/8318/16, stated that:
The court may declare the agreement unenforceable due to a material mistake of the parties in the name of the arbitral tribunal to which the dispute is referred (a reference to a non-existent arbitral institution), provided that the arbitration agreement does not specify the place of arbitration or any other provisions that would allow to establish the true intentions of the parties to choose a particular arbitral institution or the rules under which the arbitration proceedings are to be conducted. If the arbitral institution is uncertain, a party to the arbitration agreement shall not be obliged to apply to one or more arbitral institutions before applying to the competent state court to determine their competence regarding the dispute.
Choice of arbitrator
If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?
As per article 10(1) of the Law of Ukraine ‘On International Commercial Arbitration’, in cases where the arbitration agreement does not specify the number of arbitrators to be appointed, there will be three arbitrators.
If there is no agreement on the appointment procedure, the following rule shall apply: each party shall appoint one arbitrator, and these two arbitrators shall appoint the third arbitrator. If a party fails to appoint an arbitrator within 30 days of receipt of a request to do so from the other party or if the two arbitrators fail to agree on the appointment of the third arbitrator within 30 days of their appointment, at the request of either party the arbitrator shall be appointed by the President of the Ukrainian Chamber of Commerce and Industry (article 11(3) of the Law of Ukraine ‘On International Commercial Arbitration’). Regarding restrictions, a decision on any matter related to the appointment of an arbitrator in the absence of the agreement or cases determined by paragraph 4 of article 11 of the Law of Ukraine ‘On International Commercial Arbitration’ shall not be subject to appeal.
Arbitrator options
What are the options when choosing an arbitrator or arbitrators?
The parties are free to choose their arbitrators. The pools of recommended arbitrators are provided by the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry, Maritime Arbitral Commission at the Ukrainian Chamber of Commerce and Industry, the Ukrainian Arbitration Association and other specialised institutions and organisations operating in Ukraine.
Arbitral procedure
Does the domestic law contain substantive requirements for the procedure to be followed?
Ukrainian domestic law grants substantial procedural party autonomy as long as the arbitral tribunal ensures that all parties are treated equally and given a fair chance to present their cases. However, the Law of Ukraine On International Commercial Arbitration’ specifies certain procedural deadlines in arbitration proceedings:
- objections to the tribunal’s jurisdiction must be raised before submitting the defence statement; and
- claims that the tribunal is overstepping its authority should be made as soon as the issue arises during the proceedings.
Despite these rules, the Arbitration Act permits the tribunal to entertain these objections at later stages if deemed appropriate. The Act also outlines the conditions for terminating arbitral proceedings.
The Law of Ukraine ‘On International Commercial Arbitration’ also establishes default rules covering:
- the number of arbitrators;
- the process for forming the tribunal;
- the grounds for challenging an arbitrator;
- the start date of the proceedings;
- the requirement for a hearing if a party requests it;
- the repercussions for a party’s failure to provide required submissions or evidence per the tribunal’s request;
- procedures for expert evaluation and cross-examination;
- decision-making processes; and
- the correction and interpretation of the arbitration award.
Court powers to support the arbitral process
What powers do national courts have to support the arbitral process before and during an arbitration?
Ukrainian domestic courts have somewhat restricted authority, which is auxiliary. Ukraine is a favourable competence-competence country, so significant deference is granted towards arbitration.
The Cassation Civil Court of the Ukrainian Supreme Court in its Resolution dated 8 April 2021 in case No. 824/53/19 has described the national courts’ authority regarding arbitration as follows:
The court, at the request of one of the parties, shall request evidence in accordance with the procedure established by this Code (Article 477(2) of the CPCU); may, at the request of a person applying for recognition and enforcement of an international commercial arbitration, take interim measures provided for by this Code; may, at the at the request of any of the parties and if there are valid reasons, postpone consideration of the application (Article 477(6) of the Code); may suspend the proceedings in the case if there is an application for cancellation of this decision in the proceedings of the competent court (Article 477, Article 482 of the CPCU); if the award of international commercial arbitration has already been enforced before, it determines in which part or from when it is to be enforced (Article 479 of the CPCU); if the award of international commercial arbitration provides for commercial arbitration award provides for the payment of interest and (or) penalties accrued in accordance with the terms and conditions specified in the award international arbitration award, it shall indicate in its award on recognition and enforcement of such award the accrual of such interest and/or penalty until the award is enforced, taking into account the current legislation governing such accrual (Article 479(4) of the CPCU).
Interim relief
Do arbitrators have powers to grant interim relief?
According to article 9 of the Law of Ukraine ‘On International Commercial Arbitration’, articles 149(3) and 477(3) of the Civil Procedure Code of Ukraine, only a civil court can grant interim relief. While arbitrators, under article 25 of the Rules of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry, the arbitral tribunal can only determine the size and the form of the interim relief.
Award
When and in what form must the award be delivered?
Based on article 31 of the Law of Ukraine ‘On International Commercial Arbitration’, an award must be in written and, as a rule, must be signed by all arbitrators of the Arbitral Tribunal. However, the award can be signed by the majority of arbitrators indicating the reasons for the absence of signatures of other arbitrators. After that, copy of such award should be sent to every party.
Appeal or challenge
On what grounds can an award be appealed or challenged in the courts?
Ukrainian legislation provides a possibility for a further appeal of the award in the courts of appeal at the location of the arbitration (article 34(2) of the Law of Ukraine ‘On International Commercial Arbitration’).
A party can file an appeal on the following grounds (article 34 of the Law of Ukraine ‘On International Commercial Arbitration’):
- one of the parties to the arbitration agreement was incapacitated;
- the agreement is invalid by law;
- a party was not duly notified of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to submit its explanation;
- the award is rendered in respect of a dispute not covered by the arbitration agreement or not subject to its terms, or contains rulings on issues outside the scope of the arbitration agreement; or
- the composition of the arbitral tribunal or the arbitral procedure did not comply with the agreement of the parties, unless such agreement contradicts any provision of law from which the parties may not derogate, or, in the absence of such agreement, did not comply with law.
Enforcement
What procedures exist for enforcement of foreign and domestic awards?
Ukraine is a party to the New York Convention, so general recognition and enforcement procedures apply. Domestic awards are enforced in accordance with the Law of Ukraine ‘On Enforcement Proceedings’.
Notably, after the Russian full-scale invasion, Russia’s judicial sovereign immunity (including enforcement immunity) has been uplifted by the Supreme Court under the tort exception (see Resolutions dated 14 April 2022 in case No. 308/9708/19 and dated 18 May 2022 in the case No. 760/17232/20).
Costs
Can a successful party recover its costs?
Section VIII of the Schedule of Arbitration Fees and Costs of the Rules of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry allows the successful party to recover its costs for protecting its interests in proceedings conducted at the ICAC. Although not provided explicitly, it could be implied that third-party funding costs are covered by costs related to the party’s protection in arbitration proceedings. Therefore, they also could be recovered. Such request for reimbursement of costs must be claimed before the completion of the hearing of the case.