Post-award interest usually accrues between the date on which an arbitral award is issued and the date on which payment of the awarded amount is made. Ukrainian legislation does not address the concept of post-award or post-judgment interest and difficulties can thus arise. While Ukrainian case law regarding the recovery of post-award interest is controversial, there are options that make the recovery of such interest possible.
In early 2016 the High Specialised Court for Civil and Criminal Cases published an extensive overview of Ukrainian case law relating to the recognition, enforcement and challenge of international arbitration awards. This update discusses the jurisdiction of Ukrainian courts to consider applications for the setting aside of arbitral awards delivered by the International Commercial Arbitration Court and the Maritime Arbitration Commission.
In early 2016 the High Specialised Court for Civil and Criminal Cases published an extensive overview of Ukrainian case law relating to the recognition, enforcement and challenge of international arbitration awards. The overview has been welcomed by lawyers, although certain interpretations and conclusions made by the court are far from radical.
The High Specialised Court for Civil and Criminal Matters has issued a decision which confirms that an application for recognition and enforcement of an arbitral award can be served only by the original claimant that took part in the arbitration proceedings. This was the first case brought before the court regarding the specific right of an assignee to seek recognition and enforcement of an award in Ukraine.
The involvement of state bodies in international commercial arbitration remains a pressing issue worldwide. A recent case in which the state prosecutor's office attempted to bypass an arbitration agreement and challenge before the courts a commercial contract signed by a state-owned company provides guidance on preventing unreasonable attempts of the state to interfere with ordinary business activities.
Many Ukrainian businesses submit disputes to arbitration before the Ukrainian and Russian Chambers of Commerce and Industry. This has a great deal to do with the geographical location of these institutions, the language used in their proceedings and their associated costs in relation to other arbitral institutions. However, a number of cases are also referred to arbitration in England, depending on the parties involved.
When asked to allow for the recognition and enforcement of foreign arbitral awards within their jurisdiction, courts must frequently consider whether a change of the original party to the arbitration agreement affects the enforceability of the award. Recent Ukrainian court practice shows that the courts are equivocal in their interpretation of statutes applicable to this issue, resulting in ambiguous case law.
It is standard practice for parties to international contracts to agree on the particular law that will apply to the contract. However, as two recent arbitrations show, parties occasionally make a mistake in properly naming the applicable law or include too many conflicting clauses in their contract, which may stymie an arbitral tribunal in deciding which substantive law should be applied.
The New York Convention provides that recognition and enforcement of a foreign arbitral award may be refused at the request of the party against which it is invoked only if that party furnishes proof that it was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings. However simple at first glance, the question of what constitutes 'proper notice' turns out to be less than clear in practice.
Creditors seeking enforcement of arbitral awards for claims against Ukrainian bankrupt companies face difficulties if the award has not been recognised by the courts of general jurisdiction. Such an award is not enforceable in Ukraine and the claim may be denied in bankruptcy proceedings. The courts have suggested their own solution to this problem – unfortunately, not a pro-arbitration one.
Article 52 of the Rules of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry governs the procedure for forwarding an arbitral award to the parties to arbitration proceedings. Recent changes have allowed arbitrators extra time to forward awards to parties; however, there are concerns that extension of the time limits might result in unreasonable delays in the rendering of awards.
The mitigation of damages is a well-known principle in international legal practice. Ukrainian case law and arbitration practice may lack a generally applied approach on the issue, but previous decisions of the International Commercial Arbitration Court at the Chamber of Commerce and Industry provide an indication of how the mitigation rules have been applied.
President Yanukovych has signed state budget legislation which provides for significant compensation payments to foreign investors in relation to arbitral awards rendered under the auspices of the International Centre for Settlement of Investment Disputes (ICSID). The move confirms Ukraine's willingness to honour its commitments under the ICSID Convention.
Amendments to the Code of Civil Procedure have ensured that applicants for recognition of international arbitral awards have recourse to security measures in respect of award debtors. The change represents a significant step forward for Ukraine as an arbitration-friendly jurisdiction; however, applicants must be aware not only of their rights, but also of the shortcomings and inconsistencies of legal procedure.
In the past few years the Ukrainian courts have addressed a number of significant issues relating to arbitration, including aspects of arbitrability, public policy defences against enforcement and recognition, the enforcement of awards against a state-owned entity and the enforcement of interim awards. These decisions provide a valuable indication of the courts' likely approach to recognition and enforcement.
A number of amendments were recently made to legislation concerning the recognition and enforcement of arbitral awards. Despite being generally positive, some of the changes were partial and incomplete and may lead to the emergence of new obstacles in enforcing arbitral awards. In particular, this applies to amendments to the Civil Procedure Code and the Commercial Procedure Code.
Amendments to the Law on Enforcement Procedure address a number of significant problems in giving effect to foreign arbitral awards - for example, a foreign award can now be enforced for payment in a foreign currency. However, Ukraine's acknowledged corruption problems and a general culture of avoidance may still obstruct the process. Do the latest reforms go far enough?
It is no secret that Ukraine is involved in at least 20 ongoing disputes before various jurisdictional bodies, including the International Centre for Settlement of Investment Disputes and the Stockholm Arbitration Institute. A new presidential decree helps to determine which state authority is in charge of instructing legal advisers to represent Ukraine's interests. However, the position of state companies is less clear.
Until recently it was widely held that human rights had little or no relevance to international arbitration, but decisions of the European Court of Human Rights (ECHR) have identified a remedy for a party seeking enforcement. A number of ECHR cases have considered Ukrainian law and institutions; understanding this case law is likely to help overcome the problems of enforcing foreign arbitral awards in Ukraine.
The most significant ongoing arbitration dispute involving a Ukrainian company - RosUkrEnergo v NJSC Naftogaz of Ukraine - has recently taken another procedural turn. The main issue in Ukrainian law is whether the legislation governing enforcement of awards allows for the enforcement of a non-monetary award with a penalty - in this case, a quantity of natural gas.