Legal certainty is one more argument for foreign companies in favour of the ICAC at CCI of Ukraine when drafting an arbitration agreement.
Development of the global economic processes of the 20th century, active growth of cross-border legal relations which has led to the spread and popularization of non-domestic judicial institutions have made the international community realize the need to harmonize the rules for recognizing their awards at sovereign states level.
Convention on awards
Objectification of this need was marked by the adoption of New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (hereinafter – the “Convention”). Such a thesis is directly confirmed in the Convention itself: Recognizing the growing importance of international arbitration as a means of settling international commercial disputes, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the Convention) seeks to provide common legislative standards for the recognition of arbitration agreements and court recognition and enforcement of foreign and non-domestic arbitral awards”. Participants have the main obligation to recognize all arbitral awards covered by the Convention as binding and to enforce them, if so required, on lex fori terms. Each participating State may determine the procedural mechanisms used in cases where the Convention sets no requirements.
Having acceded to the Convention as far back as 1961, Ukraine continues to reform its procedural legislation regarding the issue of recognition and enforcement of arbitral awards taken by non-domestic judicial authorities. The latest amendments were introduced just recently – in late 2017 – in connection with a large-scale reform of procedural law and adoption of new procedural codes.
It should be immediately noted that awards of the International Commercial Arbitration Court at the Chamber of Commerce and Industry of Ukraine (ICAC at the CCI of Ukraine) occupy a separate, absolutely independent niche of arbitral awards which is dictated by exclusive status of arbitration. Thus, activities of the ICAC at the CCI of Ukraine are regulated by a special law, this court is not an arbitral tribunal, and its awards are subject to the same legal regime as awards of foreign commercial arbitrations. Furthermore, this statement corresponds to procedural rules and regulations: Article 482 of the Code of Civil Procedure of Ukraine provides that permission to enforce awards of international commercial arbitration, if the seat of arbitration is located in the territory of Ukraine (the only such arbitration is the ICAC at the CCI of Ukraine) shall be granted by court in accordance with the procedure provided for recognition of judgments of foreign courts under the rules set by the Code of Civil Procedure of Ukraine.
Compared to the previous edition of the Code of Civil Procedure of Ukraine, the one in force contains a clear definiteness of jurisdiction. If previously application for recognizing and permitting enforcement of awards of the ICAC at the CCI of Ukraine was considered by general local courts at the location of a debtor or his/her property, once a new Code of Civil Procedure of Ukraine was adopted, Kyiv Court of Appeals was given exclusive jurisdiction to solve such applications. Application for recognizing and permitting enforcement of an award must be submitted within three years after the date of an award which does not deprive an applicant of the right to renew time limits in case they have been missed for good reasons. Code of Civil Procedure of Ukraine imposes on application for recognizing and permitting enforcement of an arbitral award of the CCP of Ukraine general requirements to applications in civil procedure, except for the need to provide, along with an application, an original commercial arbitral award, an original arbitration agreement between parties to a dispute or notarized copies thereof.
Possibility to suspend consideration of an application recognizing and permitting enforcement of arbitral awards is a novelty of procedural legislation. Thus, Part 7 Article 477 of the Code of Civil Procedure of Ukraine provides for court’s right to suspend such proceedings should a court consider a case on quashing an arbitral award before court order becomes effective.
It should be noted that the number of quashed arbitral awards of the ICAC at the CCI of Ukraine over the past eight years amounted to an average of less than 1%. Therefore, parties to arbitration proceedings must understand that, most likely, the ICAC awards will be final and all efforts to argue a particular position must be taken during the arbitration proceedings.
According to provisions of the Convention repeated in the Law of Ukraine “On International Commercial Arbitration” and the Code of Civil Procedure of Ukraine, quashing of awards of commercial arbitration is rather exceptional and shall not be possible unless a party that filed an application for quashing arbitral award proves the following:
- one of the parties to an arbitration agreement was incapacitated or such agreement is invalid by virtue of law;
- a party has not been duly notified of appointment of an arbitrator or of arbitral proceedings, or there are other valid reasons why a party could not provide its own explanation to commercial arbitration;
- award was made in a dispute not provided for or not covered by the terms of an arbitration agreement or arbitration clause in a contract, or concerns issues beyond the scope of an arbitration agreement or arbitration clause in a contract;
- composition of an arbitral body or arbitration proceedings failed to comply with an agreement of parties or, should there be no such agreement, failed to comply with the law;
- subject matter of a dispute may not be subject matter of arbitration proceedings by virtue of law;
- arbitral award contradicts the public policy of Ukraine.
International commitments and corresponding guarantees of Ukraine on recognizing and enforcing foreign arbitral awards certainly have a positive impact on compliance with the law during procedure for recognizing and enforcing such awards. And legal certainty, transparent and understandable procedural form of recognizing foreign arbitral awards are one more argument for foreign companies for the ICAC at the CCI of Ukraine when drafting an arbitration agreement.