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Partner, Jurvneshservice. Doctor of Law, Member of Kyiv Region Bar Association and Centre for International Legal Studies (Salzburg, Austria). Dr. Tsirat graduated in 1989 from the Institute of International Relations of Taras Shevchenko National University of Kyiv, Faculty of International Law where he presented his research thesis on Enforcement of Foreign Arbitral Awards in 2000 and Unification of International Civil Procedure in 2015
International Civil Procedure
Considering and resolving civil, commercial and investment cross-border disputes remains one of the most important practices as it is an object of constant attention from business, investors, judges, arbitrators and law society. The most relevant and significant issues traditionally referred to in the international civil process, are:
International jurisdiction of Ukrainian and foreign courts regarding commercial and civil matters where Ukrainian and foreign parties (so-called international element) are involved (namely, foreign-related cases);
The procedure for rendering of international legal assistance in the course of consideration of civil and commercial cases that involve foreigners in Ukrainian courts (servicing abroad of judicial and extrajudicial documents that should ensure due notification of foreign persons on cases brought against them and their right to a proper defense), taking evidence abroad and information on foreign law;
procedures for recognition and enforcement of foreign judgments and arbitral awards in Ukraine against debtors and their property located in Ukraine and enforcement abroad (in foreign jurisdictions) of Ukrainian court judgments and arbitral awards.
2017 brought some improvements in Ukrainian civil procedure.
New Procedural Codes
In 2017 the Ukrainian Parliament finally adopted new versions of the Civil and Commercial Procedural Codes that were significantly changed and, as a result, moved closer to world standards of civil justice, including the ALI/UNIDROIT Principles of Transnational Civil Procedure. Matters connected with peculiarities of consideration of foreign-related cases have not been amended, which is testimony of the constancy of these provisions, satisfactory regulation in general and their “successful” application by Ukrainian courts. These are sections relating to such issues as definition of legal status of foreign natural and legal persons in civil procedure, procedures for legal assistance in the service of judicial documents abroad, taking of evidence abroad, recognition and enforcement of foreign court judgments, execution by Ukrainian courts of foreign letters of request in civil and commercial matters.
Choice of Court in Cross-Border Litigation
Ukrainian court practice shows broader use of choice of court agreements by Ukrainian companies and their foreign partners in their commercial contracts. Ukrainian commercial courts entertain actions covered by Article 75 of the Law of Ukraine On Private International Law (PIL), according to which disputes with foreign persons involved may be considered by Ukrainian courts in accordance with the agreement of the parties.
Adoption of the new procedural codes resulted in broadening of application of choice of court agreements in civil and commercial disputes. While Articles 75 and 76 of PIL provide a possibility of choice of merely Ukrainian courts, the relevant rules of the amended procedural codes (Article 22 of the Civil Procedural Code (the Civil PC) and Article 23 of the Commercial Procedural Code (the Commercial PC) directly give the parties a right to refer consideration of disputes to foreign courts.
These changes reflected a new Ukrainian approach to the choice of court agreements in the sphere of cross-border litigation since the time of Ukraine’s accession to the Hague Convention of 30 June 2005 on Choice of Court Agreements (the Hague Convention) in 2016. Unfortunately, 2017 did not become the year of ratification of the Hague Convention by the Ukrainian Parliament, which could have introduced the provisions of the Hague Convention into the legal framework of Ukraine and created necessary legal conditions for more active application of choice of court agreements and, notably, ensure enforcement of Ukrainian court judgments abroad and of foreign court judgments in Ukraine. We expect Ukraine to ratify the Hague Convention in 2018 in order to join the community of contracting states and let Ukrainian and foreign businesses be able to use choice of court agreements to select a jurisdiction that is more “favorable” for consideration of their disputes in accordance with party autonomy.
Creating More “Friendly” Environment for International Commercial Arbitration in Ukraine
It seems that arbitration plays a primary role in international dispute resolution. Still, despite of that fact, arbitration lacks some “compulsory” mechanisms as opposed to state courts. So, judicial procedures playing a “supporting” role in consideration of cross-border disputes by international commercial arbitration courts (ICACs) are important. These procedures include interim measures that are applied to provide a claimant with an opportunity to receive binding and enforceable legal means to enforce an arbitral award in future. Interim measures encompass the arrest of a defendant’s assets, prohibition to perform certain actions, etc.
Certain novelties occurred in the resolving of commercial disputes by ICACs.
Firstly, the amended Commercial PC finally resolved the issue of arbitrability of disputes. It defined the disputes which shall be considered exclusively by state courts in accordance with the general rules of jurisdiction, without the possibility to be referred to the consideration of ICACs.
Judicial procedures for court “support” of arbitration and control over ICACs were changed too.
A procedure of joint adjudication of applications for the setting aside an arbitral award and for the recognition and enforcement of an arbitral award in the same court proceeding was introduced. This will result in substantial procedural savings of time and elimination of grounds for abuse of procedural rights on the part of a debtor.
Besides, the rules of jurisdiction in cases on recognition and enforcement of arbitral awards (obtaining exequatur) were changed. While previously these cases were considered by district courts of general jurisdiction at the site of a debtor or its property location, now all such cases are referred to the Kyiv Court of Appeal as a court of first instance, regardless of a debtor’s or its property location. Such “centralization” will have several consequences: (1) as all cases on recognition and enforcement of arbitral awards will be considered only by this court, the latter will accumulate significant legal practice, and judges will be highly-qualified in these cases; (2) the number of instances is reduced to two instances only; (3) the “monopoly” of the Kyiv Court of Appeal might have a negative effect in the form of “strong authorities” as it will have exclusive competence to decide in cases on recognition and enforcement of arbitral awards.
Secondly, the urgent issue of granting of interim measures in state courts of Ukraine while a dispute is being under consideration by an ICAC was finally resolved. The Civil PC now explicitly provides that state courts may grant interim measures as to persons or their property located in Ukraine on the same grounds and in the same scope as in other cases considered by state courts. Article 150 of the Civil PC provides for a list of interim measures. These provisions will allow claimants to guarantee the preservation of disputed property or to prevent changes that could adversely affect the legal and property status of debtors and, thus, interfere with further enforcement of arbitral award.
Claimants shall apply to a court of general jurisdiction that is a court of appellate instance at the seat of an ICAC or defendant, or its property. Thus, interim measures can be obtained not only in disputes considered by arbitral institutions located in Ukraine, as, for example, the ICAC at the Ukrainian Chamber of Commerce and Industry or an ad hoc arbitration, but also by those that have a seat outside of Ukraine. For example, a request for arbitration is submitted to the International Chamber of Commerce (Paris, France), while the defendant is domiciled in Ukraine or has property there, so the claimant has the right to request a Ukrainian state court to grant interim measures provided by the Civil PC, and that measures shall be compulsorily enforced within the framework of the State Bailiff Service of Ukraine. So, the “old” problem of arbitration “weakness”, which manifested itself in a lack of effective mechanisms for enforcement of interim measures in arbitration in comparison with those issued in disputes the considered by state courts, has been solved positively.
Nonetheless, the problem of exequatur in Ukraine of interim measures issued by ICACs located in Ukraine or abroad (as opposed to those issued by state courts) remains unsolved. Though some Ukrainian courts have over past few years satisfied applications for enforcement in Ukraine of preliminary awards or decisions of extraordinary arbitrators, there have been other decisions where Ukrainian courts refused to satisfy similar applications. Clear introduction into Ukrainian law of a legal procedure, as that proposed by UNICITRAL Model Law on International Commercial Arbitration (with amendments as adopted in 2006), could significantly increase the effectiveness of arbitration as a means in international dispute resolution. Despite this “defect” we can say that in general there is a friendly attitude in Ukraine towards arbitration as an alternative system of dispute resolution.