Asters secured a landmark victory for two leading Chinese construction and engineering companies Power Construction Corporation of China, Limited and Powerchina Huadong Engineering Corporation, Limited ("Powerchina") in the challenge of the security measures granted by the Kyiv Court of Appeal in assistance to arbitration proceedings pending before the Dubai International Arbitration Center ("DIAC").
The procedure for interim measures of protection in aid of international arbitration was introduced to Civil Procedure Code of Ukraine ("CPC") in December 2017 with the full-scale reform of Ukrainian procedural codes. Despite some sporadic previous decisions by the Ukrainian courts, Powechina case became the first one addressing fundamental issues regarding interim measures procedure, such as international jurisdiction of the Ukrainian court in such case with multiple foreign defendants.
In spring 2022, Fursy Energy Group LLC and FAS Energy LLC ("Fursy"), the owners and operators of the Photovoltaic power plant in the Kyiv Region ("PV Plant"), launched an arbitration in the DIAC against Powerchina. In parallel, Fursy applied to the Kyiv Court of Appeal for security measures in aid of international arbitration seeking a prohibition for Powerchina to collect the pledged and mortgaged assets in Ukraine for the certified debts of Fursy.
In May 2022, the Kyiv Court of Appeal ex parte upheld the Fursy's application. Notably, this was the first known ruling rendered against collectively two foreign companies upon an application filed in aid of international arbitration having no seat in Ukraine.
In June 2022, Powerchina appealed the Kyiv Court of Appeal's ruling on multiple grounds, challenging international jurisdiction of the Ukrainian courts over Powerchina and claiming lack of substantive grounds to grant the interim measures. The Supreme Court agreed with Powerchina and Asters on most of the points. Namely, the Supreme Court found that in case of multiple defendants, the international jurisdictions of the Ukrainian court shall be established with respect to each of such defendants. The Supreme Court concluded that the Kyiv Court of Appeal erred in establishing its jurisdiction, since the court did not have jurisdiction over one of the Powerchina companies, which does not have a representative office and/or property in Ukraine. Notably, the Supreme Court rejected a possibility to rely on rules on joinder of claims set out in Article 28 CPC to establish international jurisdiction of the Ukrainian courts over a foreign defendant in cases where the arbitration tribunal is seated abroad, irrespective of the fact that several defendants may be jointly liable. In this type of cases, the Supreme Court concluded that the international jurisdiction is to be determined in respect of each defendant separately.
The Supreme Court also sided with Powerchina and Asters by finding that subject-matter of the claim referred by Fursy to arbitration does not correlate with the measures requested before the Ukrainian courts. In the opinion of the Supreme Court, in cases under Article 149 (3) CPC the first instance court shall consider whether the requested measures are reasonably linked and correlate with the real content of the claims raised in the arbitration proceedings. Finally, the Supreme Court found that the requested measures were disproportionate.
The Supreme Court's resolution is not only a decisive win for Asters' long-standing client, but also an important judgment on novel issues of Ukrainian procedural law. It clarifies the CPC rules on interim measures in aid of international arbitration from the Ukrainian courts as well as answers to a recently unfamiliar question on international jurisdiction over multiple foreign defendants.
This matter represents a significant milestone in Asters team's multitask advisory support rendered to Powerchina since early 2019. Before the end of 2019, Asters' role included advising Powerchina on the contractual framework for the construction of the PV Plant and supply of the relevant equipment.
Asters' Arbitration and Litigation team working on the case included Co-Managing Partner Oleksiy Didkovskiy and Partner Markiyan Kliuchkovskyi, Counsel Oleksandr Volkov, Senior Associate Viktor Tarasenkov and Associate Oleksii Izotov. Asters' Construction and Energy law team working on the project included Partner Yaroslav Petrov and Counsel Anzhelika Livitska. Asters Financial law team working on the project included Partner Iryna Pokanay and Counsel Gabriel Aslanian.
Asters is the largest law firm in Ukraine with offices in Kyiv, Washington D.C., London and Brussels. Chambers Europe 2022 recognises 21 lawyers of Asters – the largest number of the renowned practitioners in a single Ukrainian law firm.