Ukraine

Roman Protsyshyn, Attorney at Law, Counsel, MCIArb Kateryna Solodovnyk, Lawyer International Arbitration in Ukraine: A Creditor’s Playbook (Debt Recovery from Ukrainian Companies under International Contracts) This article from Ilyashev & Partners’ arbitration team addresses the practical recommendations for those considering debt recovery from Ukrainian companies. Legal Disclaimer: The content of this article has been prepared by Roman PROTSYSHYN, MCIArb, and Kateryna SOLODOVNYK, both of Ilyashev & Partners Law Firm, Ukraine, for informational purposes only, does not constitute legal advice, and may not reflect the most current legal and court practice developments. All summaries of the laws and court practice are subject to change. These guidelines are not intended to provide legal or professional advice on any specific matter. Legal advice should always be sought before taking any action or refraining from taking any action based on any guidelines. Ilyashev & Partners and the two named authors do not guarantee the accuracy of the article and expressly disclaim any liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the article. Introduction When a party has a contractual debt against a Ukrainian party and considers it to have it confirmed by an award of arbitration, in particular, the one to be rendered by a tribunal constituted under the Rules of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (“ICAC”), there are several key rules useful to be followed and considered from the commercial standpoint before digging into costly arbitration, eventual litigation to have a court’s leave for forceful enforcement of the award in Ukraine via the system of state and private bailiffs, and ultimately the enforcement process itself (see also our guideline on the topic “How to Enforce Foreign Arbitral Awards in Ukraine: Recent Practices and Challenges” at Legal 500). Some of the collected rules came naturally from the very sense of commerce – to eventually and actually have money, which is owed by debtors, in your pockets – while others were crafted to address important restrictions imposed by the martial law introduced since the beginning of the Russian-Ukrainian war. Rule One: Collect Information on Debtor’s Assets For any creditor seeking to recover debt in Ukraine, asset tracing is not a preparatory step. Rather, it is the foundation of the entire enforcement strategy. Without a clear understanding of what can be enforced against, even a successful arbitral award risks becoming purely declaratory. This is particularly true in the Ukrainian context, shaped by the ongoing war. Firstly, companies may have lost, damaged, or relocated assets, especially in regions affected by hostilities. Secondly, a significant number of businesses have entered insolvency or financial recovery proceedings, with assets already encumbered or dissipated. Thirdly, some assets may be located in temporarily occupied territories, rendering enforcement practically impossible despite a debtor’s formal ownership. Finally, wartime realities have increased the risk of asset concealment, re-registration, or transfer to affiliated entities, often across jurisdictions. In such circumstances, early identification of asset pools allows a creditor to (i) assess recovery prospects, (ii) choose the correct enforcement tools, and (iii) act quickly to secure assets before they are further dissipated. Where to look: key sources of asset information Ukraine offers a relatively transparent system of public registers and open data, although information is fragmented across multiple databases. We believe that for greater efficacy, a creditor should combine official registers with private aggregators. Aggregated analytical systems YouControl A leading due diligence platform aggregating data from over 50 state sources, including company records, court decisions, enforcement proceedings, sanctions lists and property registers. Opendatabot Another widely used tool for monitoring company status, litigation, and ownership structure. These platforms significantly reduce time and cost by consolidating dispersed data into a single interface. Core State Registers Unified State Register of Legal Entities (USR) Contains essential corporate data: shareholders, directors, registered address, and business activities. This is the primary source for identifying ownership and control structures, including ultimate beneficial owners (UBOs). State Register of Property Rights to Real Estate Provides information on ownership of property (land and buildings), access to which is limited to attorneys duly authorised and granted specific access rights. State Land Cadastre Used to identify land plots and their cadastral numbers, accessible exclusively to attorneys who have been expressly authorised and granted the relevant access permissions. State Register of Encumbrances over Movable Property Indicates whether movable assets (equipment, vehicles, inventory) are pledged or otherwise encumbered These registers are crucial for assessing whether the debtor is already under pressure from other creditors and whether assets may be subject to any claims. In addition to formal asset registers, particular attention should be paid to the Unified State Register of Court Decisions, which in practice is one of the most informative tools for asset tracing in Ukraine. A thorough review of court decisions involving the debtor can reveal not only its litigation history but also critical details about its assets, contractual relationships, and financial condition. In Ukraine, asset tracing is not a one-off exercise but an ongoing process. In this context, relying on a single source is rarely sufficient. Instead, a combined approach, namely drawing on state registers, court decisions, and supplementary analytical tools, significantly enhances both the accuracy and strategic value of asset tracing. A creditor who identifies assets early and understands their legal and practical enforceability will be in a significantly stronger position both in arbitration strategy and subsequent enforcement. Rule Two: Try to Secure an Arbitration Claim by Property Arrest It would be illusory in the modern commercial world to invest in arbitration to pursue a monetary claim against a debtor without assessing the prospects of ultimate debt recovery and securing that potential by interim measures. The ICAC Rules, like many modern institutional arbitration rules, allow a party to request that the tribunal impose interim measures against another party. The application is to be considered by the ICAC Head if the tribunal has not yet been constituted. The ICAC Rules also entitle the tribunal or the ICAC Head, as the case may be, to request, upon hearing another party or by own motion, a counter-security from the party requesting the interim measures by requiring that party to deposit a sum of money with the Ukrainian Chamber of Commerce and Industry, or to provide a bank guarantee, surety, or other financial security. The interim measures, if granted by an arbitral tribunal, are binding on the litigants until an arbitration award is rendered or the measures are altered or lifted during arbitration. From a practical standpoint, an interim measures arbitral award is not secured by state compulsory enforcement mechanisms, unlike interim measures court decisions. To be fully enforceable in Ukraine, interim measures granted by the arbitral tribunal must be recognised by a Ukrainian court through the exequatur procedure, as with any other arbitration award. However, this route may raise complex legal issues (Roman Protsyshyn, with another co-author, earlier discussed this in Enforcement of Foreign Interim Measures in Ukraine, The Ukrainian Journal of Business Law, October, 2021). Under the existing Ukrainian arbitration regime, the arbitral tribunal’s orders (let alone those issued by the ICAC Head) to impose interim measures against another party to the arbitration have no direct coercive effect and virtually never accomplish any serious purpose to prevent recalcitrant debtors from deliberately dissipating their assets to render themselves judgment-proof or taking other steps aimed at complicating, or even making impossible, enforcement of a future arbitral award. Against that background, asking an arbitral tribunal to issue interim measures against another party is of little application in arbitration, where the tribunal can virtually never issue immediately effective coercive relief (e.g., the arrest of funds in bank accounts). When arbitrating against ‘fat-cat’ companies with liquid assets on their balance sheets (real estate, land plots, etc.) and regular high incomes, it may be an option to request in arbitration sophisticated interim measures that are proportionate to the underlying claim. For example, asking a defendant to cause its bank to issue a bank guarantee until the award on merits is rendered. In this example, if the claimant wins, it will have direct access to funds to satisfy its claims without having to chase the defendant through recognition and enforcement procedures. However, when matters involve regular fund recovery cases, a claimant considering filing an arbitration claim under the ICAC Rules against a Ukrainian party should consider securing its claim through a domestic litigation mechanism, allowing it to seek an interim measure in aid of the already-commenced arbitration from a Ukrainian appellate court whose jurisdiction extends to a defendant’s place of business or where its property is located. The most desired type of interim measure is the arrest of a debtor’s property, which imposes a ban on its disposal to preserve it until the property’s further fate is determined. The arrest of property, as it is known in Ukraine, resembles a freezing injunction in common law countries. Regarding a debtor’s money held in bank accounts, the arrest of property resembles the common law concept of garnishment. The property arrest is very efficient, as a court ruling ordering the arrest of property can be filed with a bailiff, who will quickly issue compulsory orders to all banks, requesting them to freeze the debtor’s funds. By way of illustration, in Shell Lubricants Supply Company B.V. v. LLC “Trading House “Galpap Plus”, a local court of appeal has arrested more than $350,000 of the defendant’s funds in bank accounts in aid of an LCIA arbitration, but also requested a counter-security for the same amount. Rule Three: If You Are Sanctioned in Ukraine, Consider Restrictions Affecting Your Ability to Pay and Receive Payments Another critical factor a creditor must assess at the outset is whether it is itself subject to sanctions in Ukraine, as this may directly determine not only the viability of enforcement, but also the practical ability of a creditor to receive any recovered funds. In other words, even a successful arbitral award may prove ineffective if legal restrictions prevent the transfer of payment against a sanctioned entity or individual. In the context of the ongoing war, sanctions have become a widely used and actively employed instrument of economic control and national security policy. The National Security and Defence Council of Ukraine regularly imposes sanctions, which are enacted by decrees of the President of Ukraine, and these measures can have a direct and immediate impact on a creditor’s ability to make or receive payments. Importantly, sanctions do not operate in a uniform manner. Their legal and practical effects depend on the specific type of restriction applied. For example, sanctions involving asset blocking (also known as an asset-freezing sanction) effectively immobilise funds and property within Ukraine, preventing any transfer, disposal, or enforcement against such assets. Similarly, sanctions that suspend financial transactions prohibit Ukrainian banks from processing payments involving the sanctioned party, making settlement or enforcement impossible for as long as such restrictions remain in place. Other measures, such as limitations on capital movements, trade restrictions, or prohibitions on certain business activities, may not formally block payments but can significantly undermine a creditor party’s ability to perform its obligations or receive funds. From a creditor’s perspective, it is essential to understand that sanctions do not automatically prevent recognition and enforcement of arbitral awards in Ukraine. Ukrainian case law illustrates this distinction. Specifically, in JSC “Normetimpex” v. PJSC “Zaporizhtransformator,” the court held that the application of sanctions by the National Security and Defence Council of Ukraine, whether against the beneficiary owners of the creditor or the creditor itself, does not indicate that the arbitral award contradicts the public policy of Ukraine, nor does it justify refusal of recognition and enforcement of the award within Ukraine. This position is important for creditors, as it confirms that sanctions alone do not defeat a claim. However, the analysis changes when recognition and enforcement are sought against a State-owned enterprise of strategic importance for national defence, and the creditor appears to be a sanctioned entity registered in an aggressor State, Ukrainian courts normally reject enforcement on public policy grounds (see “Rule Five: Consider Whether Your Debtor is a Protected-From-Debt-Recovery Company”). In such cases, the enforcement of the award would be deemed incompatible with Ukraine’s fundamental legal principles, national security interests, and public order. For creditors, the practical starting point is to first determine whether they themselves are subject to Ukrainian sanctions, including through their ultimate beneficial owners or affiliated entities. This can be verified through the State Sanctions Registry. Equally important is to identify the specific type of sanctions imposed, as this will directly affect the feasibility of recovery. In particular, sanctions such as the asset-freezing sanction or the sanction restricting financial transactions may legally prohibit Ukrainian banks and counterparties from transferring funds to the creditor, effectively preventing the debtor from making payment even where the debt is undisputed or confirmed by an arbitral award. In this sense, sanctions may not defeat the claim itself, but they can block the actual flow of funds, turning enforcement into a matter of timing and regulatory constraints rather than legal entitlement. A clear understanding of both the existence and scope of sanctions is, therefore, essential for assessing whether, when, and how payment can realistically be obtained. Rule Four: Consider Currency Restriction Affecting Your Ability to Receive Payments Abroad Selling goods or providing services to Ukrainian parties under international contracts almost always involves making payments abroad, most frequently in freely convertible currency (US dollars, Euros, etc.) and very rarely in Ukrainian hryvnia. It is common ground that the Russian-Ukrainian war, regrettably, is still ongoing. On 24 February 2022, right after Russia invaded Ukraine, the Board of the National Bank of Ukraine passed the Resolution “On Operation of Banking System Under Martial Law” (“Martial Law Banking Resolution”), imposing several prohibitions preventing Ukrainian parties’ ability to pay for the delivered goods and services under the respective contracts by banning Ukrainian banks from (i) remitting money abroad at the request of their clients unless a transaction falls into a limited list of exceptions; (ii) carrying out any currency operations with Russian Roubles and/or Belarusian Roubles; and (iii) carrying out any currency operations to perform obligations owed to legal entities or individuals residing in the Russian Federation or the Republic of Belarus. The Martial Law Banking Resolution has been amended many times since its enactment, liberalising the Ukrainian banking rules under martial law to some extent. Since May 2024, Ukrainian companies have been allowed to remit money in Ukrainian Hryvna or a foreign currency abroad for imported goods, received services and works, including payment of contractual fines and penalties, bonuses, reimbursement of related expenses in connection with the performance of an international contract, or damages for its non-performance, provided that the delivery of goods, the rendering or services or the performance of works under such transactions was made after 23 February 2021 or has been being made since that date. In practice and subject to the limitations introduced in response to the Russian invasion, the above-described banking legislation would allow a Ukrainian award debtor to pay out the awarded debt abroad voluntarily, provided the concurrent performance was made after 23 February 2021. Things will likely become complicated if the award debt is to be recovered by a bailiff's coercion. The possibility for bailiffs to remit collected funds abroad remains limited, as only state bailiffs may do so, provided the awarded debt is owed by the State or a state-owned company. In cases involving debt collection from a Ukrainian private party, the most effective approach is to engage a private bailiff, who would likely collect funds (from bank accounts or by selling the debtor’s property) in Ukrainian hryvnia. Foreign companies can open accounts in Ukrainian banks in both Ukrainian hryvnia and foreign currencies. Provided that the instructed bailiff has collected the necessary amount of cash in Ukrainian hryvnia equivalent to the awarded sum in a foreign currency(s), the foreign award creditor is entitled to instruct the bailiff to remit the collected Ukrainian hryvnia to its Ukrainian hryvnia bank account opened in a Ukrainian bank. The so transferred sums will be written off from the bailiff’s books, with the debt recorded in foreign currency(s) at the National Bank of Ukraine’s foreign currency exchange rate on the day of transfer. A foreign party with funds in Ukrainian bank accounts can spend them in Ukraine, e.g., to purchase goods for export abroad. Selling the awarded debt can also be an option for overcoming foreign currency restrictions currently in force in Ukraine during martial law. Roman Protsyshyn earlier addressed the issue in the article “How to sell your debt. An arbitration award will help” (15 August 2019, NV.UA). Rule Five: Consider Whether Your Debtor is a Protected-From-Debt-Recovery Company A further aspect that creditors should assess at an early stage is whether the Ukrainian debtor falls within a category of entities that are, in practice, protected from enforcement on public policy grounds. This issue most commonly arises in respect of state-owned enterprises of strategic importance, particularly those linked to national defence or critical infrastructure. In the current wartime context, Ukrainian courts have shown increased sensitivity to enforcement actions that may interfere with such entities, even where the creditor holds a valid arbitral award. The leading guidance on this issue can be drawn from the line of cases JSC “Avia-Fed-Service” v. State Joint Stock Holding Company “Artem.” In its Resolution of 13 February 2020, the Supreme Court refused recognition and enforcement in Ukraine of an award issued by the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation on the ground that JSC “Avia-Fed-Service” was subject to economic sanctions imposed by the Ukrainian Government. However, the Court emphasised that the application of sanctions with regard to the creditor does not terminate the debtor’s obligations, nor does it constitute a permanent bar to enforcement of the award. This effectively means that the arbitral award may be enforced on the territory of Ukraine once the sanctions towards the creditor are lifted. At the same time, in an earlier, but similar, dispute between the same parties – JSC “Avia-Fed-Service” v. State Joint Stock Holding Company “Artem” – the Supreme Court adopted a different position, holding that the claimant’s Russian affiliation alone could not justify refusal to enforce the arbitral award. In particular, the Supreme Court concluded that a reference to public policy violations is only valid when enforcement of a foreign arbitral award would be fundamentally incompatible with the legal order of Ukraine. On remand, the Kyiv Court of Appeal further clarified that the imposition of sanctions on a creditor may, under certain circumstances, justify only the suspension of enforcement proceedings, rather than an outright refusal to recognise or enforce the arbitral award. Ultimately, on 9 January 2020, the Supreme Court granted recognition and enforcement of the arbitral award concerned in the case. Lastly, the Ukrainian Parliament has granted temporary protection to the property (funds, other assets, etc.) of Government-approved companies working in the defence industry from recovery in enforcement proceedings by coercion for the duration of martial law in Ukraine. It means that a creditor may approach a bailiff, but the bailiff will be precluded from collecting funds or selling property once a defence industry debtor shows evidence that it is on the protected list. The intention to apply to a bailiff may be a trigger for the protected debtor to settle the debt, as otherwise it will be charged with an additional 10% enforcement fee, increasing its liabilities. The list of protected companies is not public, but searches in the Court Decision Registry may reveal required information. For creditors, the practical implication is clear: before initiating arbitration or enforcement proceedings, it is essential to assess the nature of the debtor’s business and ownership. If the debtor is a state-owned or strategically significant enterprise, particularly in sectors such as defence, energy, or critical infrastructure, enforcement risks increase substantially. While such a status does not automatically preclude recovery, it may lead to delays, suspension of proceedings, or even refusal of enforcement on public policy grounds. Careful structuring of the claim and consideration of alternative enforcement jurisdictions may, therefore, be required. Rule Six: Consider Bargaining with Your Debtor at the Pre-Enforcement Stage Depending on a particular case, one of the regular effective ways for a foreign party to receive the awarded debt in its bank account is to warn the debtor about the intention to apply to a bailiff to enforce a writ of execution obtained at the end of the arbitral award exequatur procedure. The commercial rationale for this move is that the award debtor will not be additionally charged a 10% enforcement fee by a state bailiff or a similar sum by a private bailiff. There are plenty of options for negotiating the actual payment, from a simple deferred payment in exchange for meaningful collateral to complex financial schemes. Recovering debt from a Ukrainian company in the context of international arbitration requires more than obtaining a favourable award; it requires a careful understanding of the broader legal, regulatory, and practical environment in which enforcement will take place. In wartime Ukraine, creditors must approach recovery strategically and with heightened diligence, taking into account not only the debtor’s financial position and asset structure, but also sanctions exposure, enforcement risks, public policy considerations, and the practical realities affecting Ukrainian businesses and state institutions. Ilyashev & Partners is one of Ukraine’s leading law firms advising international businesses, investors, financial institutions and multinational corporations in complex cross-border disputes, international arbitration, debt recovery and enforcement proceedings. The firm has extensive experience representing foreign and domestic clients in disputes arising out of international trade, supply agreements, construction and infrastructure projects, energy transactions, banking and finance, investment activities and cross-border commercial operations involving Ukraine and CEE jurisdictions. The arbitration team regularly acts in proceedings under the rules of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC), the London Court of International Arbitration, the International Chamber of Commerce, the Stockholm Chamber of Commerce and other leading arbitral institutions, representing clients in commercial, investment, shareholder, construction, energy and post-M&A disputes. Ilyashev & Partners advises clients on international commercial arbitration, recognition and enforcement of foreign arbitral awards in Ukraine, debt recovery from Ukrainian companies, interim measures and asset freezing strategies, cross-border asset tracing and investigations, sanctions-related disputes and compliance, insolvency-related proceedings, international trade disputes and complex enforcement matters involving state and private bailiffs. The firm combines arbitration, litigation, asset recovery and regulatory expertise to develop practical enforcement strategies for international creditors operating in Ukraine during wartime and in highly regulated environments. Particular attention is devoted to disputes involving sanctioned parties, strategic state-owned enterprises, currency control restrictions, fraud risks, concealed assets and multi-jurisdictional enforcement structures. To learn more, please visit the Ilyashev & Partners Law Firm website or contact Roman Protsyshyn directly.

Vadym Kizlenko Attorney at Law, Counsel, Insolvency Receiver, Co-Head of Insolvency and Financial Restructuring at Ilyashev & Partners Andrii Konoplia Attorney at Law, Counsel, Insolvency Receiver, Co-Head of Dispute Resolution Practice, Co-Head of Insolvency and Financial Restructuring at Ilyashev & Partners Pursuant to the Law of Ukraine "On Investment Activity," investments include all types of property and intellectual assets invested in business and other types of activities, resulting in profit (income) and/or the achievement of social and environmental effects. The objects of such activities may include any property, including working capital in all sectors of the economy, securities (excluding bills of exchange), targeted monetary deposits, and property rights. The subjects of investment activity in Ukraine may be citizens and legal entities of Ukraine and foreign states, as well as the states themselves, which make decisions on investing their own, borrowed, and raised property and intellectual assets in investment objects. In this article, we will focus on specific risks for investors who have already made or are only planning to invest funds in Ukrainian enterprises, in the context of potential bankruptcy proceedings initiated against such enterprises. Affiliation and Limitations of Creditor-Investor Rights One of the most common ways of investing in the Ukrainian economy is through a loan granted by a shareholder or by increasing the authorized capital of a company by its participant (shareholder) to replenish working capital. As a rule, such financial injections are aimed at improving the overall condition of the company and are usually carried out by shareholders or persons related to the debtor. However, therein lies the trap: within the meaning of the Code of Ukraine on Bankruptcy Procedures (CUBP), such persons are considered "affiliated." Article 1 of the CUBP stipulates that persons affiliated with the debtor include, inter alia: a legal entity established with the participation of the debtor; a legal entity that exercises or has exercised control over the debtor within the last three years; a legal or physical person over whom the debtor exercises or has exercised control; a legal entity with which the debtor is under the common control of a third party; the direct owners (participants, shareholders) of the debtor. It should be emphasized that this list is not exhaustive. The wording "other persons with respect to whom there are reasonable grounds to consider them affiliated" is a rather relative concept, and the final assessment of these grounds will be provided specifically by the court. In the context of judicial practice, it is worth noting that we are aware of precedents where courts of cassation of various jurisdictions identified the same person as both affiliated (related) and non-affiliated in relation to the same legal entity in different disputes. Why is this status critical? According to the provisions of Art. 48 of the CUBP, creditors affiliated with the debtor have only an advisory vote at meetings and committees of creditors. That is, in fact, they are deprived of real influence on the bankruptcy procedure: they cannot vote on any issues that fall within the competence of the creditors’ meeting/committee, including the transition to the next judicial procedure (rehabilitation or liquidation). Case Study In the practice of Ilyashev & Partners, we often see situations where an investor who has provided actual funds to save a business is recognized as an affiliated person and ends up on the sidelines of the decision-making process. Sometimes, this disenfranchisement of a real investor is used by bad-faith creditors for the hostile takeover of a business through bankruptcy proceedings. Moreover, according to established judicial practice, subsidiary liability for the debtor’s obligations may be imposed on its participants (shareholders). Thus, a paradoxical and dangerous situation arises: a shareholder invests their own funds in the development of the company, and in the event of its bankruptcy, they not only lose the right to vote and the opportunity to recover the investment, but also risk being held liable for the company’s debts with their own assets. In our opinion, the key to determining whether a person is affiliated should not be their formal legal status, but the reality of the investment and an assessment of its economic feasibility. However, for now, investors need to be as cautious as possible and calculate these risks at the stage of entering the project. Requirement for Original Documents: A Heightened Standard of Proof According to recently formed practice, in bankruptcy cases, it is not enough to submit only copies of contracts or bank statements to confirm a debt. In the presence of the slightest objection from the debtor or other creditors, the court is obliged to apply a heightened standard of proof and verify the procedural quality of the evidence. Particular attention should be paid to the conclusions of the Supreme Court set out in Resolution No. 902/122/25 dated December 4, 2025. In this case, lower courts recognized the creditor's claims based on copies, believing that in insolvency cases, the court only establishes the existence of an obligation without delving into the merits of the dispute. However, the Supreme Court refuted this position. According to the position of the cassation instance, the commercial court must conduct a detailed verification of the grounds for the emergence of monetary claims through a thorough examination of primary documents and contracts. Application of the heightened standard includes: inspection of original documents in the presence of objections; verification of the method of obtaining evidence; analysis of the internal consistency of documents submitted by a certain creditor in systemic connection with documents provided by the debtor; assessment of the ability of the evidence to collectively confirm the existence of real obligations. That is, in the presence of reasoned objections from a participant in the case, the court cannot consider certain circumstances proven if only copies of documents have been provided to confirm them. It is our conviction that foreign investors must take this practice into account. The experience of Ilyashev & Partners’ attorneys in handling complex bankruptcy cases shows that we recommend, even at the stage of drafting contracts with Ukrainian counterparties, clearly stating in the text that the contract is concluded in a specific form, and ensuring the systemic preservation of the entire evidentiary base. Conclusions Regarding Foreign Law As a rule, a foreign investor insists that legal relations be governed by the law of a foreign state. This is logical and understandable for the investor, but in a bankruptcy case of a Ukrainian enterprise, it can create additional difficulties when proving the validity of their claims. A Ukrainian court reviewing a bankruptcy case does not possess (and is not required by law to possess) the intricacies of foreign law. The determination of the content of such norms is carried out by the court ex officio, but participants in the case have the right to assist the court in this. Usually, this is done by providing legal opinions from foreign experts (Legal Opinion). However, in practice, such opinions often give rise to new questions: Is the expert’s qualification sufficient, and how is it confirmed? Does the conclusion cover all norms regulating the dispute, or only a part of them? In the practice of Ilyashev & Partners, there have been cases where the court, having read the experts’ conclusions, asked to specify which specific norms regulate the legal relationship and ultimately grant the right to demand performance of obligations by the debtor. However, there are situations where this is difficult to do. For example, English law, which belongs to the Anglo-Saxon legal system, does not contain codified regulatory acts that would regulate certain legal relations. These legal issues are regulated by legal precedents and customs applied in England as a source of law alongside regulatory acts that apply to certain legal relations. Advice to Foreign Investors in Ukraine For foreign investors working in the Ukrainian market, it is important to understand that the status of being "one of their own" to the debtor company can create additional risks for the investor (a potential creditor in a bankruptcy case). The combination of the loss of voting rights, the need to confirm claims with proper evidence (with mandatory submission of original documents), and the difficulties with the application of foreign law requires careful preparation. Ilyashev & Partners recommends developing asset protection strategies in advance, taking into account the current positions of the Supreme Court, so that at a critical moment, the investment does not turn into an irreversible loss. Specifically, we advise: Structure investments carefully: Conduct due diligence on potential affiliation risks at the pre-investment stage. Maintain an evidentiary trail: Ensure that all financial transactions are supported by primary documentation (contracts, invoices, proof of payment) and stored in accordance with strict record-keeping protocols. Pre-negotiate dispute resolution: When drafting agreements, clearly define the applicable law and, where possible, secure legal opinions regarding the enforcement of claims in Ukrainian bankruptcy proceedings. Monitor the debtor’s financial state: Stay vigilant regarding the debtor’s solvency to react timely to potential insolvency filings. Ilyashev & Partners is a leading Ukrainian law firm providing insolvency and restructuring services in Ukraine, with a strong focus on distressed assets, bankruptcy proceedings, and creditor protection in Ukraine. The firm advises international investors, financial institutions, and businesses on navigating Ukrainian insolvency law, including complex risks arising in distressed investments. We represent clients in bankruptcy proceedings in Ukraine, including creditors, investors, and shareholders involved in distressed companies, and advise on debt recovery, restructuring strategies, and protection of investments in Ukraine. Our lawyers have extensive experience handling issues related to affiliated creditors, loss of voting rights in insolvency proceedings, and risks of subsidiary liability for shareholders in Ukraine, helping clients structure investments and claims to avoid adverse outcomes. A key area of our expertise is advising foreign investors on legal risks in distressed assets in Ukraine, including evidentiary requirements in bankruptcy cases, application of heightened standards of proof, and challenges related to the use of foreign law in Ukrainian court proceedings. We help clients build robust legal strategies to ensure enforceability of claims and protection of their position in insolvency processes. In addition, we support clients in cross-border insolvency matters involving Ukraine, including coordination with foreign counsel, asset tracing, and dispute resolution strategies. With deep expertise in insolvency and distressed investments in Ukraine, Ilyashev & Partners helps clients mitigate risks, protect assets, and maximise recovery in complex restructuring and bankruptcy situations. To learn more, please visit the Ilyashev & Partners Law Firm website or contact Vadym Kizlenko directly.

Valeriia Gudiy, Attorney at Law, Partner at Ilyashev & Partners Law Firm Despite the unprecedented disruption caused by the full-scale war, Ukraine has not undergone a comprehensive reform of its labour legislation. The country still applies a Soviet-era framework dating back to 1971 – the Code of Labour Laws of Ukraine. However, the realities of wartime forced the legislator to introduce specific rules to enhance and simplify the relationship between employers and employees under martial law. In 2022, Ukraine adopted the Law of Ukraine “On the Organization of Labour Relations under Martial Law,” introducing a special legal regime designed to ensure business continuity and workforce stability under extreme conditions. The statute of this law became the foundation for regulating the new realities of the labour market and introduced certain special and useful features of employment relations across enterprises, institutions, and organizations. In practice, this law has evolved into a flexible toolkit that allows employers to maintain operations, mitigate risks, and preserve human capital. At Ilyashev & Partners, we monitor these changes daily, ensuring our clients – both international and domestic – utilize these mechanisms to build resilient, legally compliant business strategies. Key Wartime Tools for Employers: Practical Insights Several mechanisms introduced during martial law have proven critical for business resilience. For international businesses and local employers alike, these tools are no longer exceptional – they have become part of an everyday legal strategy: Suspension of employment agreements: A vital alternative to termination. Flexible communication tools: Legalized use of email, messengers, and digital platforms for HR processes. Simplified HR administration: Streamlined procedures in regions affected by hostilities. Agile working conditions: Rapid changes to terms of employment without the traditional lengthy notice periods. Temporary transfers: The ability to reassign employees without consent (subject to specific legal limitations). Force Majeure protection: Shielding employers from liability for wage delays caused by objective wartime circumstances. Dismissal restrictions: Legal safeguards in combat-affected regions. The Strategy of Suspension vs. Termination The full-scale armed aggression made it impossible for many employees to perform their job functions. At the beginning of the war, the only lawful way to avoid conflict between the employer and the employee was to take leave, but such leave could not be a permanent solution. One of the most impactful innovations has been the ability to suspend employment agreements. Unlike termination, suspension allows businesses to: Retain employees without ongoing salary obligations. Avoid the legal risks and social costs associated with mass dismissals. Quickly resume operations when conditions stabilize. When an employment agreement is suspended, an employee temporarily does not perform labour duties, and the employer is not obliged to pay salary, provide guarantees, or ensure working conditions as required by standard labour legislation. However, this mechanism requires precise documentation to avoid future litigation. Experts at Ilyashev & Partners regularly assist in drafting the necessary internal regulations to ensure these actions are legally airtight. Digitalization of HR: Beyond Paperwork Wartime realities have accelerated a long-overdue shift toward digital HR processes. While the formal requirement for written documentation remains, it is now permissible, by mutual agreement, to exchange documents via messengers, email, or official company websites. This flexibility significantly reduces administrative burdens and ensures business continuity during relocation or infrastructure disruptions. Crucially, both parties must keep their contact details updated – a compliance element often overlooked by businesses, which can lead to significant legal vulnerabilities. Evolving Flexibility and Employee Protection Flexibility also characterizes the rules regarding changes to working conditions. Employers gained the right to temporarily transfer an employee to another job without their consent if required by circumstances (excluding transfers to areas of active hostilities). Furthermore, employees should be notified of changes to working conditions or remuneration no later than the moment such changes take effect. For comparison, under the general rule of the Labour Code before the war, employees had to be notified two months in advance. At the same time, the law preserves key employee protections: employees cannot be dismissed for absence if they are located in active combat zones, and employers are shielded from liability only where delays are genuinely caused by force majeure. Looking Ahead: Building Sustainable Operations In the early months of the war, the priority was survival. Today, the focus has shifted. Businesses are increasingly asking how to scale operations, how to hire and retain talent, and how to structure flexible or cross-border work arrangements. The labour market itself is transforming: we see increased participation of women in the workforce, the integration of veterans, and a growing demand for hybrid employment models. For investors, Ukraine’s labour regime offers a unique case study in legal adaptability under extreme conditions. Many wartime mechanisms are likely to influence future labour law reform in Ukraine. The current system demonstrates that flexibility and employee protection can coexist, even under the most challenging circumstances. For international clients and investors, understanding these tools is not just a matter of compliance – it is essential for building sustainable and scalable operations in Ukraine. If your business requires strategic guidance in navigating these complex labour regulations, Ilyashev & Partners’ team is ready to provide the necessary support. Ilyashev & Partners is a leading Ukrainian law firm providing employment law services in Ukraine, advising international and domestic clients on labour law compliance, HR strategy, and workforce management in Ukraine. The firm supports businesses in all aspects of employment relations in Ukraine, including hiring, termination, working conditions, remuneration, and internal HR policies, ensuring compliance with Ukrainian labour legislation. A core focus of our practice is labour relations under martial law in Ukraine, including application of the Law of Ukraine “On the Organization of Labour Relations under Martial Law.” We advise on key wartime mechanisms such as suspension of employment agreements, flexible working conditions, digital HR processes, and force majeure protections, helping businesses maintain operations and reduce legal risks. We also represent clients in employment disputes in Ukraine and advise on workforce restructuring, internal investigations, and cross-border employment arrangements. With strong expertise in employment law in Ukraine during wartime, Ilyashev & Partners helps clients ensure compliance, mitigate risks, and build sustainable workforce strategies. To learn more, please visit the Ilyashev & Partners Law Firm website or contact Valeriia Gudiy directly.

Ilyashev & Partners Law Firm has acted as a legal advisor to the Ukrainian enterprise Technological Synthesis Ltd on the privatization of the unified property complex (UPC) of the State Enterprise “Ukrainian State Research Institute of Special Steels, Alloys and Ferroalloys”. SE Ukrniispetsstal is a leading research institution in Ukraine specializing in the development of new steel grades, alloys, and production technologies. It serves as a strategically important facility for scientific research in the metallurgical industry. Located in Zaporizhzhia, SE Ukrniispetsstal operates a pilot plant with a full metallurgical cycle, including smelting, forging, rolling, heat treatment, and powder production. The implementation of this project will allow the investor to consolidate production and scientific capacities within the metallurgy sector. Technological Synthesis Ltd was declared the winner of the bidding process following an electronic auction and the subsequent signing of a sale and purchase agreement with the Regional Office of the State Property Fund of Ukraine. The privatization unit included real estate, equipment, trademarks, and other assets of the institute. A key stage in closing the deal and transferring title to the assets was ensuring the transaction’s compliance with laws on protection of economic competition. Ilyashev & Partners’ Antitrust and Competition Practice team performed a detailed analysis of the financial thresholds of the concentration participants and handled the preparation of the application to the Antimonopoly Committee of Ukraine (AMCU). Based on the review of the case, the AMCU issued the preliminary conclusions confirming that the acquisition of SE Ukrniispetsstal’s assets does not require a merger clearance. AMCU’s conclusions allowed the parties to sign the transfer and acceptance act and finalize the transfer of ownership rights. The project was led by Oleksandr Fefelov, Partner, Head of Antitrust and Competition Practice at Ilyashev & Partners, together with Alina Borovets, Attorney.