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Litigation and enforcement in Ukraine: overview
Автор: Оксана Лёгкая
Джерело: Thomson Reuters Practical Law. – листопад 2018
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Main dispute resolution methods

1. What are the main dispute resolution methods used in your jurisdiction to resolve large commercial disputes?

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 Questions 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.

Court litigation

Limitation periods

2. What limitation periods apply to bringing a claim and what triggers a limitation period?

Ukrainian law distinguishes between the:

  • General limitation period, which is three years and applies equally to contractual and non-contractual claims, and to both companies and individuals.
  • Specific (reduced or extended) limitation periods, which are expressly determined by law for certain types of claims.

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:

  • For obligations with a defined performance period, the limitation period starts running from the expiration of the performance period.
  • If there is no precise performance period or the obligation is to be performed on demand, the limitation period starts running when the right to request performance arises.
  • For claims relating to the consequences of a void agreement, the limitation period starts running on the date when performance started.

Court structure

3. What is the structure of the court where large commercial disputes are usually brought? Are certain types of dispute allocated to particular divisions of this court?

The judicial system consists of:

  • The Constitutional Court of Ukraine, which decides on the constitutionality of laws and interprets the Constitution of Ukraine.
  • Courts of general jurisdiction, which consider civil, criminal, commercial and administrative cases and administrative offences.

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:

  • Local courts.
  • Appellate courts.
  • High specialised courts (such as the High Court of Intellectual Property and the High Anti-Corruption Court).
  • The Supreme Court (which acts as a court of cassation).

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.

Rights of audience

4. Which types of lawyers have rights of audience to conduct cases in courts where large commercial disputes are usually brought? What requirements must they meet? Can foreign lawyers conduct cases in these courts?

Rights of audience/requirements

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 practise law before the courts and represent parties in court proceedings.

Foreign lawyers

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 his/her country.

Fees and funding

5. What legal fee structures can be used? Are fees fixed by law?

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. Until very recently, attorneys and law firms often used contingency fees (alone or in combination with hourly fees or caps). However, the Supreme Court ruled in 2018 that contractual provisions establishing contingency fees conditional on the outcome of a case are contrary to the fundamental principles of litigation in Ukraine, and can therefore be recognised as invalid.

6. How is litigation usually funded? Can third parties fund it? Is insurance available for litigation costs?

Funding

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

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 proceedings

Confidentiality

7. Are court proceedings confidential or public? If public, are the proceedings or any information kept confidential in certain circumstances?

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 a risk of disclosure of confidential or other privileged information, or the need to protect an individual's private life.

Pre-action conduct

8. Does the court impose any rules on the parties in relation to pre-action conduct? If yes, are there penalties for failing to comply?

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 or law) 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.

Main stages

9. What are the main stages of typical court proceedings?

Starting proceedings

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:

  • Defer acceptance of the claim. The court can provisionally defer acceptance of the claim if the statement of claim does not comply with the statutory form and content requirements. The claimant has ten days to rectify the defects, otherwise the claim will be returned to the claimant. If the defects are rectified, the statement of claim is considered as filed on its initial date of receipt by the court.
  • Return the claim to the claimant. The court will return the claim to the claimant if its signatory lacks authority or no confirmation of payment of court fees is provided. The claim can be filed again with the court on rectification of such defects.
  • Deny commencement of proceedings. The court will deny commencement of proceedings if it has no jurisdiction over the dispute, a final judgment or arbitral award has been issued regarding an identical dispute, the defendant is under liquidation procedures, and so on.

Notice to the defendant and defence

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.

Subsequent stages

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 parties make introductory pleadings outlining their core arguments.
  • The court establishes the facts of the dispute through the inspection of documents, cross-examination of witnesses and review of other evidence provided by the parties.
  • The parties make their full pleadings (stage of debates).
  • The judge (or a panel of judges) hands down a judgment.

Interim remedies

10. What actions can a party bring for a case to be dismissed before a full trial? On what grounds must such a claim be brought? What is the applicable procedure?

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 dispute cannot be adjudicated in commercial proceedings.
  • There is no cause of action.
  • The court should have refused to start proceedings (for example, there is an effective arbitral award in place between the same parties over an identical dispute).
  • The defendant was liquidated and has no legal successors.
  • The parties have already entered into a settlement agreement approved by the court.

The defendant can petition the court to dismiss a claim without consideration if:

  • The claim was filed by a person with no legal capacity.
  • The statement of claim was signed and lodged by an unauthorised person.
  • Another court is considering an identical dispute between the same parties.
  • The claimant failed to provide the evidence requested by the court with no valid reason.
  • The claimant failed to appear before the court.
  • The parties agreed to refer the dispute to arbitration.
  • The parties entered into an agreement to refer the dispute to a foreign court.
  • The claimant failed to secure the fees for consideration of its claim.

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.

11. Can a defendant apply for an order for the claimant to provide security for its costs? If yes, on what grounds?

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 claim is frivolous and vexatious, or there are signs that the claim is brought in an abuse of the claimant's right of recourse to the courts.
  • The claimant resides or is incorporated outside Ukraine or the claimant's assets located in Ukraine are not sufficient to cover the defendant's costs.
  • Enforcement of the costs order will be impaired due to the claimant's poor financial condition or actions aimed at the alienation of its assets.

12. What are the rules concerning interim injunctions granted before a full trial?

Availability and grounds

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 application for the injunction is reasonable, justifiable and fair.
  • The balance of convenience favours granting the injunction.
  • Granting the injunction would ensure enforcement of the judgment on the merits if the claim was allowed.
  • The injunction does not affect anyone apart from the applicant or defendant.

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.

Prior notice/same-day

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.

Mandatory injunctions

The court can order a party to positively take certain actions. In practice, mandatory injunctions are not granted by the courts, while prohibitory injunctions are rather common.

Right to vary or discharge order and appeals

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 against an injunction order does not suspend the execution of the order.

13. What are the rules relating to interim attachment orders to preserve assets pending judgment or a final order (or equivalent)?

Availability and grounds

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.

Prior notice/same-day

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

Main proceedings

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.

Preferential right or lien

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.

Damages as a result

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.

Security

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.

14. Are any other interim remedies commonly available and obtained?

The most common forms of interim relief are:

  • Restrictions on the disposal of assets owned by the defendant (freezing orders) (see Question 13).
  • Prohibitions to take certain actions imposed on the defendant or other persons (prohibitory injunctions) (see Question 12).

Interim remedies can take various forms. The judge can grant interim relief of a kind that is not expressly envisaged by law but is appropriate and efficient in the circumstances.

Final remedies

15. What remedies are available at the full trial stage? Are damages only compensatory or can they also be punitive?

The claimant can seek the following remedies:

  • Recognition of a right or lack of it.
  • Recognition of a transaction as invalid.
  • Termination of an action violating a right or posing a threat to a right.
  • Restitution and reinstatement of the status quo ante that existed before an infringement of the rights and legitimate interests of a person.
  • Specific performance.
  • Alteration or termination of legal relationships.
  • Indemnification for losses and moral (non-pecuniary) damages, and imposition of penalties.
  • Recognition of the invalidity of a decision, act or omission of a governmental entity, municipal entity, another entity or their officers, that contravenes the law or impairs a person's rights and legitimate interests.

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

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

  • Existence of damages and their amount.
  • Misconduct (breach).
  • Direct causal link between the misconduct and damages.
  • Fault in causing damages.

Ukrainian law distinguishes between two types of damages:

  • Actual damages, that is, losses sustained by a person in connection with the destruction or damage to an object, as well as expenses that a person has incurred or must incur to restore its breached right.
  • Lost profit, that is, income that a person would have received under normal circumstances if its right had not been breached.

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.

Evidence

Disclosure

16. What documents must the parties disclose to the other parties and/or the court? Are there any detailed rules governing this procedure?

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.

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.

Privileged documents

17. Are any documents privileged? If privilege is not recognised, are there any other rules allowing a party not to disclose a document?

Privileged documents

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 his/her 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:

  • In-house lawyers.
  • Lawyers who are not admitted to the Bar.
  • Law firms that are not in the form of an attorneys' partnership.
  • Foreign lawyers (unless they are admitted to the Ukrainian Bar).

Other non-disclosure situations

Ukrainian law protects the secrecy of:

  • Information on an individual's medical condition.
  • Information stored by notaries.
  • Confidential information, including commercial secrets.
  • Information protected by bank secrecy laws.
  • Personal communications and notes.
  • Information acquired by telecommunications operators on subscribers' communications and other details on telecommunications services.
  • Personal data.
  • State secrets.

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.

Examination of witnesses

18. Do witnesses of fact give oral evidence or do they only submit written evidence? Is there a right to cross-examine witnesses of fact?

Oral evidence

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 his/her 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.

Right to cross-examine

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

Third party experts

19. What are the rules in relation to third-party experts?

Appointment procedure

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).

Role of experts

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 the judge cannot reject evidence contained in an expert report without cause.

Right of reply

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.

Fees

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.

Appeals

20. What are the rules concerning appeals of first instance judgments in large commercial disputes?

Which courts

The courts of appeal (courts of second instance) review the judgments of local courts that have not become effective. The Supreme Court reviews the judgments of first instance courts and appellate courts.

Grounds for appeal

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

  • Why the judgment of the first instance court is unlawful and/or unsubstantiated (for example, the first instance court failed to establish the facts of the case in full due to procedural irregularities).
  • There are new facts that must be established or new evidence that must be assessed by the court (provided that there are valid reasons why such evidence was not disclosed before the first instance court).

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.

Time limit

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.

Class actions

21. Are there any mechanisms available for collective redress or class actions?

Ukrainian procedural law does not expressly provide for class actions. 
However, the Law of Ukraine on Consumer Rights Protection authorises consumer associations to bring lawsuits to recognise as illegal and stop the actions of retailers, manufacturers or contractors in relation to an indefinite number of consumers. Judgments issued in these cases must be taken into account by the courts when reviewing the claims of individual consumers seeking damages based on the same illegal actions. These claims are not common in Ukraine.

Costs

22. Does the unsuccessful party have to pay the successful party's costs and how does the court usually calculate any costs award? What factors does the court consider when awarding costs?

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

  • Attorneys' fees.
  • Witnesses' costs.
  • Translators' and experts' fees.
  • Fees relating to the execution of search orders.
  • Any other expenses to prepare and ensure the effective management of the case.

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:

  • Whether the costs relate to the adjudication of the matter.
  • Whether the costs are substantiated and commensurate with the complexity of the case, the amount claimed, the importance of the dispute for the parties, including whether the outcome of the case will affect the reputation of a party, as well as the overall magnitude of the case in the public domain.
  • Whether the conduct of a party significantly but unnecessarily extended the duration of the proceedings (for example, through filing vexatious applications or excessive costs estimates).
  • The parties' conduct at the pre-trial stage and in respect of settlement of the dispute.

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.

23. Is interest awarded on costs? If yes, how is it calculated?

Interest cannot be awarded on costs.

Enforcement of a local judgment

24. What are the procedures to enforce a local judgment in the local courts?

A court judgment can be enforced against a debtor that is not willing to execute the judgment voluntarily. State enforcement authorities (officers) and, in specific cases envisaged by law, private enforcement officers are responsible for the enforcement of local judgments.

The procedure to enforce a local judgment involves the following stages:

  • The court issues an enforcement document (writ of execution).
  • An enforcement officer starts enforcement proceedings based on the writ of execution.
  • The enforcement officer provides a copy of the resolution on commencement of enforcement proceedings and related documents to the parties (creditor and debtor) and other persons concerned.
  • The enforcement officer takes actions to enforce the judgement (for example, through writing off funds from the debtor's bank account or sale of the debtor's assets).

The writ of execution must be submitted to the debtor for enforcement within three years of issue. If this term expires, the writ of execution will be returned to the creditor.

The enforcement officer collects an enforcement fee of 10% of the sum actually forfeited or returned or value of the debtor's property transferred to the creditor. The enforcement fee is not payable for enforcement documents relating to the confiscation of property, collection of periodical payments, freezing of assets to secure claims, and writs subject to immediate enforcement.

Cross-border litigation

25. Do local courts respect the choice of governing law in a contract? If yes, are there any national laws or rules that may modify or restrict the application of the law chosen by the parties in their contract?

The Law of Ukraine on International Private Law (IPL Act) allows a choice of governing law in a contract. A contract can only include a choice of law clause if it has a foreign element. A foreign element is present if any of the following conditions are met:

  • At least one party is a Ukrainian citizen residing outside Ukraine, a foreign citizen, a stateless person, or a foreign legal entity.
  • The object of the contract is located in a foreign state.
  • A legal circumstance creating, altering or terminating the contract has occurred in a foreign state.

If the court considers that the parties have failed to reach an agreement on the governing law of the contract (including cases when the choice of law is not explicit), the court will refer to conflict of laws rules to determine the applicable law.

The application of imperative (mandatory) rules of Ukrainian law cannot be restricted by a contractual choice of governing law. In other words, Ukrainian imperative rules override rules of foreign law chosen by the contracting parties. Imperative rules are not specifically designated by law or case law. Therefore, each court will decide on whether a rule of Ukrainian law should prevail on a case-by-case basis.

Additionally, a foreign governing law cannot be applied if this is manifestly inconsistent with Ukrainian public policy. In this case, the law that has the closest and most substantial connection with the contract will apply or, if such law cannot be determined or applied, Ukrainian law will apply. Ukraine has no statutory definition of public policy. The Supreme Court of Ukraine has held that "public policy" should be understood as the legal order of a state and fundamental principles that form the basis for its existing legal order (relating to the state's independence, integrity, self-sufficiency and inviolability, fundamental constitutional rights, freedoms, guarantees, and so on).

When considering a matter that is governed by a foreign law, the Ukrainian courts must ascertain the applicable rules of foreign law. The courts are entitled to adjudicate the dispute based on Ukrainian law if they are unable to ascertain foreign law rules within a reasonable time. Parties can file expert evidence on the content and interpretation of a foreign law by foreign courts and doctrine.

26. Do local courts respect the choice of jurisdiction in a contract? Do local courts claim jurisdiction over a dispute in some circumstances, despite the choice of jurisdiction?

In cases established by law or international treaty, parties to a contract can agree to refer a dispute that falls within the jurisdiction of a Ukrainian commercial court to a foreign court. A choice of court clause must be explicit and exclusive.

However, the courts of Ukraine have exclusive jurisdiction in the following cases:

  • Disputes related to real estate assets located in Ukraine, except in cases related to the conclusion, amendment, termination and performance of public private partnership agreements with the Cabinet of Ministers of Ukraine involving real estate assets, provided that the dispute does not relate to the creation, termination and registration of property rights over such assets.
  • Disputes related to IP rights registered in Ukraine.
  • Dispute related to the registration or liquidation of foreign legal entities or individual entrepreneurs in Ukraine.
  • Dispute related to the validity of records in a state register or land cadastre of Ukraine.
  • In bankruptcy-related disputes, where a debtor was established in accordance with the laws of Ukraine.
  • Disputes related to the issuance or annulment of securities registered in Ukraine.
  • Other cases determined by law.

(IPL Act.)

Additionally, the Ukrainian commercial courts have exclusive jurisdiction over the following disputes:

  • Disputes relating to real estate, which must be considered by the commercial court at the location of real estate.
  • Corporate disputes, including disputes between the participants (founders and shareholders) to a legal entity or between a legal entity and its participants, including former participants, in connection with the establishment, operation, management or termination of operation of the legal entity, except for labour disputes, as well as disputes arising out of transactions concerning corporate rights (except shares) in a legal entity. These must be considered by a commercial court at the location of the legal entity.
  • Disputes between a legal entity and one of its officers (including an officer whose powers have been terminated) relating to compensation for damages caused by the actions (or inaction) of its officer, which must be considered by a commercial court at the location of the legal entity.
  • Disputes relating to the issuance, placement or redemption of securities, which must be considered by a commercial court at the location of the issuer.
  • Bankruptcy-related disputes and property-related claims against a debtor subject to bankruptcy proceedings, which must be considered by a commercial court at the location of the debtor.
  • Counterclaims and independent claims of intervening third parties, which must be considered by a commercial court at the place of the initial dispute.
  • Consolidations of claims relating to the conclusion, alteration, termination and performance of an agreement and claims in respect of agreements concluded to secure an initial obligation, which must be considered by a commercial court at the location of a respondent that is party to the main contract.
  • Claims relating to the registration of property and property rights and other registration actions, if such claims fall within the jurisdiction of the commercial courts.

(Commercial Procedure Code of Ukraine.)

If the parties refer their disputes to a Ukrainian court, that court will consider itself competent unless it determines that the dispute falls within the exclusive jurisdiction of a foreign court.

27. If a party wishes to serve foreign proceedings on a party in your jurisdiction, what is the procedure to effect service in your jurisdiction? Is your jurisdiction a party to any international agreements affecting this process?

Ukraine is a signatory to the HCCH Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters 1965 (Hague Service Convention), which entered into force in Ukraine on 1 December 2001. Ukraine has also concluded multiple bilateral agreements on assistance in civil law matters that govern the service of documents.

Ukraine made a number of declarations and reservations to the Hague Service Convention. In particular, Ukraine does not apply procedures for service of documents under Article 10 of the Convention (for example, service of judicial documents, by postal channels, directly to persons concerned). Service of judicial documents in Ukraine through foreign diplomatic or consular agents can only be effected on nationals of the state in which the documents originate.

The service of foreign judicial documents on a Ukrainian company can be effected via a request to the Ministry of Justice of Ukraine, which will check compliance of the request of the foreign court with the requirements of the Hague Service Convention or relevant bilateral treaty. The request is then transferred to the territorial department of the Ministry of Justice, which passes it to the court at the location of the addressee. The court summons the recipient so that its authorised representative appears before the court to receive the documents during a formal court hearing scheduled for this purpose. After service of the documents, the court prepares a protocol and confirmation of service and transfers them to the Ministry of Justice through its territorial department. If the addressee refuses to receive the judicial documents or fails to appear before the court (the court must summon the addressee at least twice), the request to serve judicial documents is deemed to be fulfilled.

Ukrainian law does not require the translation of judicial documents into Ukrainian, although a bilateral treaty may provide otherwise.

28. What is the procedure to take evidence from a witness in your jurisdiction for use in proceedings in another jurisdiction? Is your jurisdiction party to an international convention on this issue?

Ukraine is a signatory to the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters 1970 (Hague Evidence Convention), which entered into force in Ukraine on 21 July 2001. The taking of witness evidence is also governed by various bilateral agreements on legal assistance in civil law matters.

The procedure for sending a request to take evidence from a witness is the same as for requests for service of documents (see Question 27). The witness is summoned to give evidence at a court hearing and must respond to the questions listed in the request. The Ukrainian court can order the police to deliver a witness if a properly summoned witness fails to appear before the court with no valid reason. A person cannot be questioned as a witness on matters that he/she is under a legal obligation to keep secret (for example, attorneys cannot give witness evidence on issues subject to attorney-client privilege). The Ukrainian court will record the witness's responses in a protocol and send it to the foreign court via the Ministry of Justice of Ukraine.

Enforcement of a foreign judgment

29. What are the procedures to enforce a foreign judgment in your jurisdiction?

Foreign judgments are recognised and enforced in Ukraine under international treaties to which Ukraine is a party or under the reciprocity principle. Ukraine signed the HCCH Convention on Choice of Court Agreements 2005 (Hague Choice of Court Convention) on 21 March 2016, but the Parliament of Ukraine has not yet ratified it.

Reciprocity is presumed to exist between Ukraine and the state where the judgment was rendered unless there is evidence to the contrary. Therefore, a Ukrainian court can deny the enforceability of a foreign court judgment if a party proves that there is no reciprocity between Ukraine and the relevant jurisdiction.

A party seeking to enforce a foreign judgment must file a motion with the court of the debtor's location. The motion must be filed within three years of the date the foreign judgment became effective. When considering a motion for enforcement of a foreign judgment, the court must not review the merits of the judgment. After considering a motion, the court can either grant permission to enforce the judgment or refuse enforcement. These decisions can be appealed.

A foreign judgment cannot be enforced if any of the following applies:

  • The judgment has not yet come into effect under the laws of the foreign state.
  • The party against whom the decision was rendered was not able to participate in the proceedings because it was not given proper notice of adjudication of the case.
  • A Ukrainian court rendered a judgment that has become effective in a dispute between the same parties in an identical case, or there are pending proceedings before a Ukrainian court between the same parties in an identical case that started before the commencement of proceedings in the foreign court.
  • The three-year term for submission of the motion for enforcement has expired.
  • The subject matter of the dispute is not capable of resolution by litigation under the laws of Ukraine.
  • Enforcement of the judgment would jeopardise the interests of Ukraine.

Ukrainian law does not have a "blocking statute" or any other provisions that make voluntary co-operation with a foreign court order illegal.

Alternative dispute resolution

30. What are the main alternative dispute resolution (ADR) methods used in your jurisdiction to settle large commercial disputes? Is ADR used more in certain industries? What proportion of large commercial disputes is settled through ADR?

Arbitration has proven to be an efficient method of dispute resolution in Ukraine because of the flexibility of arbitration procedures and a less formalistic approach to dispute resolution. International arbitration is popular in almost all industries. While arbitration is rather common, especially in cross-border transactions, mediation is relatively rare due to an insufficient legal framework. Therefore, the questions below mainly refer to arbitration as the principal ADR method in Ukraine.

The main international arbitration institution in Ukraine is the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC). Disputes arising from foreign trade or other foreign commercial relations can be brought before the ICAC if the parties agree in writing to resort to the ICAC and at least one of them is headquartered abroad. The ICAC can also handle disputes involving companies with foreign investment, and international associations and organisations established in Ukraine. In 2017, the ICAC adjudicated 295 cases, most of which arose out of cross-border sale and purchase agreements.

Two separate statutes govern international and domestic arbitration in Ukraine. International arbitration is governed by the Law of Ukraine on International Commercial Arbitration, which is a verbatim translation of the UNCITRAL Model Law on International Commercial Arbitration, except for a few minor deviations. Domestic arbitration is governed by the Law of Ukraine on Courts of Arbitration. Ukraine is a signatory to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention). Arbitral awards issued in any of the countries that are parties to the New York Convention are enforceable in Ukraine, making arbitration a vital component of any international contract involving Ukrainian parties.

An arbitral award can be appealed within three months of receipt by an interested party. Ukrainian law provides for limited rights of appeal against arbitral awards. The grounds for setting aside an international arbitral award issued in Ukraine are equivalent to those listed in Article 34 of the UNCITRAL Model Law and Article V of the New York Convention.

31. Does ADR form part of court procedures or does it only apply if the parties agree? Can courts compel the use of ADR?

ADR procedures can be used if the parties agree to it. An arbitration agreement must:

  • Be in writing.
  • Refer to an arbitral institution selected by the parties or expressly provide for ad hoc arbitration.

There have been a number of cases where the Ukrainian courts have refused to uphold the validity of an arbitration agreement due to the incorrect designation of the arbitral institution.

Ukrainian law allows the filing of a claim with a Ukrainian court even if the parties have entered into an arbitration agreement. In this case, court proceedings will commence unless the other party files a motion to dismiss the Ukrainian court proceedings and refer the dispute to arbitration before submitting its first statement on the merits of the case. The Ukrainian court can consider itself competent to review the case if it finds that the arbitration agreement is null and void, not effective or unenforceable.

32. How is evidence given in ADR? Can documents produced or admissions made during (or for the purposes of) the ADR later be protected from disclosure by privilege? Is ADR confidential?

The parties are responsible for providing evidence in support of their claims, defence and pleadings. The arbitral tribunal can also request either party to provide evidence. There are no specific requirements on the collection and provision of evidence in ADR. As a general rule, acceptable evidence is any evidence with evidentiary force that relates to the matter in dispute, including documents, witness testimony, and expert opinions. All documents must be communicated to the tribunal in their original form or as certified copies. The tribunal can:

  • Request that a party provide a translation of any documents submitted.
  • Order the production of documents.
  • Request the attendance of witnesses.

However, the tribunal has no powers to compel compliance with these requests.

Proceedings before the ICAC are confidential and awards must not be made public without the specific agreement of the parties. Confidentiality also covers the case file. However, certain parts of the award and circumstances surrounding the proceedings may become public through court proceedings (such as setting aside or exequatur proceedings), as Ukrainian court decisions are generally publicly available. Awards are not generally published. However, the ICAC publishes a few selected cases without identifying of the parties.

33. How are costs dealt with in ADR?

Under the ICAC Rules, costs must be borne by the party against whom the award is made, unless the parties have agreed otherwise. If the claims are granted in part, the respondent will pay the costs in proportion to the claims granted and the claimant will pay the remainder.

The ICAC Schedule on Arbitration Fees and Costs provides for the payment of:

  • A fixed registration fee of USD600.
  • An arbitration fee (which includes the arbitrators' fees and an administration fee), the amount of which will depend on whether the claim is proprietary. If so, the amount of the fee will depend on the value of the claim.
  • Additional costs of the proceedings (for example, experts' expenses, translations, and arbitrators' travel expenses).

34. What are the main bodies that offer ADR services in your jurisdiction?

The ICAC is the main international arbitration institution in Ukraine (https://icac.org.ua/en).

More than 100 permanent domestic arbitral institutions provide arbitration services for domestic disputes in Ukraine. The most popular are the:

Additionally, the Ukrainian Mediation Center (https://ukrmediation.com.ua/en) handles various disputes using mediation procedures.

Proposals for reform

35. Are there any proposals for dispute resolution reform? If yes, when are they likely to come into force?

On 3 October 2017, the Parliament of Ukraine passed the Law of Ukraine Amending the Commercial Procedure Code of Ukraine, the Civil Procedure Code of Ukraine, the Administrative Procedure Code of Ukraine and Other Legal Acts. The new codes became effective on 15 December 2017. The judges and legal community are still adjusting to the 2017 overhaul of the judiciary. No other significant changes are anticipated in the near future.