Defective Arbitration Clause, Invalidity of Arbitration Agreement and Award.
11 April, 2011
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On 13 October, 2010, the Supreme Court of Ukraine decided to uphold the rulings of lower courts to override the award having been held by the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC at the UCCI) in relation to the claim of ‘Аrсеlоrmittal Аmbalaj Сеligі Sanауі ve Тісаrеt Аnоnіm Sіrkеtі’ (the claimant) against ‘Industrial and Commercial Company ‘Argo’ LLC (the defendant) on the grounds of invalidity of the arbitration agreement and exceeding by the Arbitration Court their authority. The contract made between the parties contained an arbitration clause referring all disputes to the International Commercial Arbitration Court at the Chamber of Trade and Industry of the city of Kyiv. When the dispute arose, the claimant applied to the ICAC at the UCCI (city of Kyiv), being the only international arbitration institution in Ukraine. As the defendant did not raise any objections to the jurisdiction of the ICAC at the UCCI, the panel of arbitrators recognized the competence of that arbitration court based on their proper construction of the arbitration clause, and handed down the award for the claimant. The defendant sought to have the arbitration award set aside before the state court. All the court instances have held that since the arbitration clause refers to a nonexistent arbitration court, the arbitration clause is invalid. The courts further recognized that as neither of the parties insisted on interpretation of the arbitration agreement, and as far as the arbitration agreement itself did not envisage such a right of the arbitration court, the ICAC at the UCCI exceeded their powers having construed the said provisions of the contract. Hence the award of the ICAC at the UCCI was set aside.