Ilyashev & Partners | View firm profile
Roman PROTSYSHYN MCIArb and Kateryna SOLODOVNYK
This guide from Ilyashev & Partners’s arbitration team addresses the practical recommendations for those considering the enforcement of an arbitral award in Ukraine.
Legal Disclaimer: The content of these guidelines 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 guidelines and expressly disclaim any and all 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 guidelines.
Introduction
Winning an arbitration is a significant achievement, but transforming that victory into a practical outcome through enforcement can be even a greater challenge. While arbitral awards are meant to carry binding force, their real value lies in effective enforcement, particularly when assets are located abroad. Thus, enforcement is not merely a final step in international commercial arbitration, it is its cornerstone. Without effective enforcement, even the most well-reasoned arbitral award risks becoming a hollow victory.
As a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) and being the 1985 UNCITRAL Model Law on International Commercial Arbitration country (the “UNCITRAL Law”), Ukraine offers a robust pro-arbitration legal framework for effective recognition and enforcement of awards, whether issued in commercial institutional or ad hoc proceedings. Does this framework follow general international arbitration standards? Generally, yes. However, nuances do matter, as Ukrainian legislation introduces some subtle deviations from international models, which may cause significant hurdles in pursuing the actual implementation of arbitral awards.
By the general rule, set forth in Article 474(1) of the Ukrainian Civil Procedure Code, the international commercial arbitral award, if rendered by a tribunal seated outside Ukraine, regardless of the country where it was issued, “shall be recognised and enforced in Ukraine, if such recognition and enforcement is provided for by an international treaty, ratified by the Verkhovna Rada of Ukraine, or on the principle of reciprocity.” The principle of reciprocity serves a critical fallback mechanism in Ukrainian legal framework for the recognition and enforcement of foreign arbitral awards. In the absence of a ratified international treaty between Ukraine and the State, where an award was rendered, reciprocity ensures that implementation of an award is possible, provided that awards, rendered by tribunals seated in Ukraine, are in principle recognised and enforceable in that foreign jurisdiction.
While Article 474(1) of the Ukrainian Civil Procedure Code appears explicit and straightforward, it lacks guidance on when an arbitral award can be considered ‘international’ under Ukrainian legislation, which further conceals an interpretative hurdle. The classification of an award as ‘international’ plays a crucial role in establishing whether it falls within the scope of recognition and enforcement procedures in Ukraine. This matter roots in a notable omission within the Law of Ukraine “On International Commercial Arbitration” (the “ICA Law”).
More specifically, while the ICA Law is based on the UNCITRAL Law, it does not fully replicate the classification of factors, set forth in Article 1(3) of the latter, which predetermine ‘international’ nature of commercial arbitration. Most notably, the ICA Law omits the provision of the UNCITRAL Law that deems arbitration as international when ‘the place of arbitration’ “is situated outside the State in which the parties have their places of business.” As a result, it creates a legal grey area around the issue whether an award rendered by a foreign domestic arbitral tribunal with regard to Ukrainian parties – solely by virtue of being issued outside Ukraine – would qualify as an international award subject to recognition and enforcement under Ukrainian law.
In such cases, however, Article I(1) of the New York Convention offers important guidance. While applying to “foreign” arbitral awards, that is, those “made in the territory of a State other than the State where the recognition and enforcement of such awards are sought,” the New York Convention establishes a clear and straightforward rule – if the award was made abroad, it is considered “foreign” and thus, falls within the Convention’s scope. In this regard, the differences in terminology between the UNCITRAL Law and the New York Convention shall be noted: unlike the former, which refers to “international” arbitral awards, the New York Convention does not use this term but instead refers to awards as “foreign.”
Importantly, the New York Convention holds superior legal force over Ukrainian domestic legislation on arbitration. Accordingly, the interpretation drawn from Article I(1) of the New York Convention permits the recognition and enforcement of arbitral awards rendered in disputes where both parties are Ukrainian, but the arbitration was conducted by a foreign domestic arbitral tribunal outside Ukraine, classifying such awards as “international” despite the lack of explicit guidance on this matter in the ICA Law.
Against this legal backdrop, the enforcement of foreign arbitral awards in Ukraine, while grounded in international standards, may present certain challenges and unexpected complexities. Through a detailed examination of recent judicial practices, legislative nuances and systemic legal issues, these guidelines seek to provide practitioners and stakeholders with meaningful insights and a clearer understanding of the evolving framework of recognition and enforcement of arbitral awards in Ukraine.
Legal Framework for Recognition and Enforcement of Foreign Arbitral Awards in Ukraine
The recognition and enforcement of foreign arbitral awards in Ukraine are regulated through a layered framework comprising both international obligations and domestic legislative provisions.
As already mentioned, Ukraine is a party to the New York Convention, which serves as the primary legal instrument regulating the practical implementation of foreign arbitral awards. At the national level, the recognition and enforcement process is regulated by a combination of key legislative acts. Chief among them is the Civil Procedure Code of Ukraine, which in Chapter III of Section IX sets out the procedures by which Ukrainian courts address applications seeking to give effect to foreign arbitral awards. Complementing this is the ICA Law, providing for the substantive legal principles governing recognition and enforcement of arbitral awards in Part VIII.
Article 475(1) and (2) the Ukrainian Civil Procedure Code limits the jurisdiction of a Ukrainian court, specifying that the latter has the authority to consider applications for recognition and enforcement of foreign arbitral awards only “if the debtor’s place of residence (stay) or location is in Ukraine,” or alternatively, if the whereabouts of the debtor under the award are unknown, jurisdiction is established “if the debtor’s property is located in Ukraine.”
According to Article 475(3) of the Ukrainian Civil Procedure Code, the competent court to consider applications for the recognition and enforcement of international commercial arbitral awards shall be “the court of appeal, whose jurisdiction extends to the city of Kyiv,” in practice being the Kyiv Court of Appeal. Such centralised approach helps promote uniformity in judicial interpretation and streamlines the enforcement process for foreign arbitral awards within Ukraine.
The application for the recognition and enforcement must be filed within three years from the date the award was rendered by the arbitral tribunal. If the application is submitted after the expiration of this period, the court returns it without consideration, unless the applicant petitions for renewal of the missed period and the court finds that the delay was due to reasonable and justified grounds.
Upon considering an application for recognition and enforcement of a foreign arbitral award, the Ukrainian court may take several possible actions, depending on various factors such as the nature of the award, compliance of the application seeking recognition and enforcement with procedural requirements with applicable law, etc.
For instance, pursuant to Article 481 of the Ukrainian Civil Procedure Code, if the arbitral award does not require enforcement, namely if it merely declares certain rights or obligations without imposing any enforcement measures, upon considering the respective application, the court may issue a ruling granting solely the recognition of the award (without enforcement). In this regard, it shall be noted that under Ukrainian law, recognition and enforcement are two distinct, though closely connected, legal steps. Recognition confirms the legal validity and effect of the arbitral award within the Ukrainian legal system, while enforcement involves the application of State coercive mechanisms to compel compliance with the arbitral award. In cases where enforcement is unnecessary, recognition alone may suffice to achieve the intended legal outcome, without triggering enforcement proceedings.
Where enforcement is sought, the court may either grant permission for recognition and enforcement of the award or refuse recognition and enforcement altogether. Pursuant to Article 478 of the Ukrainian Civil Procedure Code, refusal is only possible on limited grounds, which generally align with the exceptions set out in Article V of the New York Convention.
It is worth noting that Article 478 of the Ukrainian Civil Procedure Code adopts a more mandatory formulation than its counterpart Article V of the New York Convention. While the New York Convention states that recognition and enforcement “may be” refused upon the presence of certain grounds, the Ukrainian Civil Procedure Code imperatively provides that “court shall refuse to recognise and grant permission on enforcement of an international commercial arbitral award” (emphasis added) if those grounds are proved.
The above linguistic difference suggests that, under Ukrainian procedural law, courts are obliged to refuse recognition and enforcement once a ground for refusal is clearly established, without room for judicial discretion. This approach reflects a strict application of the refusal grounds, potentially narrowing the court’s ability to balance equitable considerations or the pro-enforcement bias that underlies the New York Convention.
Required Documents for Filing
A doorstep in any effort to obtain recognition and enforcement of a foreign arbitral award is to determine what proof of the existence of an award is required.
Since Ukraine is a party to the New York Convention, it has developed its procedural law statutes, which govern the process of filing an application for the recognition and enforcement of a foreign arbitral award, in a way that adheres to the pro-enforcement objectives outlined in Article IV of the Convention.
Proof of the existence of an award and an arbitration agreement
Article IV of the New York Convention is relatively brief, providing only that “the party applying for” the recognition and enforcement of a foreign arbitral award “shall … supply”: (i) the “duly authenticated original award”; and (ii) the “original [arbitration] agreement.” Article IV provides an alternative for an award-creditor to “supply” the “duly certified copy” of either instrument.
With the exception of one point regarding the identity of an applicant, Article 476 of the Ukrainian Civil Procedure Code adheres to the maximum requirement of proof as outlined in Article IV.
Article 476 narrows the requirement for an alternative supplying of the “duly certified copy” of an arbitral award and/or an arbitration agreement to the “notarised copy” of either instrument.
As discussed above, Article 35 of the ICA Law is part of the Ukrainian legal framework governing the recognition and enforcement of foreign arbitration awards. Unlike Article 476, it follows the language of Article IV, requiring, in alternative, to file just the “duly certified copy” of either instrument.
The point here is that in Ukraine, a “duly certified copy” means that a copy from an original document can be produced and “certified” by a litigant (or its counsel) by simply writing a self-made declaration on each page that it is a true copy of the original page (or making the same of the copy of a whole docement once, if it is stitched and paginated).
Award
It is also universally accepted practice among most major arbitral institutions (VIAC, LCIA, Ukrainian ICAC) to provide, upon a specific request, a party to arbitration with the “certified” copy of an award in addition to its original copy. The rationale behind this is that an arbitral institution typically stores one original copy of the award in its files.
However, filing the “duly certified copy” of an award may cause the Ukrainian court to refuse to accept the application for recognition and enforcement for consideration on the ground that the “duly certified copy” is not the “notarised copy”. In AV-Group Export LLC v. JSC “Dniprovazhmash”, the Kyiv Court of Appeal left the Kyrgyz award-creditor’s application without action because it filed a copy of the Ukrainian ICAC award, “certified by the Secretary General” of the Ukrainian ICAC, “and not by a notary.”
It is not usual to file the originals of an arbitral award and/or an arbitration agreement, as these documents will remain in court files unless the application for recognition and enforcement is returned due to procedural defects.
Article IV of the Convention, Article 35 of the ICA Law, or Article 476 of the Ukrainian Civil Procedure Code, does not provide the textual definition of the term “duly authenticated original award.” In general, the “authentication” of an original means a statement or declaration attesting to the fact that the instrument in question is the arbitral tribunal’s original award, and that the signatures of the arbitrators are genuine.
Most modern institutional arbitration rules contain a provision that each original copy of an award, signed by each arbitrator, shall be additionally signed by the Secretary General of the arbitral institution that administered the arbitration and its stamp to confirm that the award was indeed rendered and signed by one or more arbitrators appointed under those arbitration rules (e.g., the Ukrainain ICAC Rules, Art. 60(9), the Vienna Rules, Art. 36(4)). Such external authentication of the arbitrators’ signatures usually does not derive from a local arbitration law governing the form of an award where it was made.
For example, Article 52 of the English 1996 Arbitration Act sets out that unless otherwise agreed, “the award shall be in writing signed by all the arbitrators or all those assenting to the award.” For arbitrations with a seat in Ukraine, the same maximum rule applies: arbitral awards must be issued in writing and signed by either the sole arbitrator or all the arbitrators. For a panel of arbitrators, a majority of signatures is sufficient, provided the reason for any missing signature is specified on the award (Article 31(1) of the ICA Law).
It follows that English and Ukrainian ad hoc arbitral awards only need to be signed by all the arbitrators or all those who assent to the award, without the need for an external third-party verifier (e.g., a notary, witnesses, etc.) to attest to the authenticity of the arbitrators’ signatures appearing on the award.
The point is not ill-founded, as in Radius Systems Holdings Limited v. LLC “Kalush Pipe Plant”, the Kyiv Court of Appeal refused to accept the application for the recognition and enforcement of an ad hoc arbitral award, arguing that the supplied original copy is not duly authenticated because it misses a stamp that would cover a sole arbitrator’s signature. We can only speculate about a judge’s reasons for requiring the stamp of an arbitrator, which the arbitrator may not have. But under the Law of Ukraine “On Arbitration Courts,” which governs domestic arbitrations, if an ad hoc tribunal has issued a domestic award, the arbitrators’ signatures must be attested by a notary (Art. 46(2)).
Although a hypothetical defence against the non-attested signatures of ad hoc arbitrators can be raised by an award-debtor, the described example is rather an outlier.
Ukrainian courts frequently recognise foreign arbitral awards made by ad hoc tribunals under the LMAA, UNCITRAL, and other rules, where no one confirms the signatures of the arbitrators. For example, in JKX Oil & Gas Plc v. Ukraine, there was no issue with the fact that the award-creditor submitted the notarised copy of an award, signed by all the arbitrators, whose signatures had not been attested.
The usual practice in Ukraine is to provide a local advocate with the originals of a foreign arbitral award and a contract containing an arbitration clause (alternatively, an arbitration agreement existing as a separate document). The advocate then approaches a Ukrainian notary, who produces copies of those instruments from their originals and makes a written declaration on each copy that the instrument in question is a true and complete copy of the tribunal’s original award and the parties’ arbitration agreement.
If the party intends to file the “copy” of either instrument, “notarised” by a foreign notary, the so-notarised copy must be legalised in the country of origin either by attaching an apostille to it (Ukraine is a party to the 1961 Apostille Convention Abolishing the Requirement of Legalisation for Foreign Public Documents) or by means of diplomatic or consular legalisation (as the case may be) unless the country of origin is the one with whom Ukraine has entered into a legal assistance agreement, which apolishes any forms of legalisations of public documents (e.g., Poland).
Arbitration agreement
The most straightforward achievement for an award-creditor to pass the filing test is to supply the notarised copy of an arbitration agreement, if it exists in the form of an arbitration clause within an underlying contract executed by both parties using wet-ink signatures and stamps (if any).
This is a usual way of how litigants discharge their duty under Article 476(4)(2) of the Ukrainian Civil Procedure Code, requiring them to submit the “original of the arbitration agreement or the notarised copy of such agreement.” As with the original copy of an arbitral award, it would be a very rare case if one submits the original copy of a contract containing an arbitration clause.
If two individuals have entered into an arbitration agreement, one must keep in mind that a Ukrainian notary will likely refuse to make a notarised copy of that document unless the signatures of the individuals are attested before a notary. This limitation does not extend to contracts, where one of the parties is a legal entity.
As with the “duly certified copy” of an award made not by a notary, Ukrainian courts would refuse to accept for consideration the application for recognition and enforcement, accompanied by a non-notarised copy of an arbitration agreement. For example, in Private Enterprise “Saydana” v. LLC “San-Tekhno”, the applicant submitted a copy of a contract that contained an arbitration clause, certified by a Ukrainian advocate rather than a notary. In Soufflet Negoce By Invivo S.A.S. v. Private Enterprise “Agrospilka Malolisovetska”, the copy of a disputed contract, containing the GAFTA arbitration clause, was certified by an English solicitor and not by an English notary.
It is natural in maritime law relations to enter into contracts by simply exchanging emails (e.g., various types of charter parties). It is also well-known that English law does not require parties’ signatures on a written contract made by them. However, in such cases, applicants seeking the recognition and enforcement of arbitral awards in Ukraine may face judges’ reluctance to accept printouts of emails as evidence of the existence of a contract and its arbitration clause. Litigants sometimes attempt to counteract this negative approach by submitting a printout of emails, accompanied by a certified translation of those email exchanges, with subsequent notarial attestation of the translator’s signature and qualification.
However, court practice shows that such a sophisticated technique is unlikely to succeed. In Innovation Group KFT v. Starof Shipping SA, the award creditor filed a translation into Ukrainian of a voyage charter party, which was recorded in an email. The translation was made by a certified translator, whose identity, legal capacity and qualifications had been verified by a private notary. The court returned the application for recognition and enforcement without consideration, noting that the submitted document, attempting to be a notarised copy of the arbitration agreement, was simply evidencing that “the notary certified only the authenticity of the translator’s signature, but the copy of the agreement (email) itself, which was originally written in English” as there was “no notarial inscription certifying” that the email was a true copy of the original.
Ukrainian procedural law recognises emails as electronic evidence, but Ukrainian legislation on notary activity does not provide notaries with the power to certify copies of emails. They can only certify copies of physical documents.
One of the practices to comply with the necessity of submitting the “original of the arbitration agreement or the notarised copy of such agreement” in such scenarios is to submit (a) original copies of the emails containing the parties’ agreement to arbitrate as electronic evidence of the “original of the arbitration agreement” to prove iots existence, (b) their printouts (they will not be regarded as documentary evidence and just a visual hard copy form of the electronic evidence), and (c) notarised translation of the printouts.
When it comes to proving the existence of an inter-state investment protection agreement containing an arbitration clause, issues may arise at the time of filing. In State Enterprise “Energorynok” v. the Republic of Moldova, the court refused to accept a printout of an excerpt from the Energy Charter Treaty as proper evidence to prove the existence of an arbitration agreement contained in the Treaty.
Certified Translation
Article IV(2) of the New York Convention also requires that, if either an arbitral award or an arbitration agreement is not in “an official language” of the forum in which recognition and enforcement is sought, then a translation of that instrument, “certified by an official or sworn translator or by a diplomatic or consular agent,” must also be submitted.
Consistent with Article VII(1) of the Convention, allowing Contracting States to apply national law rules that are more favourable to recognition than the Convention itself, Article 476 of the Ukrainian Civil Procedure Code just requires the applicant to submit “a certified, according to legislation, translation” of the award and the arbitration agreement into Ukrainian or another language, if it is envisaged in a Ukrainain international treaty governing this issue. However, based on the general requirements of procedural law, it also requires a court fee payment receipt and the authority of the applicant’s representative to be translated.
In practice, every document logged with a Ukrainian court is fully translated into the Ukrainian language, and the translation is notarised.
Although partial translations of documents are acceptable in regular litigation, in this category of cases, partial translations are not welcomed. In Risoil Overseas Ltd v. Agrostudio Group Limited, “[t]he translation of a part of the arbitration award into Ukrainian, contained in the case file on one sheet … is … incomplete, and therefore does not meet the requirements of … Article 476 of the Civil Procedure Code of Ukraine.”
Litigants in Ukraine, willing to reduce costs on notary services, often submit translations made by a qualified translator, bearing his or her signature only or with the addition of a translation bureau stamp. Courts accept such translations in regular litigation, but in recognition and enforcement cases, there is a high risk of refusing to accept such documents. In Tiki doo Stara Pazova v. Private Enterprise “Rados KR”, even a minor fault caused the court to reject the application, holding, among other things, that “the translation of the certification inscription of the notary of the Republic of Serbia, Petar Djurdjevic, from Serbian into Ukrainian, submitted to the court, was not certified in accordance with the legislation of Ukraine.”
When translations are made abroad, a translator’s signature and qualifications have to be properly verified by a local notary (see, e.g. JSC “BM-Bank” v. LLC “Ofisbud”), the case with the negative outcome on the point). The translation thus becomes a notarised document, which must be legalised in the country of origin (by way of an apostille or otherwise). The document, therefore, acquires additional pages and/or inscriptions. This results in the need to make their additional notarised translations in Ukraine of those pages and/or inscriptions.
In sum, the safest way is to provide a translation made by a Ukrainian translator, whose signature and qualifications (usually just a diploma confirming the ability to translate from a particular language into Ukrainian) are verified by a Ukrainian notary, or the notary him/herself (if the notary understands a foreign language).
E-filing and originals
Nowadays, the usual way for a party to file an application for the recognition and enforcement of an arbitral award is to make the filing via the electronic court system. All Ukrainian advocates must have registered accounts with it. If the application has been filed electronically, it provides the applicant with a 20% discount on the court fee. Still, the statute requires the physical submission of proofs of the existence of an award and an arbitration agreement to the court before a court hearing.
Court fee payment receipt
Despite a low court fee for considering an application for the recognition and enforcement of an arbitral award (UAH 1,514, or approximately USD 36 for 2025), the law still requires the applicant to submit proof of payment of the court fee.
If the payment has been made from abroad and if the court fee payment receipt has been generated (issued) in a foreign language, the latter must be accompanied by a proper translation into Ukrainian. Failing to comply with this rule may cause the refusal to accept the application for consideration, as happened in Private Enterprise “Saydana” v. LLC “San-Tekhno”.
Foreign parties usually instruct their local advocates to pay the court fee in Ukrainian hryvnia, which is a much more cost-effective approach.
Signatory’s Authority
Article 476 of the Ukrainian Civil Procedure Code separately requires a power of attorney or another document proving the signatory’s authority to execute the application for the recognition and enforcement of an arbitral award.
If the applicant is a legal entity, its corporate representative (e.g., a director) may sign the application, provided he or she submits the necessary proof that the legal entity has entered into court proceedings as a self-represented litigant. This may include articles of association, shareholders’ resolutions of appointment, and other relevant documents. If these documents are in a foreign language, they must be accompanied by a proper translation into Ukrainian.
The most straightforward and cost-effective way is to engage a local advocate, who may confirm his or her authority to act by a one-page document – an advocate’s warrant, issued by the advocate himself or herself – provided that the advocate and his or her client have entered into a legal assistance agreement.
Nowadays, most practising advocates do not ask their clients to issue a power of attorney, as the latter may give rise to unnecessary challenges from the opposing party (e.g., if a power of attorney has been issued before a notary but has not been subsequently duly legalised, such a power of attorney will likely be a reason for the court to reject the application for consideration).
Applicant
As mentioned earlier, Article 476 of the Ukrainian Civil Procedure Code differs from its treaty counterpart in terms of who may apply for the recognition and enforcement of a foreign arbitral award in Ukraine. Article IV of the New York Convention does not identify who must be “the party applying for” recognition and enforcement.
The Ukrainian procedural law statute limits the range of those who can apply for recognition and enforcement to award creditors only and their representatives (e.g., advocates).
That was not the case when the old Civil Procedure Code was in effect (before 15 December 2017). However, at that time, the assignees of awards were effectively precluded from obtaining a Ukrainian court’s leave to enforce the purchased awards, given the negative court decisions in Euler Hermes Services Schweiz AG v. PJSC “Odessa Oil and Fat Plant”.
Roman Protsyshyn earlier addressed the issue in the article “How to sell your debt. An arbitration award will help” (15 August 2019, NV.UA).
The Ukrainian courts have confirmed that, if the application for recognition and enforcement is filed procedurally properly by a singular successor, the prima facie statutory limitation should not be an obstacle for such a successor of the award creditor’s rights under the award to obtain a writ of execution, allowing its holder to apply to a bailiff to foreculle enforce a debt against a debtor’s property (see, e.g., LLC “MetMash Ufaley” v. LLC “Donbastekhnolohiia”, LLC “Soliushen Finance” v. PJSC “Azovzahalmash”, and OLM Ltd v. PJSC “Budgidravlika”.
The Ukrainian courts would also reject defences against granting leave for recognition and enforcement based on statutory limitations in cases where the applicant is a universal successor of the award creditor, as, for example, happened in Soufflet Negoce By Invivo S.A.S. v. Private Enterprise “Agrospilka Malolisovetska”.
Proof of Existence of a Foreign Legal Entity
Under Ukrainian civil procedure rules, foreign corporate litigants must prove their existence and legal capacity by submitting a fresh certificate from their trade or company registers to the court.
The key mandatory requirement is that if a document has been issued and signed by a state official (e.g., a state registrar), his or her signature must be verified by means of the legalisation process (i.e., by attaching an apostille to the document or otherwise), unless, as discussed above, there is a treaty between the country in question and Ukraine abolishing all forms of document legalisation.
Since each country has its own rules governing the procedure for obtaining a certificate from its trade or company register concerning a given company, Ukrainian courts accept all forms of documents, provided they meet certain obligatory and optional requirements.
It is not recommended to use excerpts from tax registers if an excerpt from a company register can be obtained, as Ukrainian law requires proof of the foreign company’s legal capacity and not the company’s tax registration.
It is not recommended to use excerpts from electronic company registers (especially those providing data about companies for information purposes) if an option to get a hard copy with an official’s signature and stamp is available. The point is that Ukrainian judges are accustomed to accepting legalised documents and, in the event of any doubts and/or inability to verify the information contained in the electronic excerpt, they can request a foreign legal entity to provide legalised documents proving its existence and legal capacity. If so, the provided time limit may be too tight to comply with the court’s request, thereby triggering the risk of negative consequences for the foreign applicant, such as having its application left without consideration.
Evidence of A Foreign Debtor’s Ownership of Property Located in Ukraine
Ukraine is not a jurisdiction which allows the recognition and enforcement of a foreign arbitral award against an award debtor that has no sufficient connection with Ukraine.
The general rule states that a Ukrainian court is competent to rule on an application for recognition and enforcement, provided that the award debtor has, in the case of a natural person, his or her registered place of residence or stay, or, in the case of a legal entity, its place of business on the territory of Ukraine.
The alternative rule is that a Ukrainian court will have jurisdiction over a foreign award debtor if the debtor has property on the territory of Ukraine.
The alternative rule does not require the applicant to identify a particular item of a foreign award debtor’s property against which the award creditor intends to satisfy its claims via forceful sale procedures carried out by a bailiff. It would then be for a bailiff to locate and identify specific items of property that are subject to forceful collection and sale.
The statute just requires providing evidence that the foreign award debtor owns at least some property in Ukraine.
The applicant can be exempt from proving this if it is a well-known fact that a foreign award debtor’s property is indeed located in Ukraine, as the Supreme Court determined in LLC “Everest Estate” and Others v. The Russian Federation, holding that it is a well-known fact that “property of the Russian Federation is located on the territory of Ukraine, including its occupied part, …. for example, military and other property in the temporarily occupied territory of Ukraine.”
That example illustrates how the general rules of evidence apply in Ukraine for this specific jurisdictional purpose. Still, it would be an extremely rare case to apply this exemption in a regular recognition and enforcement case.
In regular cases, applicants must submit evidence of a foreign award debtor’s ownership over an item of property that is permanently or temporarily located in Ukraine.
Mere indicating in the application that a foreign award debtor has some property in Ukraine amounts to an assumption and will not suffice for a Ukrainian court to establish its jurisdiction, as happened in LLC “Hrystynivka-Prodtovary” v. Kernunn Ltd (where the applicant identified bank accounts allegedly opened for the debtor, but pleaded the impossibility argument to obtain necessary evidence because of the information was covered by banking secrecy), in LLC “ED-MAR” v. Zhangjiagang wancheng new material co. Ltd (where the applicant relied on a local law firm’s note, which stated that the debtor had carried out 15 customs clearances in Ukraine by delivering goods to a Ukrainian customer on Cost, Insurance and Freight delivery terms, which indicated the debtor’s property might have been located on the territory of Ukraine), or in LLC “Loft 2020 v. Trend Corporation Scottish Limited Partnership (where the applicant presumably identified the debtor’s real estate property located in Ukraine, which had not been sold at auction, but failed to submit proper evidence of ownership).
A Ukrainian court would grant leave for the recognition and enforcement of foreign arbitral awards against a foreigner if the foreign award debtor owns (i) corporate rights in Ukrainian companies (as in Landes Bank AG v. Avangardco Investments Public Limited), (ii) a vessel physically located in the Ukrainian waters (as in Gemini Holdings Limited v. Tinka Shipping SA), (iii) goods stored at a port warehouse (as in JSC “United Mining and Chemical Company” v. Immco Trade Pte Ltd), or the chose in action against a debtor domiciled in Ukraine (as in JSC “Ukrgazvydobuvannya” v SC Drilling Equipment SRL, where the applicant, seeking to enforce an award, relied on the same award ordering it pay to the debtor lesser sums under the latter’s granted counterclaims).
Depending on the type of property, a bundle of documentary evidence would inevitably vary, but the general recommendation is to prove a foreign debtor’s ownership with reliable evidence.
Copy for an award debtor
Ukrainian procedural law requires a party to provide the enforcing court with copies of the application for recognition and enforcement in a number equivalent to the award debtors. It is then the court’s duty to provide each debtor with its copy, provided that the court is satisfied with the applicant’s filing and has decided to commence a proceeding. The usual way is to make a copy of the whole bundle.
That scheme works only if the applicant makes the filing in a traditional manner, in hard copies by post or by lodging the documents directly at a court.
If the party submits the application for recognition and enforcement via the electronic court system, the burden of supplying the award debtor with its copy of the application shifts to the applicant.
If the award debtor has a registered account in the electronic court system, the debtor will automatically receive a copy of all filings made in the case, and the court will receive the necessary evidence of notification automatically, provided the process has been completed properly.
If the debtor has no registered account in the electronic court system, the usual procedure is to send a copy of the filing by post, describing the contents of the postal package, and subsequently submit the postal receipts to the court. Similar rules apply if the award debtor is a foreign party (see generally UAB Generatorius v. LLC “Kalush Pipe Plant”, where, on appeal, the Supreme Court found that a third-party appellant had discharged its duty to provide the court with evidence of sending a copy of filings to a party with no registered account in the electronic court system by sending them by post).
Negative consequences for failure to make filings properly
In general, if a party fails to comply with any of the filing requirements for the application for recognition and enforcement, the enforcing court will grant a 10-day time limit to rectify the identified defects. If the applicant fails to fix the filing, the application is then returned without consideration.
The rule, allowing the party to cure defects of filing, does not extend to cases where the applicant’s signatory submitted no or improper evidence to act for his or her principal, and the application is returned without consideration without allowing rectifying the defect (see, e.g., by LLC “DEM” v. Production and Commercial Firm TIGOS).
Returning the application without consideration does not prejudice the unfortunate applicant and does not preclude it from filing another application afresh.
The downside of this exercise is that any time spent on the first unsuccessful attempt counts against the general 3-year statutory time limit allocated for applying for the recognition and enforcement of an arbitral award in Ukraine since the award’s issuance.
If the application for recognition and enforcement is intended to be filed by the end of the 3-year limitation period, everything must be done excellently, as there would be practically no chance of a second try.
Notwithstanding that the law allows a party to seek the renewal of the missed 3-year limitation period, the applicant must show good arguable reasons that would explain why the 3-year limitation period had been missed. For example, one of the award creditors in Perryvale Enterprises Incorporated and Others v. Kernel Holding SA and Others unsuccessfully tried to enforce the LCIA award for the fourth time. The court did not accept the applicant’s set of arguments based on speculation about the Russian-Ukrainian war and the advocate’s alleged inability to issue a proper warrant of advocate justifiable for the purpose of renewing the missed limitation period.
Typical Obstacles in Practice
Although Ukraine has established a legal framework for the recognition and enforcement of foreign arbitral awards that largely reflects international standards, in practice, parties may face serious and substantive obstacles that go beyond mere procedural formalities. These challenges often vary from strict judicial interpretation of arbitration clauses to broader geopolitical and public policy considerations, which can significantly complicate or prevent the enforcement of an otherwise valid arbitral award. The following passage examines recent trends in Ukraine’s enforcement landscape, highlighting key legal and practical developments that have shaped the way foreign arbitral awards are treated by national courts.
Defects of the Arbitration Agreement as a Barrier to Recognition and Enforcement
Pursuant to both Article 478(1)(1) of Ukrainian Civil Procedure Code and Article V(1)(a) read in conjunction with Article II of the New York Convention, the validity, effectiveness and enforceability of the arbitration agreement are essential prerequisites for enforcing an arbitral award stemming from it.
As concluded by the Supreme Court in Agricultural Enterprise “Stoyanova I.S.” v. LLC “Nor-Est Agro,” any objections regarding the above listed characteristics of the arbitration agreement may be raised by the parties as a procedural matter, among other things, during the enforcement stage, potentially creating a significant obstacle to the practical implementation of an award. In particular, if the court finds that the arbitration clause is null and void, inoperative or incapable of being performed, recognition and enforcement of the award shall be refused.
This issue frequently arises when the arbitration agreement contains vague, incorrect or misleading determinations. In particular, courts may deem an arbitration clause incapable of being performed where the parties have made a substantial error in naming a non-existent arbitral institution, especially if the agreement lacks a designated seat of arbitration or any other terms that would allow the court to ascertain the parties’ true intent regarding the arbitral forum or applicable rules.
Such deficiencies may create serious impediments to enforcing awards, particularly those rendered in ad hoc arbitration, where no permanent arbitral institution is normally involved in resolving the dispute. Due to the parties’ failure to accurately reflect in their arbitration agreement the intention to submit the matter to ad hoc arbitration, the court may initially face uncertainty in interpreting the clause at the enforcement stage, which ultimately affects its final decision on implementation of any arbitral award rendered pursuant to that clause.
Nevertheless, recent case law demonstrates a pro-arbitration stance of the Ukrainian courts in such situations. For instance, in LLC “Exon UK” v. Oiltagro OU, the Kyiv Court of Appeal upheld and granted enforcement of an ad hoc arbitral award based on a clause that, while lacking clear reference to specific arbitration authority, undoubtfully expressed the parties’ intent to arbitrate.
Given the above, to avoid unnecessary impediments at the enforcement stage, parties should ensure that the arbitration agreement is drafted with clarity and precision, accurately reflecting their intention and avoiding ambiguous or incorrect references.
Violation of Public Order as a Ground for Refusing Recognition and Enforcement of Arbitral Awards in Ukraine
A potential violation of public order serves as another significant obstacle to the recognition and enforcement of arbitral awards in Ukraine. This is a ground for refusal to implement of the award, provided the latter itself (not the transaction in respect of which the dispute arose or the foreign law applied by the arbitral tribunal in resolving the dispute on its merits) is manifestly incompatible with the fundamental principles of Ukraine’s legal system, including its constitutional values, notions of justice and fairness and key principles of public morality or national security. While Ukraine is generally supportive of international arbitration and adheres to the principles set forth in the New York Convention, courts retain the authority, and indeed the obligation, to ensure that foreign arbitral awards do not contravene the fundamental values and legal principles of the Ukrainian legal system.
Under Ukrainian law, the court examining a request for recognition and enforcement of an arbitral award is required to assess compliance with public policy ex officio, regardless of whether the opposing party raises the issue. This obligation stems from the nature of the court’s competence, rooted in the law. Therefore, even if the party resisting enforcement does not explicitly invoke a public policy objection, the court must independently consider, whether the enforcement of the award would violate the core principles of Ukrainian legal order.
Ukrainian courts have identified specific circumstances in which the enforcement of a foreign arbitral award may be deemed contrary to public policy. For instance, in State Development Corporation “VEB.RF” v. Ukraine, the Supreme Court, upholding the reasoning of the lower court, confirmed that enforcement would contradict the public order and, thus, should be refused, where it would effectively suspend the execution of another arbitral award that had already been granted enforcement by a domestic court.
Additionally, in JSC “Olainfarm” v. LLC “OLFA” the Supreme Court held that a violation of fundamental principles of due process, specifically, the principles of party autonomy and adversarial proceedings, rendered the arbitral process unfair and incompatible with the standards of a fair trial, constituting, in general, a breach of public policy. Although this conclusion was reached in the context of setting aside the award, it is equally relevant to cases involving recognition and enforcement of the arbitral awards.
In recent years, a noticeable tendency has emerged in which parties, particularly State-owned enterprises, frequently invoke the public policy exception as a ground for resisting the enforcement of arbitral awards, especially in cases involving significant financial liabilities. However, depending on case circumstances, such arguments many carry a speculative nature and be aimed more at delaying or avoiding payment than at genuinely protecting the legal order.
In LLC “Specijalna Oprema Skopje – D. O. O.” v. the Subsidiary of the State Company “Ukrspecexport” – State Enterprise “Ukroboronservice” the Supreme Court clarifies that the mere potential impact of an arbitral award on the solvency of a strategically important State enterprise does not, in itself, constitute a violation of public order. Striking down a commonly used defence line invoking a public policy argument, the court further holds that the enforcement of an award, issued by the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry, which orders the recovery of a debt from a defense industry enterprise during martial law does not provide sufficient grounds to refuse recognition and enforcement. It was specifically noted that while martial law may temporarily suspend the execution of enforcement actions, it does not release the State enterprise from its contractual obligations or justify a blanket refusal to recognise the award under the guise of protecting public policy.
In conclusion, the public order exception involves serious and narrowly interpreted arguments, as it deals with the protection of State fundamental legal principles, constitutional values and essential public interests. Courts are therefore cautious in applying this ground and are unlikely to uphold speculative or purely financial objections disguised as public policy concerns.
Impact of Sanctions on Recognition and Enforcement of the Awards
Another matter worth addressing is the application of sanctions against one of the parties to the arbitration, whether debtor or creditor, and their impact on the final outcome of the dispute. Sanctions, particularly those imposed by the National Security and Defence Council of Ukraine, have become a widespread phenomenon in wartime Ukraine, serving as a tool to safeguard national security and restrict dealings with entities deemed to pose a threat to the State. However, despite what is often assumed, the mere existence of sanctions does not automatically preclude the recognition and enforcement of an arbitral award.
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.
Importantly, when recognition and enforcement is sought against a State-owned enterprise of strategic importance for national defense, and the creditor appears to be a sanctioned entity registered in an aggressor State, Ukrainian courts normally reject enforcement on public policy grounds. 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 instance, on 13 February 2020, in JSC “Avia-Fed-Service” v. State Joint Stock Holding Company “Artem,” 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.
It is worth noting, however, that Ukrainian case law has not been entirely consistent regarding the effect of sanctions on the enforcement of foreign arbitral awards. 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.
The divergent judicial approaches taken in the two similar cases, both involving JSC “Avia-Fed-Service” and State Joint Stock Holding Company “Artem”, highlight that Ukrainian jurisprudence in this area remains in flux, continuing to evolve in response to the shifting political and legal landscape. Notably, within the span of just one month (9 January 2020 – 13 February 2020), the Supreme Court issued two conflicting decisions on analogous matters, underscoring the unsettled nature of the courts’ approach to sanctions-related enforcement issues. This ongoing uncertainty creates both practical challenges and effective flexibility for award creditors and debtors alike.
In conclusion, while sanctions imposed during the martial law are important tools for protecting national security, they alone donot automatically prevent the recognition and enforcement of arbitral awards in Ukraine. Ukrainian courts carefully assess the specific circumstances of each case, and enforcement may still proceed once sanctions towards a party are lifted.
In light of this, sanctions should be viewed as a temporary obstacle rather than an absolute bar to recognition and enforcement of foreign arbitral awards in Ukraine.
Interim Measures in Aid of the Recognition and Enforcement Proceedings
Article 477(3) of the Ukrainian Civil Procedure Code entitles the party seeking the recognition and enforcement of an arbitral award in Ukraine to ask the enforcement court to apply interim measures against the award debtor to ensure the actual enforcement of the arbitral award.
This mechanism should be considered if an award creditor had not secured its claim at the stage of arbitration by interim measures in aid of arbitration proceedings.
Key criteria and general procedure
Ukrainian procedural law affords litigants the right to seek many types of interim measures, provided that (i) the sought interim measures are proportionate to the underlying claims and (ii) there is a risk that non-taking of such measures may significantly complicate or render impossible the enforcement of a court decision or the effective protection or restoration of the violated or disputed rights or interests of the applicant. For example, in JSC “Ukrgazvydobuvannia” v. Suifenhe Xin-Resistant Technology Development Co., Ltd, the court refused to grant the arrest of the debtor’s goods located at customs as their value exceeded 15 times the amount ordered under the award.
The two above criteria are not the only ones; there are many others to consider when applying for interim measures. For example, in Gemini Holdings Limited v. Tinka Shipping SA, the court refused to grant various types of injunctions aimed at preventing bailiffs in other cases from forcefully selling the award debtor’s property to satisfy other creditors’ claims. By way of another illustration, a foreign litigant, asking to impose interim measures and having no assets in Ukraine, is generally subject to a duty to provide an undertaking in damages. Ukrainian courts may misapply that requirement entirely. For example, in Agroprosperis Trading 2 Limited v. Farming Enterprise “Ukraine”, the court did not accept the proposed undertaking in damages in the form of a third-party’s surety, but in UAB Tinwestplus v. LLC “Specproject”, the court ruled that there were no grounds for applying the statute and arrested the debtor’s money in a bank account.
The law allows for securing an award creditor’s claims swiftly and effectively, as the application for interim measures must be considered within two days on a without-notice basis. Only in exceptional circumstances, the court may summon all parties.
The court practice shows that Ukrainian courts tend to secure award creditors’ claims by imposing interim measures, even against the property of foreign award debtors (see, e.g., The Ministry of Defence of Ukraine v. FDI Group Falcon Dynamic Systems Savunma Sanayi ve Ticaret Limited Sirketi).
Arrest of Property
The most desired type of interim measures is the arrest of a debtor’s property, which represents the imposition of a ban on the right to dispose of the property in order to preserve it until the further fate of the property is determined.
The arrest of property, as it is known in Ukraine, bears resemblance to a freezing injunction, as it is known in common law countries. Regarding a debtor’s money held in bank accounts, the arrest of property bears resemblance to the common law concept of garnishment.
The arrest of property shall not be equated with the common law concept of attachment, as, by default, no taking of physical possession over an item of property happens when it is just arrested. However, in some instances, a court or a bailiff, by arresting property, can restrict the owner’s other rights. For example, once a bailiff has arrested a debtor’s property, he or she has the power to (i) restrict the owner’s right to use the property, (ii) seal it (so that no one, for example, enters a building), or (iii) even seize it, i.e. by taking physical possession over the property, and transfer it for storing to other parties. The arrest of property can be combined with other provisional remedies, e.g., by imposing an obligation on a harbourmaster to prohibit a vessel from sailing out of Ukrainian waters (to keep the vessel as an item of property within the jurisdiction for the purpose of a bailiff exercising forceful collection against her, if the award is allowed to be recognised and enforced). The latter example will have an effect similar to the arrest of a ship to secure a maritime claim under the 1952 Arrest Convention.
The area of arresting a debtor’s money has been much developed in commercial litigation, where commercial courts would arrest the debtor’s money without the need for a claimant to prove the debtor’s intention to dissipate it in light of the brought action for money. Commercial courts tend to justify the imposition of such an arrest based on the idea that once a defendant faces an action for money, the defendant’s ability to dispose of the funds at any time is indisputable, which will make it difficult to enforce a court judgment in the future, if it is made in favour of the claimant. In such circumstances, it would be an excessive or even unattainable standard of proof for the claimant to provide evidence of the obvious fact concerning the defendant’s unrestricted right to dispose of its funds at any time. If the action for money succeeds, the debtor will have an unconditional opportunity to settle with the claimant from the arrested funds (provided they match the awarded sum) without resorting to the enforcement procedure against the debtor’s property.
On that background, seeking the arrest of an award debtor’s property and funds at the time of applying for recognition and enforcement will only assist an award creditor to secure its already-adjudicated claims in arbitration.
Interim Measures as a Level for Negotiations
Bearing in mind that an interim measures ruling, if not overruled, lasts, by default, ninety days following a judgment for the claimant, the imposed arrest on the award debtor’s property may serve as a good lever for the award creditor to reach with the debtor an amicable solution to actually get the awarded debt by means of other instruments (e.g., court-approved settlement with debt restructuring, out-of-court settlement, including by way of a notarial deed, etc.).
The commercial rationale behind this move is that the award debtor will not be additionally charged with the enforcement fee of 10% of the awarded sum, which is charged when the award creditor applies to a bailiff to forcefully enforce a writ of execution following the successful recognition and enforcement proceedings in court.
Actual Enforcement before a Bailiff
The key goal for an award creditor in the recognition and enforcement run is to obtain a writ of execution from the enforcing court. Under Ukrainian law, it is an enforcement document, entitling its holder to request a state or private bailiff to actually enforce a monetary judgment or arbitral award by means of the forceful collection of a debtor’s property to satisfy the creditor’s claims.
In commercial cases, private bailiffs cannot be engaged to collect a debt owed by the State, a state enterprise, or a company, where the State’s shareholding excedes 25%.
Time Limits
Save for a few exceptions, the writ of execution is issued for a term of three years. This is a deadline for an award creditor to apply to a bailiff. If it is missed, the award creditor shall ask the issuing court to renew the deadline, but sound justifiable reasons have to be pleaded.
Although all time limits set in the Law of Ukraine “On Enforcement Proceedings” are constantly interrupted due to the duration of martial law and will run afresh after the end of martial law, courts issue writs of execution indicating the 3-year deadline.
In practical terms, it means that award creditors, who hold valid writs of execution, should keep an eye on developments in Ukrainian legislation and court practice on this point, as the Ukrainian parliament may abolish this temporary exemption, as it did with the wartime statute suspending limitation periods.
General procedure for forceful collection
The forceful collection of a debtor’s property by a bailiff begins with locating and inventorying the property, followed by its arrest (and the seizure or restriction of its use, if need be), and ultimately putting it up for forced sale. A bailiff can also forcefully collect a debtor’s property held by a third party or any property (mostly funds) owed to the debtor by another party.
Save for a few exceptions, all types of property are subject to forced sale and collection.
Piercing the corporate veil
A bailiff should normally enforce a debt against those items of property, constituting a debtor’s ownership, and is not specifically entitled to apply the doctrines of piercing the corporate veil or alter ego to enforce a judgment or award against another’s property.
However, the practice shows that in rare high-value cases, state bailiffs may resort to that exercise.
This occurred in Everest Estate LLC and Others v. The Russian Federation, where a state bailiff inventoried and arrested the shares of a Ukrainian bank, Prominvestbank, which belonged to State Development Corporation “VEB.RF” as property of the Russian Federation. In the spin-off litigation to that case (State Development Corporation “VEB.RF” v. The Ministry of Justice of Ukraine & Others), the Supreme Court arguably justified the application of the alter ego doctrine against VEB.RF to disregard its personality and its ownership over the shares in Prominvestbank and, therefore, has impliedly ratified the legality of the state bailiff’s prior actions.
Foreign Currency
Foreign award creditors typically seek the recognition and enforcement of their monetary awards in Ukraine, where the sums were awarded in one or more freely convertible foreign currencies (U.S. dollars, sterling pounds, euros, etc).
In 2022, immediately following Russia’s invasion of Ukraine, the Board of the National Bank of Ukraine passed the Resolution “On Operation of Banking System Under Martial Law,” which imposed a number of prohibitions preventing cash from flowing outside Ukraine. The Resolution has been amended numerous times since its enactment, liberalising the Ukrainian banking rules under martial law to some extent; however, the possibility for bailiffs to remit the collected money abroad remains limited.
If the awarded debt is owed by the State, a state enterprise, or a wholly state-owned company, then only a state bailiff can remit the collected debt abroad in foreign currency, provided that the forcefully collected cash existed in foreign currency, the state bailiff had an open bank account in that particular foreign currency, and the money were credited to that account without any conversions to and from Ukrainian hryvnia. State enforcement authorities, where state bailiffs are employed, may not have opened bank accounts in foreign currency, as the primary channel for collecting and distributing funds in enforcement proceedings is a treasury account, which operates only in Ukrainian hryvnia.
If the awarded debt owed by the State, a state enterprise, or a wholly state-owned company has been collected in Ukrainian hryvnia and accumulated on a treasury account, a state bailiff is entitled to purchase the required foreign currency cash and remit it to the award creditor, but only to its bank account in foreign currency opened in a Ukrainian bank.
Hopefully, 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, recording the debt in a foreign currency(s), at the foreign currency exchange of the National Bank of Ukraine on the day of transferring.
This exercise would also be possible without a foreign party opening a Ukrainian hryvnia bank account if the foreign party instructs its representative in Ukraine. (e.g., an advocate or law firm) to accept the collected Ukrainian hryvnia cash and hold it for the principal in Ukraine for a small fee (e.g., 1% of the received sum). The representative may then execute the principal’s instructions on how to use that cash.
Defence Industry
The State has temporarily shielded specific defence industry enterprises from any enforcement actions for the duration of martial law. This restriction means that a foreign award creditor can submit a writ of execution, a bailiff will commence enforcement proceedings (and even may arrest some property), but shall rule to stay the enforcement proceedings until the end of martial law upon discovery that a debtor has been granted a special protection from the State as a defence industry enterprise.
Not all defence industry enterprises, regardless of whether they are state-owned or not, are on that protective list.
Recommendations for Foreign Parties
The bottom line is that if a foreign party considers recognising and enforcing a foreign arbitral award against an award debtor in Ukraine, it is not only possible in principle, but also likely to yield a fruitful outcome.
Before presenting the application for recognition and enforcement in court, the award creditor should be well-prepared with the documents intended for filing and consider securing its claims by a wide range of interim measures that can be sought from a Ukrainian court.
Of course, starting the enforcement campaign in Ukraine, from the commercial point of view, should be preceded by a careful investigation of the award debtor’s assets. Searching for real estate, land plots, and vehicles registered in the debtor’s name must be inherent in the asset-tracking exercise. A thorough investigation of the financial reports of a Ukrainian debtor should also be considered as a must-do exercise. The next level is to examine how the debtor is trading and with whom. If it has claims against Ukrainian parties, those choses in action can be considered potential targets for enforcing the award against the debtor in Ukraine.
The foreign party considering the enforcement of an old arbitral award debt should take into account the 3-year limitation period for filing an application for recognition and enforcement. However, if the time has lapsed, there is still room not to give up, as Ukrainian law empowers Ukrainian courts to renew the missed deadline if there is a justifiable reason for doing so.
Notwithstanding temporary currency restrictions, there are still viable options available for foreign parties to transfer their funds from the Ukrainian jurisdiction or at least hold them within Ukraine for investment purposes (e.g., purchasing real estate for Ukrainian hryvnia and selling it outside the jurisdiction to another foreigner) or other purposes.