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Counsel, International Dispute Resolution, Hillmont Partners
Recognition and Enforcement of Foreign Interim Injunctions in Ukraine
A Worldwide Freezing Order (“WFO”) is an interim injunction granted by English courts to restrain individuals or companies from dissipating assets until a judgment can be obtained. WFOs and other foreign interim injunctions are considered as powerful tools in cross-border litigation as they enable the restriction of the transfer of money held in bank accounts, shares, tangible or intangible property in different jurisdictions. In Ukraine, the applicable procedural legislation does not provide for a particular procedure on recognizing and enforcing foreign freezing injunctions, although relevant court practice does shed some light.
Procedure on Recognition and Enforcement of Foreign Judgments
As a rule, foreign judgments are recognized and enforced in Ukraine if their enforcement is provided for by international treaties to which Ukraine is a party or under the reciprocity principle. Ukraine has signed a large number of bilateral treaties on the basis of which foreign judgments in civil and commercial cases are subject to recognition and enforcement in Ukraine. Consequently, foreign court orders on interim measures are usually enforced in Ukraine on the basis of a relevant bilateral treaty, which has come into force.
The principle of reciprocity applies to the enforcement of WFOs and other freezing injunctions issued by courts of common law jurisdictions with which Ukraine has not signed relevant international treaties. Generally, the reciprocity principle is presumed to exist unless there is evidence to the contrary. Therefore, Ukrainian courts may refuse to enforce foreign judgments if a party demonstrates that there is no reciprocity on recognition and enforcement of judgments between Ukraine and the relevant jurisdiction.
According to part 2 of Article 462 of the Civil Procedure Code of Ukraine, foreign judgments are recognized in Ukraine based on motions which are filed to civil courts defined as based on the defendant’s registered place of residence (if such place is unknown the motion should be filed on the basis of the property’s location. In Ukraine, such foreign court decisions are recognized within the civil procedure and they may normally be enforced in Ukraine within three years from the date of their coming into force.
Along with the motion, a party must file the following documents:
1. certified copy of the foreign judgment;
2. official document certifying that the foreign judgment has come into force (if the judgment does not specify so);
3. document specifying that a party which did not participate in the consideration of the case was duly notified of the proceedings;
4. document specifying which part of the judgment must be enforced (if applicable);
5. document certifying the powers of the legal representative (if applicable);
6. duly certified translation into Ukrainian of any documents, etc.
Five days after receiving the motion, the court will notify the debtor in writing and request thereof to provide one’s objections within a month. After reviewing the submitted documents and listening to the explanations of the parties, the court will decide on recognizing and enforcing the foreign court decision in Ukraine.
In practice, when considering foreign interim injunctions, courts sometimes rely on the Resolution of the Plenum of the Supreme Court of Ukraine No. 9 On the Application of the Civil Procedural Legislation by the Courts for the Consideration of Interim Injunctions of 22 December 2006. According to the Resolution, an applicant seeking an interim injunction shall provide the court with the following:
- evidence that a dispute exists between the parties and there is a genuine risk that the final judgment or arbitral award would not be enforced or that enforcement will be impeded;
- information on the debtor’s identity;
- statements on the compatibility of the claims to the requested security measure in the form of seizure of the debtor’s property.
Although the above-mentioned requirements relate to the consideration of interim injunctions issued by domestic courts, they are often taken into account in interpreting foreign court orders on interim measures.
The civil court also may object to enforcing a foreign judgment if:
1. a foreign judgment has not come into force;
2. a party was deprived of the opportunity to participate in court proceedings since it did not receive timely and correct notification of the hearing;
3. the dispute must be considered by Ukrainian courts;
4. the enforcement of foreign judgment would threaten the interests of Ukraine;
5. the decision of the Ukrainian court in a dispute between the same parties, on the same subject and on the same grounds has come into force, etc.
Furthermore, Ukrainian procedural law sets out additional requirements to the types of interim injunctions and the subject matter of the dispute which is being considered by the court. In particular, Article 150 of the Civil Procedural Code of Ukraine does not allow a claim to be secured by any of the following means:
- freezing of wages, pension, scholarship and any other social security payments;
- freezing of the property or assets of the clients of an insolvent bank;
- identical provisional measures to the party’s claims, if the dispute is not resolved on its merits;
- suspension of a temporary administration or liquidation of a bank;
- termination, postponement, suspension or other interference with a tender, auction, bidding or other;
- public competitive procedure conducted on behalf of the State, etc.
In addition, the Commercial Code of Ukraine excludes any application of the following types of interim injunctions in disputes arising out of corporate relations:
- prohibiting shareholders from holding shareholders’ meetings, attending shareholders’ meeting or — making certain decisions in such meetings;
- prohibiting the production of the register of shareholders or other registers of subscribed securities holders;
- prohibiting the provision of information concerning shareholders’ meetings for the purpose of holding shareholders’ meetings;
- prohibiting public bodies from exercising their statutory powers.
Peculiarities of the Enforcement of WFOs and other Interim Injunctions in Ukraine
Although Ukrainian civil procedural legislation provides for general requirements and steps to recognize and enforce foreign court decisions (in particular, an interim injunction), rather sparse court practice reveals the procedural pitfalls and impediments that can arise when enforcing and/or recognising a foreign judgment.
Ukrainian courts have different approaches to the enforcement of WFOs in Ukraine and the interpretation of facts established by a foreign court. For example, according to the court ruling adopted by the Holosiivskyi District Court of Kyiv City of 1 June 2012 in case No. 2601/9578/12, a permit was granted to enforce the WFO issued by the High Court of Justice, Queen’s Bench Division, Commercial Court. The court found that the WFO did not require enforcement and should only be recognized in Ukraine.
In another case, the claimant asked the court to establish the respondents’ breach of the WFO issued by the High Court of Justice. On 12 January 2021, the Central Commercial Court of Appeal in its Resolution rendered in case No. 904/384/20 analysed the claimant’s argument that by acquiring shares in Southern Mining and Processing Plant PJSC the respondents attempted to avoid the consequences of a WFO. The Claimant argued that the share purchase agreements are not intended to have any real legal effect, since if the funds are transferred to the accounts of legal entities whose assets have been seized by the English court, the ultimate beneficiaries will not be able to dispose of such funds prior to the termination of the WFO. The Central Commercial Court of Appeal rejected this argument on the basis that the claimant’s allegations were not supported by sufficient and admissible evidence.
Ukrainian courts usually require foreign courts to provide evidence that no grounds impede enforcement of a foreign judgment. In particular, the Derhachiv District Court of Kharkiv Region in its Ruling of 22 October 2014 in case No. 619/1880/14-ц satisfied the defendant’s motion and ordered to address the District Court of Stara Zagora of the Republic of Bulgaria through the Ministry of Justice of Ukraine with a request to inform whether:
1. the foreign interim injunction had come into force;
2. the defendant has been duly notified about the time and place of the court hearing and whether it was served with a copy of the statement of claim;
3. the defendant was duly informed of the interim injunction granted by the court;
4. the decision entered into legal force.
Since timing is of the essence for a freezing injunction the civil court request, as outlined above, may result in an additional 8 months of waiting, thereby diminishing the effectiveness of the freezing injunction.
Another thing that should be taken into account is the possibility to recognize and/or enforce a foreign judgment as an interim measure. According to Article 466 of the Civil Procedure Code of Ukraine, an interim decision in the case on enforcing a foreign court decision can be issued. Thus, the Podilskyi District Court of Kyiv City, by its Ruling of 6 May 2019, satisfied the motion on securing the claim on the territory of Ukraine in case No. 758/5786/19. In the meantime, the main civil case subject was the enforcement of the decision of the District Court of the Seventh Judicial District of Idaho, Bonneville County, United States, regarding the collection of USD 2,200,000 from the defendant. In this case, the court satisfied the injunction motion and ordered seizure of the defendant’s property before rendering a final decision on recognizing and enforcing the foreign judgment.
In a similar case, the defendant succeeded in challenging the property seizure based on the foreign court decision. In particular, the Zhovtnevyi District Court of Mariupol City, Donetsk Region, with its ruling of 22 November 2016 in case No. 263/2404/16-ц satisfied the motion on enforcing the decision of Kozani city court of the Hellenic Republic (Greece) on property seizure to secure the claim for 42,972 euros. Thereafter, on 22 December 2016 the Zhovtnevyi District Court of Mariupol City, Donetsk Region, with its ruling prohibited enforcing the decision of the District Court in Kozani of the Hellenic Republic on the grounds that it had not come into force due to appeal and, thus, cancelled the previously imposed seizure. The Appeal Court of Donetsk Region agreed with the findings of the court of first instance that there was no basis for maintaining the seizure of the defendant’s property, since the foreign judgment had not come into force.
In another case on property seizure, the Husiatynskyi District Court of Ternopil Region, with its ruling of 1 July 2015 in case No. 596/522/15-ц satisfied application on the recognition and enforcement of the decision of the Regional Court of Nicosia (Cyprus) of 5 February 2015 on property attachment. In the case, the court analyzed the applicable provisions of the international treaty between Ukraine and Cyprus on legal assistance in civil cases and decided to attach the defendants’ property and corporate rights with a total value of USD 1.5 mln. It should be noted that the court not only assessed the legal grounds for recognition and enforcement of a foreign judgment, but also analysed the merits of the case.
Although the Civil Procedure Code of Ukraine provides a general description of the process of recognizing and enforcing foreign judgments, in practice complainants quite often face different procedural impediments. In the absence of clear guidance, Ukrainian courts apply different approaches to the recognition and enforcement of WFOs and other interim injunctions granted by foreign courts. Therefore, in order to seamlessly recognize and enforce a foreign judgment, an applicant should ensure collection of all supporting evidence required by Ukrainian procedural law and provide it to the respective civil court.