Foreing Awards and Judgements Enforcement
Expierenced Enforcement Attorneys
Jurvneshservice attorneys have vast experience in recognition and enforcement of judgments and awards. The procedure is easy, if a debtor, a Ukrainian company, is ready to pay under the judgement or award. But very often the debtor chooses a strategy to do all possible and impossible acts not to pay or at least to delay payment for as long as possible. Correspondingly, the debtor usually uses procedural means to achieve such strategy, including, e. g. setting the award aside. Jurvneshservice attorneys are perfectly acquainted with such strategies and know how to beat them within court proceeding.
Grounds for enforcement provided by law. International treaties and principle of reciprocity
The Code of Civil Procedure of Ukraine (hereinafter referred to as the CCP) provides that a judgment or award given by a court or arbitration of a foreign state can be recognized and enforced in Ukraine, if there is a treaty on recognition and enforcement of foreign judgments between the states, ratified by the Verkhovna Rada of Ukraine (the Ukrainian parliament), or under the principle of reciprocity, the existence of which is presumed.
The great bulk of states, including some of European states – Estonia, the Czech Republic, Italy, Hungary, etc. – whose court judgments are often sought to be recognized and enforced in Ukraine have an appropriate international treaty on mutual legal assistance concluded either with Ukraine or USSR to which Ukraine is a successor. Certain states that do not have legal assistance treaties with Ukraine are still parties to certain other conventions that provide for recognition and enforcement of judgments: for example, both Ukraine and Portugal are parties to the Hague Convention on the recognition and enforcement of decisions relating to maintenance obligations of 1973, and both Ukraine and Denmark are parties to the European convention on recognition and enforcement of decisions concerning custody of children and on restoration of custody of children of 1980, etc.
As, unfortunately, Ukraine did not conclude treaties on mutual legal assistance with most of the developed states, the judgments of that states shall be recognized and enforced under the reciprocity principle. If a defendant called the existence of reciprocity into question, it should prove that the questioned reciprocity did not exist.
The Ukrainian court practice demonstrates that usually the applicant proved the fact the reciprocity existed without waiting for any objections from the party against whom enforcement was sought, i. e. the applicant already in the first session of the court proved that Ukrainian judgments were enforced in the foreign state whose court had given the judgment which was sought to be recognized and/or enforced in Ukraine. The following facts and documents may serve as evidence:
- Copies of judgments of the foreign state concerning recognition of judgments of the Ukrainian courts.
- The fact that judgments from the foreign jurisdiction were recognized in third states.
- Statement of absence of any information showing that the foreign state’s courts have refused to recognize and/or enforce Ukrainian judgments.
- Information from the Ukrainian embassy in the foreign state or of the Ukrainian Ministry of Foreign Affairs concerning the existence of the practice of recognition and enforcement of Ukrainian judgments in the foreign country.
- Information concerning the practice of the foreign state with regard to entering into international treaties on the recognition and enforcement of foreign judgments, i.e. whether its practice is to enter into such treaties (like post-Soviet states) or not (like the USA), and the relation between such practice and the principle of reciprocity in the foreign state. The USA and Germany, for example, does not conclude treaties on recognition and enforcement of foreign judgments at all. Both states recognize and enforce foreign judgments on the basis of the principle of international comity (that covers the principle of reciprocity).
- Foreign arbitral awards shall be recognized and enforced by the Ukrainian courts as Ukraine has been a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention) since 1960. Thus, any award given by permanent or ad hoc arbitration institution will be enforced in Ukraine without the need to re-consider the case on the merits.
Grounds for refusal to recognize and enforce an award
According to the Law of Ukraine On International Commercial Arbitration (the Law) that corresponds to the New York Convention recognition and enforcement of an arbitral award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof 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 to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
- The party against whom the award is invoked 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 difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the 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 arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, is such agreement does not exist, 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.
Besides, the Law provides that recognition and enforcement of an arbitral award may also be refused, if the competent authority in the country where recognition and enforcement is sought, finds that:
- The subject matter of the dispute is not capable of settlement by arbitration under the laws of Ukraine; or
- The recognition or enforcement of the award would be contrary to the public policy of Ukraine.
Grounds to set aside an arbitral award
The arbitral award made in Ukraine by the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry or ad hoc arbitration situated in Ukraine may be set aside within 3 months since a party received the arbitral award. The grounds to set aside correspond to those for refusal to recognize and enforce the award. Setting aside of the award is used by Ukrainian debtors as their strategy not to allow enforcement of award.
Grounds for refusal to recognize and enforce a foreign judgment
Submission on the recognition and/or enforcement of a foreign judgment shall not be satisfied if:
- a judgment of the foreign court has not come into force yet according to the laws of the state of that court;
- the debtor was not duly and timely informed of the foreign proceedings and could not present its statement of defense;
- the case shall be considered exclusively by the courts or other authorities of Ukraine;
- there is a Ukrainian court judgment issued in a dispute between the same parties on the same subject and on the same grounds, that has come into force, or if there are court proceedings in Ukraine between the same parties on the same subject and on the same grounds, that had been initiated before the proceedings in the foreign court;
- the limitation period prescribed by the international treaties of Ukraine and by the CCP that provides that the enforcement of foreign judgments shall be made within 3 years since the judgement took effect, has lapsed;
- the subject matter of the dispute is not subject to judicial determination in the courts under the laws of Ukraine;
- enforcement of the judgment could violate the interests of Ukraine (public policy);
- there has been already enforced and recognized earlier a foreign court judgment rendered in a dispute between the same parties on the same subject and on the same grounds, as the judgment asked for enforcement;
- in any other cases prescribed by Ukrainian law.
The list is exhaustive, so no other grounds can be viewed as an obstacle to the recognition and/or enforcement of a foreign judgment.
To obtain an allowance to recognize and enforce the judgment the applicant shall submit it to an appropriate court at the place of debtor’s location the following documents:
- an application to enforce a judgment;
- a copy of the judgment, certified by the court, and an official document confirming the judgment entered into force, in case this is not evident from the text of the judgment;
- document proving the debtor was duly served with summons;
- a translation of the documents mentioned above in the subparagraphs 2 and 3.
A strategy frequently used by debtors
One of the most “beloved” by Ukrainian debtors’ ground to set aside the award or to refuse the enforcement of the award is an alleged absence of their due informing of arbitration or foreign court proceeding (Rangedale Limited v. Aviation company South Airlines; Trading Overseas Limited v. Stated Owned Enterprise Mariupol Sea Trade Port; Dalmond Trade House Ltd v. Metallurgic Plant “Dniprospetstal”; Arbug-Servise SRL v. Trade House “Meat Spring”; WidrigFinanz & Beteiligungs-Fktiengesellschaft v. Furniture Plant “Stryi”; Fabrika Tasm Transporterowych Wolbrom S. A. v. Public Joint Stock Company “Mine Holding “Pokrovske”, Altum Air Inc. v. Windrose Airlines, etc.). Such ground is based on a debtor’s allegation that a person responsible for postal submissions acceptance did not receive any notification on the appointment of the arbitrator or of the arbitration proceedings, though the Law states that debtor shall be notified by its commercial enterprise address only.
Another strategy based on undue notification of the process is to refer to Hague Convention on the Service abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of 1965. Within its ratification Ukraine has refused to apply Article 10 of the Convention that allows use a Process Agent Service and stated that notification is due, if made through the Ministry of Justice of Ukraine with the help of the form that can be found at Hague Conference site.
The CCP does not prescribe clearly the framework provided for consideration of an application for the enforcement of foreign judgment, but practically it cannot last less than a couple of months. Before introduction of amendments to the CCP at the end of 2017 the applications had been considered usually within 3 months. After introduction of the amendments to the CCP consideration of cases, however, became slower and some of the applications, due to a natural transition period when some of the applications being considered under the “old” rules were still pending, were considered for more than a year.
On the basis of the foreign court judgment and a decision of a Ukrainian court to grant a permit for its enforcement, the last one issues an executive writ, which is registered in the Uniform State Register of executive documents and shall be submitted for execution.