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.(1) Following on from "High court issues overview of case law relating to international arbitration awards", which highlighted certain issues raised in the overview, this update addresses:
- the jurisdiction of Ukrainian courts to consider applications for the setting aside of arbitral awards delivered by the International Commercial Arbitration Court (ICAC)(2) and the Maritime Arbitration Commission (MAC)(3) at the Ukrainian Chamber of Commerce and Industry; and
- related matters, as clarified by the High Specialised Court for Civil and Criminal Cases (Section 7 of the overview).
In accordance with Article 389-1(5) of the Civil Procedure Code,(4) an award of international commercial arbitration where the seat of arbitration is Ukraine can be challenged by the parties before the courts in accordance with the international agreements of Ukraine and/or the Law on International Commercial Arbitration (4002-XII).(5)
In accordance with Article 34(1) of Law 4002-XII, a setting-aside application is an exclusive recourse against an arbitral award.
Further, in accordance with Articles 34(2) and 6(2) of the law, an application for setting aside an arbitral award will be considered by the regional, city district, city and municipal courts of the seat of arbitration.
Article 1(3) of the Rules of the ICAC at the Ukrainian Chamber of Commerce and Industry(6) stipulates that the ICAC has its seat in Kiev, Ukraine. Articles 10(1) and 10(2) of the same rules determine that the place of arbitration shall be Kiev, although the parties can agree to hold hearings outside the ICAC location.
Similarly, Article 1(3) of the Rules of the MAC at the Ukrainian Chamber of Commerce and Industry(7) stipulates that the MAC has its seat in Kiev. Articles 10(1) and 10(2) of the rules determine that the place of arbitration shall be Kiev, although the parties can agree to hold hearings outside the MAC location.
At the start of Section 7 of the overview, and on the basis of the above provisions, the High Specialised Court for Civil and Criminal Cases explained the following:
- Since the ICAC and the MAC both have their seats (ie, are physically located) in the Shevchenkivskyi district of Kiev, the first-instance court competent to consider applications for setting aside ICAC and MAC arbitral awards is the Shevchenkivskyi District Court of Kiev.
- The second-instance court competent to consider appeals against the relevant judgments of the Shevchenkivskyi District Court of Kiev is the Kiev Court of Appeal.
- The third-instance court competent to consider cassation appeals against the relevant judgments of the Kiev Court of Appeal is the High Specialised Court for Civil and Criminal Cases.
The High Specialised Court for Civil and Criminal Cases further highlighted the fact that the rules of both the ICAC and the MAC expressly the seat of any arbitration (or "the place of abritration" as is referred to in both sets of rules) held under their auspices: Kiev. The court explained that neither the parties nor the tribunal can change this seat (as opposed to choosing the location of hearings). As a result, the court clarified the following:
- Where a dispute has been referred to the ICAC or the MAC, the seat of the relevant arbitration will always be Kiev.
- The law applicable to the arbitration procedure will be Ukrainian law (being the law applicable at the seat of arbitration).
- Regardless of where the hearings or other procedural actions take place, the award should state that the seat of arbitration was Kiev.
- Any award delivered by the ICAC or the MAC can be set aside only by the Shevchenkivskyi District Court of Kiev (in the first instance).
The majority of national laws and institutional rules recognise the distinction between:
- the seat (ie, the legal place) of arbitration; and
- any other place where hearings or required procedural actions can be held or tribunals can hold deliberations.
This distinction is important as only the seat of arbitration determines the law governing the arbitration procedure and challenges to, and the enforcement of, arbitration awards. Ukrainian law also recognises this distinction.
As a rule, parties are free to agree the seat of their arbitration. In default of any such agreement, the seat of arbitration will be that which is set out in the relevant arbitration rules(8) or by the relevant authority or tribunal.(9) However, this is not the case with the ICAC and the MAC. As reconfirmed by the High Specialised Court for Civil and Criminal Cases, where a dispute is referred to the ICAC or the MAC, the seat of the relevant arbitration will always be Kiev, which the parties cannot change by agreement.
The English version of the arbitration clause recommended by the ICAC(10) suggests that parties can choose a different seat of arbitration from that defined in Article 10(1) of the ICAC rules, stating that "the place of arbitration shall be…". However, the Ukrainian and Russian versions of the model arbitration clause allow parties to choose only the place where the arbitral tribunal will meet.(11) Both versions of the arbitration clause recommended by the MAC (in English and Russian) also allow the parties to choose only the place of the MAC meetings.(12) Therefore, it is understood that the English version of the arbitration clause recommended by the ICAC was incorrectly translated from Ukrainian. The parties to the relevant arbitration agreement should be guided by the ICAC rules and Section 7 of the clarifications of the High Specialised Court for Civil and Criminal Cases, which confirm that in any ICAC arbitration, the parties can agree to hold only hearings and other necessary procedural actions outside the ICAC location.
For further information on this topic please contact Anna Kombikova at Eterna Law Group by phone (+38 044 490 7001) or email (firstname.lastname@example.org). The Eterna Law Group website can be accessed at www.eterna.law.
(1) High Specialised Court for Civil and Criminal Cases Plenum Resolution 11, December 11 2015, available in Ukrainian at www.sc.gov.ua/ua/postanovi_za_2015_rik.html.
(9) For example, Article 20(1) of the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce; Article 18(1) of the International Chamber of Commerce Rules of Arbitration; or Article 18(1) of the United Nations Commission on International Trade Law Arbitration Rules.
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