Litigation and enforcement in Ukraine: overview

Traditional court litigation remains the most common method used to resolve business-related disputes in Ukraine. Arbitration is a typical out-of-court method but is used less frequently than traditional litigation (see Question 30 to 34). Mediation is rarely used as an alternative to court proceedings or arbitration.

Ukrainian court proceedings are broadly inquisitorial, although there is a clear trend towards a more adversarial approach. The courts consider disputes based on lawsuits filed by claimants, within the scope of the remedies sought and based on evidence provided by participants to the proceedings. The judges give directions on the management of the case taking into account the specificities and scope of the disputed matter, the amount claimed, the time and costs required for performance of certain legal procedures, and so on. All parties have the same procedural rights and each party must prove the facts on which it relies. Judges evaluate evidence based on their own conviction, with no evidence having a pre-determined weight.

Ukrainian law distinguishes between the:

Parties to a contract can extend the limitation period established by law but cannot reduce it.

In commercial cases, limitation periods are regarded as a matter of substantive law. This approach is illustrated by the prohibition on the courts to apply or extent limitation periods on their own initiative. The expiry of the limitation period does not preclude the claimant from bringing a claim. However, the respondent can request the court to terminate the proceedings if the claim is time barred, and the court will be obliged to do so unless it finds that the claimant had a compelling reason to miss the limitation period.

The limitation period starts running from the date when the aggrieved party found out, or could have found out, about a violation of its right or a person violating such right. There is no statutory test to determine when a legal entity "found out or could have found out" about a violation of its rights. In practice, the courts examine the factual circumstances of each case to determine the event triggering a limitation period. Specific rules include the following:

The judicial system is built on the principle of specialisation for the consideration of civil, criminal, commercial and administrative cases and administrative offences. The judiciary is administered by a system of courts encompassing the courts of general jurisdiction (administering civil law cases and cases regarding administrative offences), commercial courts and administrative courts. The Constitutional Court of Ukraine has exclusive jurisdiction to decide on the constitutionally of laws and officially interpret the Constitution of Ukraine. However, the Constitutional Court is not part of the national judicial system.

Specialised commercial courts have jurisdiction over disputes between business entities, as well as over disputes relating to bankruptcy, anti-monopoly, corporate matters and securities. In practice, the commercial courts most often deal with disputes concerning sale contracts, loan contracts, property, bankruptcy, and insurance matters. The commercial courts apply the rules of the Commercial Procedure Code of Ukraine.

The judicial system encompasses:

The High Court of Intellectual Property acts as a first instance court and appellate court for some categories of cases. The Supreme Court consists of the Supreme Court Grand Chamber, the Administrative Court of Cassation, the Commercial Court of Cassation, the Criminal Court of Cassation, and the Civil Court of Cassation. The Commercial Court of Cassation is composed of chambers specifically designated for the consideration of particular categories of commercial disputes (that is, disputes relating to bankruptcy, the protection of intellectual property rights, anti-monopoly and competition matters, corporate matters, and corporate rights and securities).

There are no specific divisions in local and appellate courts. Before the local courts, cases are usually heard by a single judge. Complex cases can be allocated to a panel of three judges. The appellate courts and cassation courts hear cases in panels of at least three professional judges.

The answers to the following questions relate to procedures that apply in the commercial courts, which are set out in the Commercial Procedure Code of Ukraine.

Litigants, whether individuals or legal entities, can present their own case in court proceedings or engage a representative to act on their behalf. Only attorneys admitted to the Ukrainian Bar can conduct cases before the courts and represent parties in court proceedings.

Foreign lawyers must be admitted to the Ukrainian Bar to conduct cases in the Ukrainian courts. To be admitted to the Ukrainian Bar, a foreign lawyer must be certified to practise law before the courts of their country.

A client and an attorney (or law firm) are free to agree on the amount and structure of legal fees. Remuneration for legal services is commonly based on hourly fees or capped sums. While Ukrainian courts sometimes held that contingency fee agreements were invalid (in line with the Supreme Court 2018 decision), lawyers have continued using contingency/conditional fees (alone or in combination with hourly fees or caps). In May 2020, the Grand Chamber of the Supreme Court ruled that contingency/conditional fees can be used and comply with Ukrainian law.

Litigation is normally funded by the parties.

Ukrainian law does not regulate third-party funding, although there is no prohibition on third parties financing litigation. The High Commercial Court of Ukraine has held that a court cannot reject a claim or appeal on the ground that an external person paid the court fee on behalf of the claimant or appellant. Litigation funding is uncommon in Ukraine for various reasons, including the lack of legal mechanisms allowing investors to ensure and enforce (if necessary) payment by a losing party.

Insurance for litigation costs is available. This type of insurance compensates losses sustained as a result of litigation-related costs that a party could not anticipate.

Court hearings are held in public, so that any person can attend a hearing. On application of a party, the court can arrange for proceedings to be kept confidential in full or in part based on the:

The Constitution of Ukraine generally states that mandatory rules relating to pre-action conduct can be established by law. No such rules have been adopted to date.

Therefore, the parties can use pre-trial dispute settlement procedures based on an agreement or a legal right to do so. For example, a company that seeks to hold a counterparty liable has a statutory right to send a letter of claims to the wrongdoer to launch a pre-action settlement procedure. The parties will go to court if they cannot settle their dispute through negotiations.

The Constitutional Court of Ukraine held that the right to go to court cannot be made conditional on the use of pre-trial dispute settlement procedures. The Ukrainian courts unanimously agree that the use of pre-trial settlement proceedings (even if envisaged by a contract) amounts to a right, not an obligation. Therefore, a claimant can bring an action directly before a court and has no obligation to conduct pre-trial negotiations, even if the parties have previously agreed to resolve their disputes through other means before bringing a claim to court.

Litigation starts by filing a statement of claim with a first instance court. A single judge is appointed to consider how to proceed with the claim. The judge must order the commencement of proceedings within five days after receipt of the statement of claim, unless there are reasons to:

A claim can be filed online on obtaining electronic authorisation (electronic signature). The claimant can choose whether to file a claim via post, at the chancellery of the relevant local court or online.

Before lodging a statement of claim with the court, the claimant must serve a copy on the defendant. The claimant must enclose a confirmation of service in its statement of claim, otherwise the court can defer acceptance of the claim and return it to the claimant.

The court will serve a court order on participants to the proceedings, notifying them of the causes of action, details of the preliminary hearing or first hearing on the merits, and timeline for submitting the defence. The defendant is not obliged to file a defence. If the defendant does file a defence, it must forward a copy of it to the claimant. The defendant can bring a counterclaim within the timeline for providing the defence. A counterclaim is adjudicated together with the initial claim.

The court must hold a preliminary hearing within 60 days after the start of proceedings. At this hearing, the judge resolves various organisational issues (for example, involvement of other persons in the proceedings, consolidation of claims, acceptance of a counterclaim, checking completeness of evidence referred to in the claim and defence, granting injunctive relief, ordering expert evidence, and summoning witnesses) and schedules the date of the first hearing on the merits. The preliminary hearing can also lead to dismissal of the claim without consideration or termination of the proceedings (similar to strike-out of claim) (see Question 10).

The subsequent stages are as follows:

The defendant can initiate a procedure similar to an application for strike out of claim at a preliminary hearing or at any time during the proceedings if it proves any of the following:

The defendant can petition the court to dismiss a claim without consideration if any of the following apply:

The court can also dismiss a claim without consideration or strike out a claim on its own initiative if it considers that any of the above grounds are satisfied.

There is no procedure for summary judgment under Ukrainian law.

The defendant can apply for an order for the claimant to provide security for the remuneration of the defendant's attorney and other costs arising from the proceedings. The court will grant the application if the defendant shows any of the following:

The court can grant interim injunctions on application of the claimant, defendant or a third party at any time before and during the proceedings. The application must contain evidence of the facts on which the applicant relies. An injunction is granted if the applicant shows the court that the enforcement of the final judgment would be impaired or impossible without interim relief. When considering whether to grant an injunction, the High Commercial Court of Ukraine has held that judges must consider whether:

The judge can grant several interim injunctions in conjunction. An interim injunction cannot amount to final relief in a dispute.

The court can require the applicant for an injunction/interim order to give a cross-undertaking to protect the defendant or any other person against any damage that they may sustain as a result of the injunction. The applicant will be required to deposit funds on the court's account to fortify the undertaking. In certain cases, the applicant can provide a bank guarantee in lieu of the fortification payment. The injunction order will be discharged if the applicant fails to fortify the cross-undertaking within ten days of the order.

Injunction applications are made without notice to the defendant. Judges generally deal with applications without summoning the parties, although they can arrange for a hearing to be attended by the applicant and parties to be bound by the injunction (for example, if evidence accompanying the application is not sufficient to decide whether to grant the injunction).

Urgent injunctions are not specifically regulated. In principle, the judge can grant an injunction on the day of receipt of an application, provided that the applicant shows valid reasons for this.

The court cannot order a party to positively take certain actions. This type of interim injunction was abolished by amendments to the Commercial Procedure Code adopted in 2020. In practice, prohibitory injunctions ordering a party to refrain from taking certain actions are rather common.

An injunction can be varied through substituting one type of injunctive relief (such as an attachment) with another type of injunctive relief (such as a prohibitory injunction). The court can set aside an injunction on its own initiative or on a substantiated application of a party to the proceedings. Parties to the proceedings, as well as non-parties, can appeal injunction orders if the court has decided on their rights, freedoms, interests or obligations. An appeal must be filed within ten days after the grant of the injunction order or its receipt by the appellant (if the appellant was not served with the order at the hearing). An appeal against an injunction order does not suspend the execution of the order.

An applicant for an interim attachment (freezing) order must satisfy the court that there is a risk of dissipation of the respondent's assets. The application must be supported by evidence showing the likelihood of dissipation (for example, alienation of assets or threat that such alienation will occur, transfer of funds despite outstanding debts towards the claimant, or conclusion of mortgage or pledge agreements). The mere allegation that the defendant will resist execution of the final judgment does not justify issuing an attachment order. Interim attachment orders are usually granted before the commencement of substantive proceedings.

The court can require the applicant for an attachment order to give a cross-undertaking to protect the defendant or any other person against any damage that they may sustain as a result of the order (see Question 12, Availability and grounds).

Interim attachment orders are granted ex parte (see Question 12, Prior notice/same-day).

There is no legal mechanism to grant interim relief in support of proceedings that have been or are about to be commenced in a foreign court.

Attachment does not create any preferential right or lien over the seized assets. The attachment order is registered as a public encumbrance in accordance with the Law of Ukraine on Securing of Creditors' Claims and Registration of Liens. A registered encumbrance enjoys priority over unregistered encumbrances. The priority of registered encumbrances is further determined by the order in which they were registered. These rules equally apply to encumbrances registered under interim attachment orders.

The claimant must compensate the defendant and any other person who suffered loss as a result of the attachment if the claimant is ultimately unsuccessful in its claim. Compensation comes primarily from the cross-undertaking given by the claimant.

If the court considers that an undertaking should be fortified, the applicant has ten days to provide security (for example, through a fortification payment to the court, a bank guarantee or other financial security, or any other action the court deems appropriate to remove risks of potential losses to the defendant). See Question 12, Availability and grounds for further details.

The most common forms of interim relief are:

The courts can only order interim remedies that are explicitly envisaged by law.

The claimant can seek the following remedies:

The court can apply other remedies to protect a right or interest.

To hold a person liable for damages, four elements must be shown:

Ukrainian law distinguishes between two types of damages:

The aggrieved party must always prove the existence and amount of damages that it claims. The fault of the defaulting party is presumed until that party rebuts the presumption.

Damages are compensatory in nature. Punitive damages are not recognised under Ukrainian law.

A party must disclose the documents on which it relies. There is no obligation to disclose documents that adversely affect a party's own case or support the other party's case. Documents are disclosed by submitting originals or copies to the court and every other party. A party cannot rely on a document that it failed to disclose simultaneously with lodging its claim, defence or pleadings. A party that cannot disclose certain documents (for example, because it does not possess them) must notify the court immediately, stating the reasons for this and giving confirmation that a search has been made to locate the documents.

There is no statutory obligation to provide documents in electronic form. However, a party can submit evidence in electronic form (including together with other evidence in paper form).

A party can seek a court order compelling a person possessing documents to disclose them. The court cannot begin this process on its own initiative, except if it has doubts as to the parties' good faith.

Under the Law of Ukraine on the Bar and Practice of Law, issues raised by clients, advice given and other information obtained by an attorney during their professional activities are subject to attorney-client privilege. Attorneys, their assistants and officers of an attorney's firm cannot disclose information subject to attorney-client privilege. These persons, as well as technical staff of an attorney's firm, cannot be interrogated on matters covered by attorney-client privilege. The Rules of Ethics also provide for the confidentiality of client information and any other information obtained from clients, except when such information is given by an attorney acting as a witness (unless it is privileged).

Attorney-client privilege does not extend to information in the possession of third parties, including clients. The rights and obligations arising from attorney-client privilege do not apply to:

Ukrainian law does not recognise the "without prejudice" principle.

Ukrainian law protects the secrecy of:

On application of a party, the court can order disclosure of information falling under the above categories in light of the specific circumstances of the case.

Witnesses give evidence in the form of written witness statements. The court can call a witness to give oral evidence at trial if the facts outlined in the witness statement contradict other evidence or there are doubts as to the credibility of the statements. If a witness fails to appear in court with no valid reason, the court will not attach any weight to their witness statement. The use of witness evidence in commercial proceedings was introduced by a judicial reform that took effect in December 2017 and remains largely untested in practice.

Ukrainian law does not attribute different weight to written and oral evidence. The court assesses each item of evidence separately and independently.

A witness can be called at trial to be cross-examined on the contents of their witness statement by the judge or on the application of any party.

The court can, on its own initiative or on the application of a party, appoint an expert to prepare evidence for the purposes of the proceedings. The court selects an expert from among nominees suggested by the parties and appoints the expert on which they agree. The order appointing the expert sets out the questions that the expert should address, which can be proposed by the parties subject to final approval by the court.

An expert can also be appointed by a party. A party engaging an expert independently has full discretion on whether to submit the expert report to the court. The court will not rely on the evidence of a party-appointed expert if the other party succeeds in challenging the expert (for example, on the ground of serious concerns as to the impartiality of the expert).

Both court-appointed and party-appointed experts must provide objective and independent expert evidence. Experts are criminally liable for issuing deliberately misleading reports.

The judge is not bound by an expert's opinion, although they cannot reject evidence contained in an expert report without cause.

The court can call an expert to be cross-examined by the judge and parties to the proceedings. Cross-examination is held at the adjudication stage.

As a rule, the party that applies for the appointment of an expert or instructs an expert pays the expert's fees and expenses. The court can order a party to deposit in the court's bank account a sum covering the expert's fees. In its final judgment, the court must rule on the allocation of expert fees between the parties. The court can order the losing party to reimburse expert fees borne by the successful party or allocate the sum between the parties.

The courts of appeal (courts of second instance) review the judgments of local courts that have not become effective. The Supreme Court (court of cassation appeal) reviews the judgments of first instance courts and appellate courts. The appellant submits its statement of appeal directly to the appeal court. No permission is required to bring an appeal.

The grounds for appeal vary depending on each specific case, but an appellant must identify the following in its statement of appeal:

A decision can be appealed to the Supreme Court if a lower court failed to correctly apply substantive law rules or breached procedural law rules and provided that one of the following conditions apply:

The above conditions were introduced in 2020 and significantly limit the grounds for cassation appeal.

The appellant must file an appeal against a judgment within 20 days after the day on which the judgment is handed down. An appeal against a court order can be brought within ten days after the day on which the order is pronounced. If the period for appeal has lapsed, the judgment becomes effective.

A cassation appeal can be lodged with the Supreme Court within 20 days after the day of the judgment of a lower court.

These time limits can be extended if a party convinces the appellate court or Supreme Court (as applicable) that the delay was due to a compelling reason.

The costs that a successful party can recover include court fees and legal fees relating to the adjudication of the dispute. Legal fees include:

Attorney's fees must be commensurate with the complexity of the case and the work done and time spent by an attorney as well as the quantum and/or magnitude of the case. If this is not the case, the court can on an application by the other party decrease the amount of awarded fees. The same applies to translators' and experts' fees.

Court fees are allocated between the parties pro rata to their success on the different issues. A successful party will be awarded its legal costs. A party that succeeded in defending some aspects of its case will be awarded a pro rata portion of its costs.

Along with its first petition on the merits of the case, each party must provide an estimate of the costs already incurred and prospective costs, otherwise the court can deny recovery of that party's costs.

When awarding costs, the court considers the following:

The court can order full recovery of costs against a party (even successful) if that party abused its procedural rights or if the dispute arose in connection with that party's incorrect and vexatious actions. The court determines the amount of costs to be awarded based on evidence provided by the parties (such as contracts and invoices) before the end of the stage of debates or, if the court allows, within five days after the judgment is rendered.

Interest cannot be awarded on costs.