Ukraine

In today’s unpredictable world, businesses often face circumstances that disrupt contractual performance. Whether it’s war, sanctions, pandemic, or skyrocketing costs, many turn to legal safety nets such as force majeure and hardship to mitigate the consequences. Yet, in Ukraine, commercial actors often conflate the two doctrines, leading to uncertainty and practical difficulties in their application. For international companies entering into contracts under Ukrainian law or working with Ukrainian partners, drawing a clear boundary between these concepts is vital step in safeguarding their interests when the unexpected strikes. At first glance, force majeure and hardship appear to address the same circumstances – both dealing with extraordinary events that disrupt contractual performance. However, in the eyes of the law, they are fundamentally distinct mechanisms, each with its own requirements and consequences. Understanding which applies to your situation is critical, as it can determine whether non-performance is legally excused or constitutes breach of contract. What is force majeure? Under Article 141 of the Law of Ukraine “On the Chambers of Commerce and Industry”, force majeure (Ukrainian: obstavyny neperebornoi syly or “circumstance of irresistible force”) is defined as extraordinary and unavoidable circumstances that make it objectively impossible for the affected party to perform its contractual obligations. Classic examples include armed conflicts, natural disasters, or government-imposed restrictions, such as quarantines or export bans. Further clarification is provided in paragraph 6.9 of the Regulation on Certification of Force Majeure Circumstances by the Ukrainian Chamber of Commerce and Industry (approved by Resolution of the Presidium of the UCCI dated 18 December 2014, No. 44(5)), which outlines four cumulative criteria that must be met for an event to qualify as force majeure: 1. Extraordinary nature – The event is exceptional and beyond the control of the parties; 2. Unpredictability – The occurrence or consequences of the event could not reasonably have been foreseen, particularly at the time of concluding the relevant contract or prior to the obligation’s due date; 3. Inevitability (Irresistibility) – The occurrence and/or its consequences are unavoidable despite the exercise of due care and diligence; 4. Causal link – There must be a direct causal connection between the event and the impossibility of performing a specific contractual or legal obligation (under contract, statute, regulation, or decision of a local authority). Crucially, simply invoking force majeure is not sufficient to safeguard a party from liability or contractual penalties. To rely effectively on this legal mechanism, the affected party must: 1. Obtain a certificate of force majeure from the Chamber of Commerce and Industry of Ukraine confirming that the specific event qualifies as force majeure in the context of the relevant contract and in relation to the affected party. Note: The Supreme Court of Ukraine has clarified that the general certificate issued by the Chamber of Commerce and Industry of Ukraine on 28 February 2022, which recognized the russian armed aggression as a force majeure event, does not in itself exempt parties from liability for non-performance. The Court held that such general certificate, addressed “to whom it may concern,” lacks the necessary link to a specific contract or obligation, and does not constitute sufficient proof to justify non-performance without additional evidence demonstrating the impact of the unforeseen event on a specific contractual obligation. 2. Demonstrate a clear causal link between force majeure event and the party’s inability to fulfill its contractual obligations. 3. Establish that no reasonable alternative means of fulfilling the contractual obligation were available. The party must prove that, even with additional effort or expense, fulfilling the obligation was objectively impossible under the circumstances. What is hardship? Hardship – legally referred to as a material change in circumstances under Article 652 of the Civil Code of Ukraine – is a significant change of the conditions that the parties relied upon at the time of contracting. A change is considered material if, had it been foreseen, the parties would not have entered into the contract at all, or would have done so on significantly different terms. As clarified by the Supreme Court of Ukraine, hardship must stem from external factors unrelated to the conduct of the parties and must arise independently of their legal relationship. According to the Court`s case law, in order to qualify as hardship, the event must meet all four legal criteria: 1. Be Unforeseeable – The change could not have been reasonably anticipated at the time the contract was concluded. 2. Be Unavoidable – The affected party could not have prevented or mitigated the consequences of the change through reasonable efforts (due diligence). 3. Disrupt Contractual Balance – The change significantly distorts the contractual equilibrium, significantly diminishing the value of performance expected by one party. 4. Provide No Assumption of Risk – The affected party did not, either contractually or customarily, bear the risk of such a change. Common examples include sharp increase in cost of raw materials, hyperinflation, significant changes in legislation, etc. Importantly, in order to benefit from the hardship mechanism, the affected party has to proactively raise the issue and seek to re-negotiate the terms of the contract – either directly with the counterparty or by initiating judicial proceeding. If the opposing party files a claim for non-performance before hardship is invoked, the affected party loses the opportunity to rely on it as a legal basis for modifying or terminating the contract. So, what is the difference? As recently confirmed by the Supreme Court, the difference between the two concepts lies in both degree of disruption and legal consequence that follow: 1. Force majeure renders the performance of contractual obligations objectively impossible – where no amount of effort or financial outlay can overcome the barrier hindering the performance of the obligations. Hardship, by contrast, arises where performance of a contractual obligation remains objectively possible, but has become excessively burdensome or economically impractical for the affected party due to fundamental change in circumstances. 2. Force majeure affects the timing and feasibility of performance and exempts the affected party from liability for non-performance during the force majeure period. Hardship, on the other hand, does not release the party from performance or liability. Instead, it provides the affected party grounds for seeking modification or termination of the contract in order to restore the balance of interests that has been disrupted by the unforeseen changes. Legal consequences It is crucial to distinguish the legal consequences of the two doctrines. When properly invoked, the doctrine of force majeure can shield the affected party from liability, relieving it of penalties or fines arising from non-performance. In contrast, hardship does not exempt a party from liability for non-performance. Instead, it gives a legal foundation to seek revision or termination of the contract – either though negotiations with the counterparty or by applying to the court. In essence, force majeure is aimed to safeguard an affected party against the consequences of non-performance, while hardship offers a pathway to reshape a contract in light of fundamentally changed circumstances. What this means for your business With the Supreme Court providing clear guidance the application of the two doctrines under Ukrainian law, it is more important than ever for business owners to understand the distinction – especially since misinterpretation is likely to result in lost opportunities for legal protection. At Koziakov and Partners, we specialize in helping businesses navigate these legal complexities. Whether you need to invoke force majeure, renegotiate a contract under hardship, or defend against contractual claims, our team is here to protect your interests. If your business is facing contractual challenges due to unforeseen events or shifting market realities, we are here to guide you in choosing the best course of action and safeguard your commercial interests.

The public procurement market in Ukraine has been rapidly developing despite the ongoing war and is expected to experience even greater growth in the post-war period. This opens up attractive business opportunities for foreign companies, yet it also requires a solid understanding of the specific regulatory framework governing government contracts in Ukraine. This article outlines key “good-to-know” insights and practical considerations to help foreign businesses better understand the regulation and practical aspects of government contracting in Ukraine. Regulatory regime and applicable law Government contracts are, in most cases, procured under the Law of Ukraine ‘On Public Procurementʼ (the Law) and are subject to specific regulatory regime. In addition to governing the procurement procedure itself, the Law sets requirements for the content and performance of procurement contracts. In particular, it provides that such contracts must be concluded in accordance with the Civil Code of Ukraine, taking into account the specific requirements established by this Law. Accordingly, even when a non-resident is a contractual party, the governemnt contracts are by default governed by Ukrainian law, which also applies as a substantive law in the event of a dispute. Amendments to a draft contract The contracting authority publishes a draft of the future contract together with the tender documentation at the very start of the procurement procedure. Before submitting its bid, a bidder may request amendments to the draft if it considers any provions to be discriminatory or unreasonable. However, once the winner is announced, the contracting authority and the successful bidder shall sign a contract on terms identical to those of the winner’s bid proposal. The current law allows only a few exceptions to this rule, such as: specifying the price of obligations in foreign currency; reducing the contract price without changing the procurement volume; adjusting the quantity of goods to align with packaging multiples. Importantly, the non-compliance with this rule renders the contract void under Ukrainian law.   Amendments to a signed contract The Law of Ukraine “On Public Procurement” generally prohibits amendments to the essential terms of a concluded contract until the parties have fully performed their obligations, except in a limited number of cases expressly provided by law. The most frequently invoked exceptions include: reducing the procurement volume, including in cases where the contracting authority’s actual budget expenditures decrease (e.g., due to reduced budget financing); increasing in the unit price of goods by up to 10%, in proportion to market price fluctuations, provided that the total contract price does not increase. Such an adjustment may occur no more than once every 90 days from the date of signing or last amendment of the contract (although this time restriction does not apply to contracts for fuel (petrol, diesel), natural gas, or electricity; improving the quality of goods, works, or services, as long as this improvement does not increase the total contract price; extending the contract duration or performance period due to objective reasons such as force majeure or delayed budget financing provided that such extension does not increase the total contract price; reducing the contract price without changing the contract volume; adjusting the contract price to reflect changes in tax rates, fees, or tax benefits, proportionally to such changes (which may, in certain cases, increase the total contract price, e.g., when the contractor becomes a VAT payer); Additional supplies, works and services Under the current procurement rules, a contracting authority may directly procure additional goods, works or services from the same contractor without a new tender. This is allowed when changing the supplier would result in technical incompatibility or operational issues related to the use or maintenance of goods, or when there is a need for additional similar works or services directly related to the original contract. Such additional procurement may take place within three years from the signing of the initial contract, provided that the total price of the additional supply, works, or services does not exceed 50% of the price of the main procurement contract. Subcontractors In principle, the engagement of subcontractors under government contracts for the provision of services or works (but not for the supply of goods) is generally permitted. However, tender documentation may limit the engagement or replacement of new subcontractors without the prior consent of the contracting authority. The bidder must indicate in its bid proposal information about any subcontractor that will provide services or perform works amounting to 20% or more of the total contract price. Importantly, under Art. 838 of the Civil Code of Ukraine, the contractor remains liable to the contracting authority for the result of the engaged subcontractor’s performance. Force majeure Tender contracts usually include a force majeure clause, which releases the parties from liability for improper performance of their obligations caused by force majeure events. At the same time, this clause typically requires the debtor to: notify the creditor within a specified period about the impossibility of proper performance; and obtain a valid force majeure certificate from the relevant Ukrainian or foreign Chamber of Commerce. Failure to comply with these requirements may result in the loss of the right to invoke force majeure and an obligation to pay penalties and compensate damages in full. Dispute resolution Typically, when a non-resident is a party to a government contract, the dispute resolution clause provides that any disputes arising in connection with the contract shall be settled by the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC) in accordance with its Rules.   Although the ICAC Rules generally reflect the core procedural principles applied in leading international arbitration centres, the ICAC also has several distinctive features. One of them is a capped list of arbitrators available for the parties to choose from. At the same time, the ICAC is known for its relatively moderate arbitration fees and efficient dispute resolution process since most cases are resolved within six months from the date of claim’s filing.   Conclusion Ukraine’s public procurement legal framework establishes several restrictions on the freedom of contract to ensure the integrity and fairness of the procurement process. Successful bidders should be aware of the statutory controls governing contract amendments and procurement of additional goods, services or works, as well as the default provisions typically included by contracting authorities in draft contracts. At Koziakov and Partners, we specialize in helping businesses navigate these legal complexities. We offer practical legal solutions to manage contractual risks during the performance of government contracts and to ensure effective protection of our clients’ interests in the event of a dispute. The content of this material does not constitute legal advice. You should always consult a suitably qualified lawyer about any particular legal question or problem you may have.

On 21 May 2025, the Interdepartmental Commission on International Trade (ICIT) adopted Decision No. AD-579/2025/441-01 extending the application of definitive anti-dumping measures on cement imports from the Russian Federation, the Republic of Belarus, and the Republic of Moldova until 2030. This decision follows the review by the Interdepartmental Commission on International Trade of the anti-dumping measures imposed in 2019 as a result of an anti-dumping investigation into imports of cement into Ukraine, including cement clinkers and Portland cement, classified under UCGFEA codes 2523 10 00 00 and 2523 29 00 00. The review of the anti-dumping measures was initiated in May 2024 due to the expiration of their initial five-year term. As a result of the review, the existing anti-dumping duties have been extended for an additional five years, remaining in effect at the following rates: 57.03% for products from Belarus, 114.95% for products from the Russian Federation, and 94.46% for products from Moldova. The legal support for the national producers – Vipcem (Dyckerhoff Cement Ukraine), Ivano-Frankivskcement, and Kryvyi Rih Cement – which collectively account for over 70% of cement production in Ukraine and are members of the Ukrcement Association, was provided by the International Trade Practice team of Ilyashev & Partners, led by Partner Olena Omelchenko. “The introduction of duties in 2019 made it possible to halt dumped imports, which contributed to the stabilization of the domestic market and fair competition. The measures helped reduce import share in consumption and increased domestic producers' market share. This allowed for market stabilization and created the foundation for preserving jobs and encouraging production investment. The extension of anti-dumping duties until 2030 is a crucial step toward ensuring the long-term stability and development of Ukraine’s cement industry. These measures comply with international trade rules and are necessary to safeguard national interests in foreign trade,” stated Olena Omelchenko. The Ukrcement Association is an industry organization uniting national cement producers in Ukraine. It brings together the leading companies in the sector, which account for over 95% of the country’s total cement production. The Association represents the interests of its members at both the national and international levels, promotes sustainable manufacturing, supports production facility modernization, and encourages the implementation of environmental standards.

The International Trade Practice team at Ilyashev & Partners, led by Partner Olena Omelchenko, representing the interests of Yuzhcable Works – one of the largest Ukrainian manufacturers of high-voltage cables, accounting for over 50% of total national production – has initiated an anti-dumping investigation into imports of cable and wire products originating from the Republic of Azerbaijan, the Republic of Uzbekistan, and the Republic of Turkey. Following the review of a complaint submitted by the domestic producer, the Interdepartmental Commission on International Trade, by its Decision No. АД-580/2025/441-01 dated 21 May 2025, initiated an anti-dumping investigation concerning imports into Ukraine of products from Azerbaijan, Uzbekistan, and Turkey described as: insulated electric cables with a voltage exceeding 1,000 volts, classified in Ukraine under UCGFEA codes 8544 60 10 10, 8544 60 10 98, 8544 60 90 10, and 8544 60 90 90. “The imported products are supplied to Ukraine at dumping prices and are identical or similar to those manufactured by the Ukrainian cable industry,” stated Olena Omelchenko. “In the complaint, we submitted compelling evidence of dumping, including calculations of the dumping margin and an analysis of the injury caused to the domestic producer. This increase in imports occurred alongside a significant decline in average weighted prices. This negatively impacted the sales volumes and profitability of Ukrainian companies. Domestic manufacturers expect decisive government action and the application of effective trade defense instruments to restore fair competition on the market.” If the investigation confirms the existence of dumping, anti-dumping duties may be imposed to restore fair competition conditions on the Ukrainian domestic market. The investigation may last up to 12 months. Yuzhcable Works, Private Joint Stock Company (PJSC) is one of the largest cable manufacturing enterprises in Ukraine. The company is a national leader in the production of large cross-sectional power cables (up to 2000 mm²), high and extra-high voltage cables (up to and including 330 kV), medium voltage power cables (up to 10 kV), and cables with enhanced safety standards for nuclear power plants and coal mines. The plant supplies its products to industrial enterprises, power stations, mining and processing plants, oil fields, and coal mines, metro systems and ongoing construction projects, railways and urban transport systems. It also manufactures cables for communication systems.