According to Article 35 of the Law of Ukraine "On International Commercial Arbitration," an arbitration award, regardless of the state of origin, is recognized as mandatory (binding) and, after submission of a written petition to a competent court, is subject to enforcement.
Note, however, that the respondent has several viable defences, any one of which would emasculate all efforts to enforce foreign arbitration court's award in Ukraine. Specifically, the respondent has the right to appeal to the competent court with a request to refuse recognition and enforcement of a decision of a foreign court. In fact, pursuant to Article 5, paragraph 1 of the New York Convention and Article 36 of the Law of Ukraine "On International Commercial Arbitration," the recognition and enforcement of an arbitration decision may be denied at the request of the respondent if it provides evidence that:
- the parties to the arbitration agreement were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law which the parties chose to govern said agreement or, in the absence of such agreement, under the law of the country where the award was made; or
- the party against whom the award was issued was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or
- the award deals with a dispute not falling within the arbitration agreement or clause, or it contains decisions on matters beyond the scope of the arbitration agreement or clause. However, if decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or
- the composition of the arbitration court or the arbitration procedure did not correspond to the agreement of the parties, or, in the absence of such agreement, was not in accordance with the law of the country where the arbitration took place; or
- the award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
As Ukraine is also a signatory to the 1961 European Convention on International Commercial Arbitration in Geneva, during the consideration of a petition on the recognition and enforcement of decisions of international commercial arbitration courts, it is important to take into account the provisions of Article IX of the said Convention regarding the recognition of arbitral decisions as invalid. Specifically, paragraph 2 provides that in the relations between states, which are signatories to the European Convention and simultaneously signatories to the 1958 New York Convention, paragraph 1 of Article IX limits the application of Article 5, paragraph 1(e) (see above) of the New York Convention in certain cases.
Further, an arbitral decision may be declined for recognition and enforcement if the competent authority (in Ukraine, the competent court) of the country in which the relevant request for recognition and enforcement determines the following:
- The object of the dispute cannot be the subject of arbitration under the law of such country; or
- The recognition and enforcement of such decision contradicts such country's public order.
Thus, obtaining a foreign arbitration court's award is only half of the battle. Enforcing the judgment is the other half, which in Ukraine is often far more difficult to accomplish than obtaining the initial decision. Please see our discussion concerning the enforcement procedure for national and foreign court awards as well as for international arbitration awards.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.