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UKRAINE: Tips for enforcement of arbitral awards in maritime disputes

31 October, 2013

21

London maritime arbitration provides fast and cost-effective instrument for the settlement of maritime disputes. However, the enforcement of LMAA award in Ukraine may become a complicated procedure which requires certain efforts from the party seeking enforcement. The recoveror must be ready that the enforcement may be denied by reasons of merely formal nature.

General Procedure 

Ukraine is a party to theNew York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, provisions of which are incorporated in different local legislative acts. Thus in general the procedure of recognition and enforcement is similar to same in other jurisdictions where the New York Convention is being in force, with some peculiarities though.

Foreign arbitral award can be enforced in Ukraine within 3 years from the moment of its entering into legal force.To recognize and enforce a foreign arbitral award in Ukraine a Creditor (a party which have won the arbitration) have to file an application on recognition and enforcement of arbitral award to the Ukrainian court of general jurisdiction at the location of the person against whom the award is issued.

Together with the application on recognition and enforcement the Creditor may request the court to secure the Creditor’s claim against the Debtor’s assets in Ukraine, including seagoing vessels,and the court shall issue interim decision.

In the course of proceedings the Debtor is entitled to present his objections to the enforcement of the award based on the grounds listed in the Article V of the New York Convention. Depending on actual circumstances of the case Ukrainian court may issue the decision granting recognition and enforcement of the foreign arbitral award in Ukraine or rejecting it. Once the court decision is in force the court shall issue a writ of execution. Having the court decision and writ of execution at hand, the Creditor shall apply to the state enforcement service of Ukraine at the Debtor’s location with a petition to enforce the award and follow the enforcement proceedings prescribed by law.

Formal requirements to be followed

Ukrainian courts usually demonstrate extremely formal and bureaucratic approach to the cases of this type, and demand from the applicant clear and strict compliance with the procedure, and due preparation of case materials. Therefore, to avoid the risk of rejecting the application under the formal points, the application must be served with attached documents which are to be duly prepared as we comment below.

Under the law the Creditor shall submit the documents as follows:

1.  Duly certified copy of the Award. In practice “duly certified” means that the Award is to be issued on the Tribunal’s letterhead duly signed and stamped, apostilled or legalized with notarized translation to Ukrainian attached.  

2.  Official document evidencing that the Award is final and has entered into legal force (if it is not specified in the Award). The Award should state that it is final and has entered into legal force on the date of issue, otherwise an official letter evidencing that the Award is final and has entered into legal force on such issue date must be provided. Such document shall be issued on the tribunal’s letterhead duly signed and stamped, apostilled or legalized with notarized translation to Ukrainian attached.  

3.  Arbitration agreement. In the event when the Parties have not entered into a separate arbitration agreement, the main contract with arbitration clause must be provided, with notarized translation of complete text into Ukrainian.

4.  Document evidencing that the Respondentwas duly notified on the time and place of the arbitration. Clear evidences that all notices were duly served to and received by the Respondent shall be attached to the application.

5.  Document defining in which part or from which date the Award is enforceable (if it is enforceable in part).

6.  Power of Attorney duly authorizing the Creditor’s representative. The Power of Attorney must clearly state names of the persons authorized, the detailed scope of authorization. Such Power of Attorneymust be duly signed and stamped, apostilled or legalized with notarized translation to Ukrainian attached. 

Common Risks of Rejecting Recognition of the Award

The application on recognition and enforcement of foreign arbitral award may be rejected for formal reasons or due to specific circumstances of the case.

The Civil Procedure Code of Ukraine provides that the court may refuse in recognition and enforcement of the Award for the following reasons.

the Award have not entered into legal force according to the legislation of the country where it was issued;
the Debtor was deprived from the opportunity to participate in the arbitration for the reasons of undue notification on the time and place of the arbitration;
the Award is made in the dispute that is under exclusive jurisdiction of the Ukrainian court or other authorized state body of Ukraine;

These points are the formal reasons for rejection of the application, however, filing of the application with attached documents as advised above should minimize the risk of rejection of the application under these reasons.

Ukrainian court has issued the decision on merits between the same parties, on the same subject, on the same basis.
Ukrainian court is considering the case on meritsbetween the same parties, on the same subject; on the same basis, consideration of which was initiated prior the beginning of the arbitration proceedings.

To avoid rejection of the application for this reason we recommend, prior the initiation of arbitration proceedings, to check through the register of court decisions whether any Ukrainian court has a pending case or issued a decision on merits between the parties of the dispute. In the event such case/decision is found, the Claimant shall participate in such proceedings and evidence before the court the lack of Ukrainian jurisdiction over the dispute or appeal the decision requesting to cancel it for the same reasons. 

the enforcement of the Award in Ukraine is time barred;

As stated above, foreign arbitral award can be enforced in Ukraine within 3 (three) years from the moment of its entering into legal force. So the Creditor shall be careful with this term to avoid the risk of rejecting the application as time barred.

the subject of the dispute cannot be the subject of the trial under Ukrainian law;

Basically this provision means that in order to enforce the Award the object of the enforcement and connected relationships between the Parties must by recognized by the current legislation of Ukraine.

For example if to define the subject of the dispute as damages suffered by the Creditor due to the breach of the contract by the Debtor so such subject can be the subject of the trial under the laws of Ukraine.

enforcement of the Award which threatens the state interests of Ukraine;
other reasons provided by current legislation of Ukraine.

The application may be rejected due to specific circumstances of the dispute. Each specific case is unique and is a subject to individual consideration by the Ukrainian court. Therefore in order to estimate possible risks of rejection of recognition and enforcement of the arbitral award in Ukraine we would recommend involving Ukrainian lawyers prior initiating the arbitration.

Alexander Chebotarenko for arbitrationwatch.com

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Shiparrested practical guide

4 December, 2012

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Sea ports оf Ukraine are to be: in concession.

26 November, 2012

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Arbitration Watch Gafta case

20 November, 2012

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Recognition and Enforcement of Foreign Court Judgments & Arbitration Awards in Ukraine

8 November, 2012

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MARINE INSURANCE AND LEGAL PRACTICE

6 November, 2012

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1st Black Sea Port&Shipping

29 October, 2012

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Recognition and Enforcement of Foreign Court Judgments & Arbitration Awards in Ukraine

25 October, 2012

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Pirates of the Ukrainian Sea

28 September, 2012

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If at first you don’t succeed…

10 September, 2012

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Ukraine paves the way for privatization

26 June, 2012

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Law on Sea Ports of Ukraine: First Impressions

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Ukraine: ILO Announces Lists of Licenses and Permits Needed for Dredging Works

19 June, 2012

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Forwarder’s Liability as a Consignee under Bill of Lading – a Ukrainian Perspective

16 February, 2012

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Vision before strategy

28 November, 2011

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Legal life in… Ukraine

5 September, 2011

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Ukraine: ILO Announces Lists of Licenses and Permits Needed for Dredging Works

18 May, 2011

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Defective Arbitration Clause, Invalidity of Arbitration Agreement and Award.

11 April, 2011

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