Dispute Resolution 2010

GENERAL

1. Please give a brief overview of the use of commercial arbitration in your jurisdiction, including any recent trends. What are the general advantages and disadvantages of arbitration compared to court litigation in your jurisdiction?

Commercial arbitration is divided into two distinct categories: international and domestic. Commercial disputes involving a foreign or international element may be brought before international arbitration tribunals subject to the relevant arbitration clause. Ukrainian legislation establishes two arbitration bodies with exclusive competence to deal with international commercial disputes:

■ International Commercial Arbitration Court (ICAC), which deals with general commercial disputes.

■ Maritime Arbitration Commission at the Ukrainian Chamber of Commerce and Industry, which deals with merchant shipping disputes.

International commercial arbitration is generally regarded as the best option where foreign parties are involved because of its speed, confidentiality, impartiality and expertise. In addition, the ICAC received semi-public powers under the Law on Payments of Foreign Currency. For example, a Ukrainian company may be subject to financial sanctions for failure to obtain payment in foreign currency in its account within 180 days after the supply of goods/services abroad, unless an action against the defaulting foreign counterparty is filed with a court of law or the ICAC (no other arbitration institution qualifies). Therefore, Ukrainian com­panies involved in international trade often insist on including an arbitration clause referring disputes to the ICAC. This is because bringing a court claim against a foreign company without a repre­sentative office or property in Ukraine is barred by procedural law.

Ukraine is a party to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Conven­tion) and the European Convention on International Arbitration 1961 (Geneva Convention).

The internal domestic arbitral bodies are prohibited by law from considering cases involving foreign elements and have, so far, gained little trust among large businesses in Ukraine. Therefore, they are rarely entrusted to deal with serious commercial disputes.

The Law on Internal Arbitration was recently amended. As a result:

■ Third parties, whose interests have been affected by the proceedings before these internal tribunals, can appeal against the awards.

■ The tribunals’ powers have decreased. They can no longer consider corporate, land and labour disputes.

2. Which arbitration organisations are commonly used to resolve large commercial disputes in your jurisdiction? Please give details of both arbitral institutions and professional/industry bodies, including the website address of each organisation.

The prominent arbitral institutions involved in large commercial disputes are:

■    ICAC {www.ucci.org.ua/arb/icac/en/icac.htmD. The parties can refer the following disputes to the ICAC:

■ over contractual and other civil law relationships arising in the course of foreign trade and other forms of inter­national economic relations, provided that the place of business of at least one of the parties is situated abroad;

■ between enterprises (and their participants) with foreign investment, international associations and organisations established in Ukrainian territory.

Disputes between only companies incorporated in Ukraine without foreign investment cannot be referred to the ICAC. (The parties can agree to submit these disputes to domestic arbitration under the Law on Internal Arbitration.)

Foreign economic relationships that can be referred to the ICAC include, in particular:

■ transactions for the sale/purchase/delivery of goods;

■ contracts of service and labour;

■ exchange of goods and/or services;

■ carriage of goods or passengers;

■ commercial representation and agency;

■ leasing;

■ scientific-technical exchange and exchange of other results of intellectual activity;

■ construction works;

■ licensing operations;

■ investment, financing, insurance, and joint ventures; and

■ other forms of industrial and business co-operation.

■   Maritime Arbitration Commission (www.ucci.org.ua/arb/mac/en/mac.html). The Commission settles disputes arising from contractual and other civil law relationships in merchant shipping, irrespective of whether the parties to a relationship include both Ukrainian and foreign entities, or whether the parties are only Ukrainian entities or only foreign entities. In particular, the Commission must settle disputes arising from relationships concerning the following matters:

■ the chartering and loading of vessels, the carriage of goods by sea, and the carriage of goods in mixed navigation (river-sea);

■ the maritime towage of vessels or other floating objects;

■ marine insurance and reinsurance;

■ the sale of seagoing vessels and other floating objects, their repairs and maritime liens;

■ piloting, conducting through ice, agencing or other servicing of seagoing vessels and vessels of inland navigation, to the extent that the relevant operations are connected with the sailing of such vessels on sea routes;

■ the use of vessels for scientific research, extraction of minerals and hydrotechnical or other works;

■ the salvage of seagoing vessels or of vessels of inland navigation by seagoing vessels, and the salvage in sea waters of vessels of inland navigation by other vessels of inland navigation;

■ the raising of vessels and other property sunk in sea waters;

■ collisions between seagoing vessels, or between a seagoing vessel and vessel of inland navigation, or between vessels of inland navigation in sea waters, and the infliction by a vessel of damage to port installations, navigational aids and other objects; and

■ the infliction of damage to fishing nets or other fishing gear, and the infliction of other damage in conducting maritime fishery trade.

3. What legislation applies to arbitration in your jurisdiction? To what extent has your jurisdiction adopted the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law)?

The following legislation applies to the conduct of arbitration, and recognition and enforcement of arbitral awards:

■ Law on International Commercial Arbitration, based on the UNCITRAL Model Law, regulates the conduct of internation­al arbitration and general rules of recognition and enforce­ment of the awards.

■ Rules of ICAC and Rules of the Maritime Arbitration Commission.

■ Law on Internal Arbitration, which regulates the procedure for domestic arbitration and powers of domestic arbitral institutions. It also sets out grounds and procedural formali­ties for challenging awards in court.

■ Law on International Private Law contains provisions regarding cross-border civil relations and allows for choice of governing law and forum. It also contains a comprehensive set of arbitrability requirements.

■ The Civil Procedure Code (CPC) regulates the recognition of foreign judgments, which the courts use (with the necessary amendments being made) in recognition of arbitration awards.

In addition, the ruling of the Plenum of the Supreme Court on the Courts\\\\\\\’ Practice in Consideration of Applications for Recognition and Enforcement of Foreign Courts\\\\\\\’ Judgments and Arbitral Awards (Plenum Ruling) is important.

4. Are there any mandatory legislative provisions (for example, relating to removal of arbitrators, challenge of awards and arbitrability)? If yes, please summarise their effect.

The mandatory statutory rules can be applied by the courts irrespective of the parties\\\\\\\’ choice of law. Some of the mandatory provisions are that:

■ State officials carrying out any part-time work other than scientific research, teaching, creative activity and medical practice, are prohibited from sitting as arbitrators.

■ Court judges, persons under 18 and persons with a criminal record cannot sit as arbitrators.

■ Awards contrary to public order, concerning a non-arbitrable matter or issued by an invalid tribunal, can be set aside.

The following matters are non-arbitrable:

■ Disputes over immovable property situated in Ukraine.

■ Execution of an intellectual property (IP) right, which is subject to registration or issuance of certificate (patent) in Ukraine.

■ Registration or liquidation of foreign legal persons or private entrepreneurs in Ukraine.

■ Validity of the entries in state registers, including the land register.

■ A debtor\\\\\\\’s bankruptcy, established under Ukrainian law.

■ Issuance or annulment of securities, registered in Ukraine.

■ Claims for annulment of acts by state and municipal authorities.

■ Disputes regarding state procurement (this provision may contradict the Washington Convention and bilateral investment treaties (BITs), since some supplies for state needs can constitute foreign investment falling under the investment tribunals’ jurisdiction).

■ Corporate disputes between:

■ a commercial company and its shareholders (including those who withdrew); and

■ shareholders of the commercial companies relating to the company’s establishment, governance and winding up.

5.  Are there any requirements relating to independence or impartiality?

Arbitrators must be independent and impartial in fulfilling their duties (Rules of the ICAC). An arbitrator must not be a representative of either party to the dispute. However, no further explanation is provided and it is unclear, for example, what type of connection between the party and the arbitrator raises the “justifiable doubts as to arbitrator’s impartiality”.

6. Does the law of limitation apply to arbitration proceedings? If yes, briefly state the uual length of limitation period(s) and what triggers or interrupts it in the context of commercial arbitration.

The limitation period depends on the governing law, which the parties can choose. If Ukrainian law governs arbitration, the following rules apply:

■ The general limitation period is three years and runs from the moment the claimant discovered or should have discovered a breach of its rights.

■ Claims for invalid contracts on grounds of duress or fraud are subject to a five-year limitation period (starting from the date when the duress ended).

■ Claims for application of effects of a contract that was invalid from the start are barred after ten years (from the beginning of its fulfilment).

■ Claims regarding defects in sold goods are barred after one year.

■ Claims for contract penalties are subject to a one-year limitation period.

The recognition and enforcement of international awards is subject to the three-year statutory limitation.

The running of the limitation period is interrupted by the default­ing party\\\\\\\’s action(s) that amount to the acknowledgement of the debt and by filing an action with a competent judicial authority or arbitration tribunal. If the relevant institution refuses to accept the claim for consideration on the merits, the limitation period continues to run uninterrupted.

ARBITRATION AGREEMENTS

7.  For an arbitration agreement to be enforceable:

What substantive and/or formal requirements must be satisfied?

Is a separate arbitration agreement required or is a clause in the main contract sufficient?

There are two requirements for an enforceable arbitration agreement:

■    It must be in writing. This requirement is satisfied if the agreement is contained:

in a document signed by the parties;

in an exchange of letters, telex, telegrams, fax messages or other means of telecommunication that provide a record of the agreement;

in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another.

   The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement, provided the contract is in writing and the reference is such as to make that clause part of the contract. Further, it must be sufficiently precise in relation to the arbitral institution competent to consider the case.

An arbitration agreement may comprise a separate agreement or simply an arbitration clause in the main contract.

8. Do statutory rules apply to the arbitration agreement? For example, are there restrictions on the number, qualifications/ characteristics or selection of arbitrators?

There are no specific statutory rules regarding the content of an arbitration agreement. The parties are free to determine the number of arbitrators, including a sole arbitrator, and the arbitrators\\\\\\\’ qualifications. If the parties fail to agree the number of arbitrators, three arbitrators will be appointed.

9. In what circumstances can a third party be joined to an arbitration, or otherwise be bound by an arbitration award? Please give brief details.

Third parties may be joined to arbitration only on their express written consent (Rules of ICAC). In practice, third parties are not bound by an arbitration agreement or award and are free to challenge the validity of the agreements, containing arbitration clauses, before competent Ukrainian courts. This may happen if a third party\\\\\\\’s rights are affected by the contract, containing the arbitration clause.

A party who did not participate in the international arbitration proceedings, cannot apply to set aside the award. Non-parties to domestic arbitration proceedings, whose interests were affected by the award, have recently been granted this right by law.

PROCEDURE

10. Does the applicable legislation provide default rules governing the appointment and removal of arbitrators, and the start of arbitral proceedings?

The parties are free to agree on a procedure for appointing and removing arbitrators (see Question 8). If the parties fail to agree on the appointment procedure in arbitration with three arbitrators, then each party appoints one arbitrator, and the two arbitrators collectively appoint the third arbitrator (the chairman). If a party fails to appoint the arbitrator within 30 days after receiving notice from the ICAC, or if the two arbitrators fail to appoint the chairman within 30 days of their own appointment, an arbitrator is appointed by the President of the Ukrainian Chamber of Commerce and Industry.

In a sole-arbitrator proceeding, if the parties are unable to agree on the arbitrator, he is appointed by the President of the Ukrainian Chamber of Commerce and Industry.

The default procedure of challenging an arbitrator is the following:

■ A party sends a written notice of challenge (stating the reasons) to the ICAC within 15 days from either:

■ being notified of the composition of the arbitral tribunal; or

■ having become aware of circumstances that can serve as a reason for challenge.

If a party does not make a challenge within this period he is deemed to have waived his right of challenge.

■ If the challenged arbitrator does not withdraw voluntarily, or if the other party does not agree to the challenge, the decision is taken by the Presidium of the ICAC.

■ If the challenge is not successful, the challenging party may request, within 30 days after receiving a notice of the decision, the President of the Ukrainian Chamber of Commerce and Industry to decide on the challenge. The President\\\\\\\’s decision is not subject to appeal. While this request is pending, the arbitral tribunal, including the challenged arbitrator, can continue the arbitral proceedings, including the issuance of an award.

11. What procedural rules are arbitrators likely to follow? Can the parties determine the procedural rules that apply? Does the legislation provide any default rules governing procedure?

Subject to the provisions of the Law on International Commercial Arbitration, the parties can agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. Failing agreement by the parties, the tribunal may conduct the arbitration in such a manner as it considers appropriate.

The ICAC applies its own rules, occasionally using the UNCITRAL Arbitration Rules to fill any gaps.

12. What procedural powers does the arbitrator have? If there is no express agreement, can the arbitrator order disclosure of documents and attendance of witnesses (factual or expert)?

The tribunal’s power includes the power to determine the admis-sibility, materiality, relevance and weight of any evidence. If the ICAC believes that the evidence attached to the Statement of Claim or Statement in Defence is insufficient, it may propose to the claimant or respondent to rectify the defects of the relevant statement.

After the Secretariat receives all preliminary materials, but before the first hearing, the ICAC can order that written explanations, evidence, and other additional documents be requested from the parties. In the course of the proceedings, the tribunal can require the parties to produce further evidence. It may also, at its own discretion or at either of the parties’ request, order inspection by an expert, and call and hear witnesses.

The tribunal may, at its own discretion, appoint one or more ex­perts to report to it on specific issues to be determined by the tribunal and request that a party give the expert any relevant information or to produce/provide access to any relevant docu­ments, goods or other property for his inspection.

If the tribunal considers it necessary, the expert, after delivery of his written or oral report, must participate in a hearing where the parties have the opportunity to question him. The parties can present expert witnesses to testify on the points at issue.

EVIDENCE

13. What documents must the parties disclose to the other parties and/or the arbitrator(s)? Can the parties determine the rules on disclosure? How, in practice, does the scope of disclosure compare with disclosure in litigation?

The parties to arbitration proceedings have equal rights in relation to the production of evidence. The arbitral institutions accept in evidence writ­ten documents, expert opinions and oral statements. Any piece of writ­ten evidence produced by a party should be provided in three copies, one of which is forwarded by the arbitration tribunal to the other party.

The law allows the parties to determine rules on disclosure at their discretion. In practice, however, the scope of disclosure in arbitration is more strictly regulated than in litigation. Generally, the privilege of documents disclosed during arbitration is not recognised (except for advocate-client communications).

CONFIDENTIALITY

14. Is arbitration confidential?

The ICAC proceedings are not open to the public and are con­fidential unless the parties waive this requirement. The ICAC\\\\\\\’s President and Vice Presidents, arbitrators and the ICAC Secre­tariat are prohibited from disclosing information about disputes settled by the ICAC, of which they become aware.

COURTS AND ARBITRATION

15. Will the local courts intervene to assist arbitration proceedings? For example, by granting an injunction or compelling witnesses to attend?

Under Ukrainian law, requesting a state court to award interim measures is not incompatible with arbitration and the arbitral

tribunal. A party, with the tribunal\\\\\\\’s approval, can also request a competent state court to assist with taking evidence. In practice, however, the ICAC rarely makes or gives approval for these requests, and the courts implement them even less often.

16. What is the risk of a local court intervening to frustrate the arbitration? Can a party delay proceedings by frequent court applications?

A court may intervene in arbitration proceedings only in the following circumstances:

■ A party challenges the validity of the arbitration agreement following the decision of the arbitration tribunal on this matter (see Question 19). While the request is pending, the arbitral tribunal can continue the arbitral proceedings and make an award.

■ A party to arbitral proceedings applies to the court to set aside the award.

Therefore, a party to an existing arbitration cannot delay proceedings by frequent court applications.

17. What remedies are available where a party starts court proceedings in breach of an arbitration agreement, or initiates arbitration in breach of a valid jurisdiction clause?

If a party starts court proceedings in breach of an arbitration agreement, the other party can request the dismissal of the ac­tion without consideration on the merits. This request is bind­ing on the court, unless the court declares the arbitration clause invalid, unenforceable or that the matter is non-arbitrable (see Question 4). If, however, the other party does not request the court to dismiss the action, the court will consider the case on the merits and make a judgment, based on the assumption that the recourse to arbitration is a right, not an obligation, of the parties.

Jurisdiction clauses are virtually unenforceable in Ukraine. For example, if the clause concerns a domestic court, the matter can be considered by a court competent to deal with it under territo­rial jurisdiction rules irrespective of the selected forum. If the jurisdiction clause specifies a foreign court, this cannot prevent a domestic court from considering the case on the merits.

Arbitration is possible only with the parties’ agreement. There­fore, if the contract specifies, for example, the courts of England and Wales as a forum, no arbitration can be started in Ukraine unless the parties subsequently conclude a written agreement referring the dispute to arbitration.

18. Will the local courts grant an injunction to restrain proceedings started overseas in breach of an arbitration agreement?

The law does not empower the courts to issue injunctions to restrain proceedings of other courts, whether domestic or foreign. In practice, when this occurs, it draws highly controversial reaction from the judicial community.

19. What remedies are available where one party denies that the tribunal has jurisdiction to determine the dispute(s)? Does your jurisdiction recognise the concepts of separability and/ or kompetenz-kompetenz? Does the tribunal or the local court determine issues of jurisdiction?

A party can request a competent court to decide the issue of arbitral tribunal’s jurisdiction within 30 days from receiving the tribunal\\\\\\\’s ruling that it has jurisdiction to consider the matter. The court’s decision on this matter cannot be appealed. In practice, these requests are rarely filed with domestic courts.

The concept of separability is not very well developed. Although an arbitration clause should be considered as independent of the underlying contract, it is sometimes invalidated by the courts alongside the agreement.

REMEDIES

20. What interim remedies are available from the tribunal? Can the tribunal award:

■ Security for costs?

■ Security or other interim measures?

Under Ukrainian law, the arbitral tribunal can, at a party\\\\\\\’s re­quest, order the other party to take such interim measure as the tribunal considers necessary in relation to the subject matter of the dispute, including security for costs.

The ICAC considers itself competent to grant requests for interim measures through rulings prohibiting one of the parties from either:

■ Alienating its assets.

■ Disposing of funds in bank accounts (in the amount of the relief claimed).

However, it is virtually impossible to have the domestic court issue a writ of execution on the basis of this ICAC’s request.

21. What final remedies are available from the tribunal? For example, can the tribunal award damages, injunctions, declarations, costs and interest?

The final remedies available from the tribunal depend on the gov­erning law applicable to the arbitration. If Ukrainian law applies, the tribunal is entitled to:

Recognise a right.

Award compensatory damages.

Award penalties.

Order a debt recovery.

Order specific performance, including by staying actions that violate rights.

Declare the underlying contract invalid, terminated or amended.

APPEALS AND CHALLENGES

22. Can arbitration proceedings and awards be appealed or challenged in the local courts? If yes, please briefly outline the grounds and procedure. Can the parties effectively exclude any rights of appeal or challenge?

A party to arbitration can apply to the local court to set aside the award on one of the following grounds:

■ A party to the arbitration agreement did not have full capacity.

■ The arbitration agreement is invalid under the law to which the parties have subjected it or under Ukrainian law.

■ The dispute falls outside the arbitration agreement.

■ The applicant was not given proper notice of the arbitral proceedings or was otherwise unable to present his case.

■ Invalid composition of the arbitral tribunal.

■ The arbitral procedure was not in accordance with the parties\\\\\\\’ agreement.

■ The subject matter of the award is non-arbitrable.

■ The award conflicts with Ukrainian public policy.

On receiving the application for setting aside the award, the court:

■ Invites the opposing party to provide, in writing, its position on the matter.

■ Holds hearings to which both parties are invited.

The proceedings are regulated by the Civil Code of Ukraine. The decision of the court is subject to appeal and cassation appeal.

The parties cannot contractually exclude the right to challenge the arbitral award in a court of law. Any contractual provision con­taining this type of exclusion is treated as invalid on the ground of contradicting the law.

COSTS

23. What legal fee structures can be used? For example, hourly rates and task-based billing? Are fees fixed by law?

Legal fees can be set as hourly rates or be task-based. Other fee arrangements are possible, including agreements setting fixed, flat or contingent fees. Hourly rates and fixed fees can also be combined with bonuses, contingent on results.

Legal fees are not fixed by law.

24. Does the unsuccessful party have to pay the successful party’s costs? How does the tribunal usually calculate any costs award and what factors does it consider?

Generally, the unsuccessful party pays the successful party’s costs. If a claim is only partially awarded, expenses are paid pro rata. The respondent’s fee can be awarded only if it files a counterclaim for costs.

MAIN ARBITRATION ORGANISATIONS International Commercial Arbitration Court (ICAC)
Main activities. The ICAC is an independent, permanently functioning arbitral institution whose functions are regulated by the Law on International Commercial Arbitration.
W www.ucci.org.ua/arb/icac/en/icac.html
Maritime Arbitration Commission
Main activities. The Maritime Arbitration Commission is an independent, permanently functioning arbitral institution that carries out its functions in settling disputes in conformity with the Law on International Commercial Arbitration.
W www.ucci.org.ua/arb/mac/en/mac.html

The costs are awarded only if supported by documentary evi­dence. Therefore, the contingent fee costs cannot be awarded. However, if the payment of the fee is supported by the relevant documents, the court can award the costs for it, subject to its discretion to reduce the amount.

The pre-trial and enforcement costs are not awarded.

ENFORCEMENT

25. To what extent is an arbitration award made in your jurisdiction enforceable in the local courts? Please briefly outline the enforcement procedure.

There are two types of arbitral tribunals in Ukraine: international and domestic. The procedure for enforcement of awards made by the ICAC and Maritime Arbitration Commission is the same as for awards issued by foreign arbitral institutions (see Question 27).

The party to domestic arbitration proceedings against whom the award is issued must comply with it voluntarily. However, if the unsuccessful party refuses to comply, the successful party can seek compulsory enforcement through application to the competent court (that is, the court whose jurisdiction extends to the place of arbitration). During the consideration of application for enforcement, the court invites both parties to the proceedings and requests the arbitration file from the relevant arbitral institution. The court may refuse the enforcement if the:

■ Award has been cancelled by a court competent to do so under a specific statutory procedure.

■ Matter is non-arbitrable.

■ Three-year time limit for application has expired.

■ Dispute falls outside the arbitration agreement.

■ Arbitration agreement has been declared null and void by the competent court.

■ Composition of the tribunal was invalid.

■ Awarded remedy is not provided for by Ukrainian law.

■ Arbitral institution has failed to provide the court with the arbitration file.

■   Award interferes with the rights of persons who did not participate in the proceedings.

The courts decision to refuse the application for enforcement of a domestic arbitral award is subject to appeal and cassation appeal.

If the enforcement is granted, the court issues a writ of execution, which may be passed to the State Bailiff Service for compulsory enforcement.

26. To what extent is an arbitration award made in your jurisdiction enforceable in other jurisdictions? Is your jurisdiction party to international treaties relating to this issue such as the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)?

Ukraine has been a party to the UN Convention on the Recog­nition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) since 1961 and the European Convention on International Arbitration 1961 (Geneva Convention) since 1964.

In 2000, Ukraine joined the Washington Convention 1965, es­tablishing the International Centre for Settlement of Investment Disputes (ICSID). Ukraine has already been involved in several disputes with investors before this body.

27. To what extent is a foreign arbitration award enforceable in your jurisdiction? Please briefly outline the enforcement procedure.

To enforce a foreign arbitration award, it must first be recognised by the competent domestic court. The enforcement is possible if the State where the award was rendered is a party to the New York Convention or European Convention on International Commercial Arbitration 1961 (Geneva Convention).

With regard to awards made in the territory of non-contracting states, Ukraine applies the New York Convention only to the extent that those states grant reciprocal treatment. For example, with Yemen and Iraq (both non-signatories), Ukraine has bilateral agreements providing for enforcement of awards under essentially the same rules as provided for in the New York Convention.

The CCP regulates the procedure for recognition of arbitration awards. The competent court is the local court with territorial jurisdiction over the place of residence/registered address of a person against whom the enforcement is sought. If the person concerned does not reside in Ukraine or the place of residence is unknown, the application is filed with the court that has territorial jurisdiction over the place where the debtor’s property is situated.

The debtor can submit its position on the matter, within one month after the notification of the commencement of court proceedings, for recognition and enforcement. If the debtor has been duly notified, his failure to appear in court is generally not an obstacle for the hearing. The hearing is held on a sole-judge basis. Both parties can present their case orally. The applicable procedural rules (for example, for the collection of evidence, service of process and recording of court hearing) are the same as for an ordinary civil case.

The court’s decision to grant or refuse the enforcement of the award can be challenged before the relevant court of appeal and, subsequently, before the Supreme Court of Ukraine (a cassation instance court).

The court practice sets out the following positions as to the recognition of awards:

■ The application itself is free of any court charges, but the subsequent enforcement proceedings are subject to the relevant court or other fees and charges.

■ The award and arbitration agreement must be translated into Ukrainian and the translation must be certified by an official or judicial interpreter, or the relevant embassy/ consulate.

■ The application for recognition and compulsory enforcement of the award is subject to a general three-year statutory limitation period (see Question 6).

■ A person against whom the enforcement award is issued (respondent) can apply for the refusal in its recognition, if the other party uses the award to the respondent\\\\\\\’s detriment without applying for its formal recognition.

■ In deciding whether the debtor was duly notified of the proceedings, the courts consider the following rules:

■ the rules of arbitration selected by the parties in the arbitration agreement;

■ UNCITRAL Arbitration Rules;

■ Geneva Convention; and

■ the rule of the permanent arbitral body, participating in the proceedings.

If the enforcement is granted, the court issues a writ of execution, which can be passed to the State Bailiff Service for compulsory enforcement.

28. How long do enforcement proceedings in the local court take? Is there any expedited procedure?

The law provides that the compulsory enforcement procedure is initiated by the Bailiffs’ Service of Ukraine following the submis­sion by a creditor of a writ of execution issued by a court of law, including a writ of execution issued on the basis of an arbitral award.

In the course of enforcement, a bailiff is entitled to arrest and order compulsory sale of property, freeze bank accounts, deduct money from various sources of income. The actions or inaction of the bailiff are open to challenge before the court. The time limit for the completion of the enforcement proceedings is six months, although they usually last much longer.

This article was first published in the PLC Cross-border Arbitration Handbook 2010/11, www.practicallaw.com/arbitrationhandbook