Enforcement Of Foreign Judgments - 2013 - Arbitration & Dispute Resolution

1 Treaties

Is your country party to any bilateral or multilateral treaties for the reciprocal recognition and enforcement of foreign judgments? What is the country's approach to entering into these treaties and what if any amendments or reservations has your country made to such treaties?

Ukraine is a party to the Hague Convention on Civil Procedure of 1954, which however applies only to the recognition and enforcement of foreign orders for costs and expenses of proceedings. Ukraine also ratified two relevant multilateral treaties, which were concluded between the members of the Commonwealth of Interdependent States, in particular:

the Minsk Convention on Legal Assistance and Legal Relations in Civil, Matrimonial and Criminal Cases of 1993 (along with Ukraine, the parties to this treaty are Azerbaijan, Belarus, Armenia, Kazakhstan, Moldova, Tadzhikistan, Turkmenistan, Uzbekistan, Georgia, Kyrgyzstan, and Russia); and
the Kyiv Convention on Settlement of the Commercial Disputes of 1992 (along with Ukraine, the parties to this treaty are Belarus, Armenia, Kazakhstan, Tadzhikistan, Turkmenistan, Uzbekistan, Kyrgyzstan, and Russia).

The reciprocal recognition and enforcement of foreign judgments is also prescribed in some bilateral treaties for legal assistance and legal relations to which Ukraine is a party (mutual assistance treaties), in particular with Albania (1958), Algeria (1982), Bulgaria (2004), China (1993), Cuba (2003), Cyprus (2004), Czech Republic (2001), Estonia (1995), Georgia (1995), Greece (1981), Hungary (2002), Iran (2004), Iraq (1973), Italy (1979), Latvia (1995), Libya (2008), Lithuania (1993), Macedonia (2000), Moldova (1993), Mongolia (1995), North Korea (2003), Poland (1993), Romania (2002), Syria (2008), Tunis (1984), Turkey (2000), Uzbekistan (1998), Vietnam (2000) and Yemen (1985).

In general, the treaties prescribe the possibility of reciprocal recognition and enforcement of foreign judgments and stipulate the list of judgments that may be recognised and enforced, the requirements for the relevant application and documents that shall be added thereto, the procedure and the grounds for denial in recognition and enforcement.

2 Intra-state variations

Is there uniformity in the law on the enforcement of foreign judgments among different jurisdictions within the country?

Yes, the same rules apply to the recognition and enforcement of foreign judgments all over the country.

3 Sources of law

What are the sources of law regarding the enforcement of foreign judgments?

Ukraine is a civil law country. The enforcement of foreign judgments is primarily regulated by section VIII of the Code of Civil Procedure and applicable bilateral or multilateral treaties.

In the case of inconsistency between the provisions of an applicable treaty and the Code of Civil Procedure, the treaty should apply. In cases where there are two or more relevant treaties, the one that entered into force later should apply.

There are two grounds to enforce a foreign judgment: under an international agreement or under the reciprocity principle. The existence of reciprocity is presumed. Thus, at least in theory, a decision issued at any jurisdiction may be enforced in Ukraine, unless the opposing party proves the non-existence of reciprocity. However, the recognition and enforcement of a foreign judgment on the basis of reciprocity is problematic in practice. Since the burden of proving reciprocity was reversed just recently, in February 2010, there is still a lack of established court practice relating to the recognition and enforcement of foreign judgments in Ukraine under the principle of reciprocity.

To unify the court practice, the Supreme Court of Ukraine adopted the Decree 'On practice of consideration by the courts of applications for recognition and enforcement of foreign judgments and arbitral awards, and annulment of arbitral awards issued on the territory of Ukraine' on 24 December 1999. Notwithstanding that case law does not constitute a source of law in Ukraine, the Decree is widely practised by the courts during the consideration of an application for the recognition and enforcement of a foreign judgment.

4 Hague Convention requirements

To the extent the enforcing country is a signatory of the Hague Convention on Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, will the court require strict compliance with its provisions before recognising a foreign judgment?

Ukraine is not a signatory to the Hague Convention on Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters.

5 Limitation periods

What is the limitation period for enforcement of a foreign judgment? When does it commence to run? In what circumstances would the enforcing court consider the statute of limitations of the foreign jurisdiction?

Article 391 of the Code of Civil Procedure prescribes a three-year limitation period for the submission of an application for recognition and enforcement of foreign judgments, which commences to run from the day when the judgment constitutes legal force.

At the same time, under the general rule of articles 72 – 73 of the Code of Civil Procedure, a judge may renew the term prescribed by the law at the request of a creditor (applicant) if the term is missed for good reasons.

The special limitation period applies to the enforcement of judgments for collection of periodical payments. Such judgments may be submitted for enforcement within the whole term of money collection with debt repayment for the last three years.

6 Types of enforceable order

Which remedies ordered by a foreign court are enforceable in your jurisdiction?

Article 390 (paragraph 1) of the Code of Civil Procedure determines 'a foreign judgment' as a foreign court decision; other competent authorities of a foreign country that consider civil and commercial cases; and foreign and international arbitration.

According to paragraph 9 of the Decree of the Supreme Court of Ukraine of 24 December 1999 'On practice of consideration by the courts of applications for recognition and enforcement of foreign judgments and arbitral awards, and annulment of arbitral awards issued on the territory of Ukraine', an amicable agreement adopted by the court, a ruling, a decree or a court order are also subject to recognition and enforcement in Ukraine. Such conclusion was made by the Supreme Court of Ukraine based on the analysis of the relevant international treaties to which Ukraine is a party.

Ukrainian law does not directly prohibit the enforcement of any specific remedy. At the same time interim remedies, in particular interim injunctions, are actually problematic to be enforced in Ukraine.

The general provision of the Civil Code of Ukraine provides for the following remedies:

recognition of the right;
determination of a deed as invalid;
termination of the action that violates the right;
restitution;
fulfilment of the obligation in kind;
change of legal relations;
termination of the legal relations;
compensation of damages and other ways of material damages compensation;
compensation of moral damages; and
determination as unlawful of a decision, action or omission of a state authority.

This list is not exhaustive. The court may secure the right or interest by any other way established by the law.

7 Competent courts

Must cases seeking enforcement of foreign judgments be brought in a particular court?

An application for enforcement of a foreign judgment is considered by a general court at the location of the debtor (respondent). If the debtor has no location in Ukraine, or his or her location is unknown, the application may be considered at the location of the debtor's assets in Ukraine.

Notwithstanding the existence of special commercial courts in Ukraine, which consider disputes between legal entities, all applications for enforcement of foreign judgments shall be considered by the general courts. General courts, which also consider criminal, family, matrimonial and other cases, are much more overloaded with cases than commercial courts. This makes the recognition and enforcement of a foreign judgment a time-consuming and complicated process.

8 Separation of recognition and enforcement

To what extent is the process for obtaining judicial recognition of a foreign judgment separate from the process for enforcement?

Under Ukrainian law, a decision should be recognised first, and only then may it be enforced. Section VIII of the Code of Civil Procedure is divided into two sub-sections: recognition and enforcement of a foreign judgment that is subject to coercive enforcement and recognition of a foreign judgment that is not subject to coercive enforcement. Both processes are generally the same, but have some particularities (eg, the list of documents, which is required to be added to an application, is shortened in the case of an application for mere recognition without enforcement).

9 Defences

Can a defendant raise merits-based defences to liability or to the scope of the award entered in the foreign jurisdiction, or is the defendant limited to more narrow grounds for challenging a foreign judgment?

A defendant cannot raise merit-based defences. An application for recognition and enforcement of a foreign judgment can be dismissed only on a limited number of grounds, which are determined in an applicable treaty. If the applicable treaty does not contain such grounds, article 396 of the Code of Civil Procedure shall apply, which determines the following grounds for challenging a foreign judgment:

the foreign judgment did not enter into force;
a party to the dispute was not given an opportunity to participate in the proceeding due to an improper notification;
Ukrainian courts or other Ukrainian authorities possess an exclusive jurisdiction over such disputes;
a Ukrainian court has rendered a judgment or is currently considering a dispute in the same matter between the same parties, and such consideration has started before the opening of the proceeding by the foreign court;
the established application term for the enforcement of a foreign judgment expired;
under Ukrainian legislature, the disputed matter is not subject to court consideration;
the enforcement of such a judgment will threaten the interests of Ukraine; and
in other cases prescribed by international treaties and Ukrainian legislature.

10 Injunctive relief

May a party obtain injunctive relief to prevent foreign judgment enforcement proceedings in your jurisdiction?

Ukrainian law does not directly prescribe the possibility to obtain injunctive relief to prevent foreign judgment enforcement proceedings in Ukraine. However, there has been court practice of consideration of an application for refusal in recognition and enforcement of foreign court judgment or arbitral award. Furthermore, the Supreme Court of Ukraine in paragraph 13 of the Decree on Practice of Consideration by the Courts of Applications for Recognition and Enforcement of Foreign Judgments and Arbitral Awards, and Annulment of Arbitral Awards issued on the Territory of Ukraine, dated 24 December 1999, emphasises that a party against which a foreign judgment has been issued may file an application to the competent court for refusal in recognition and enforcement of a foreign court judgment, if the winning party does not file such an application, but, at the same time, uses the judgment to the detriment of the losing party.

11 Basic requirements for recognition

What are the basic mandatory requirements for recognition of a foreign judgment?

A creditor (applicant) shall submit an application to the competent court, which shall include:

the name of a creditor or its representative with the indication of his or her address;
the name of a debtor with the indication of his or her address or location of his or her assets in Ukraine; and
motives for the application submission.

Documents that are required by an applicable treaty shall be added to the application. If the applicable treaty does not contain such grounds or there is no such treaty, article 394 of the Civil Procedure Code shall apply, which requires the following documents to be added to the application:

a duly certified copy of the foreign judgment that is subject to coercive enforcement;
an official document certifying that a foreign judgment entered into force (if this is not mentioned in the judgment);
documents that prove that the party as to which the judgment was made, and who did not take part in the court proceeding, was properly informed about the time and place of the hearing;
a document that determines in which part or from what time the foreign judgment is subject to enforcement (if it was enforced before);
documents that certify the representative's authority (if the application is made by the representative); and
duly certified translations of those documents into Ukrainian or the language required by the international treaties of Ukraine.

In the case of an application for mere recognition of a foreign judgment (without its coercive enforcement) article 400 of the Civil Procedural Code applies, which requires the following documents to be added to the application:

a duly certified copy of the foreign judgment that is subject to recognition;
an official document certifying that the foreign judgment entered into force (if this is not mentioned in the judgment); and
duly certified translations of those documents into Ukrainian or the language required by the international treaties of Ukraine.

12 Other factors

May other non-mandatory factors for recognition of a foreign judgment be considered and if so what factors?

In the case of a lack of an applicable treaty, recognition and enforcement of a foreign judgment is possible on the basis of the reciprocity principle. There is a presumption that reciprocity exists and the burden of proving otherwise lies on the debtor. However, if there is no applicable treaty, the creditors' chances of enforcing a foreign judgment would increase if he or she provides to the court evidence of the existence of reciprocity, that is, that Ukrainian judgments are enforceable in the state the judgment of which the creditor requests to enforce in Ukraine.

13 Procedural equivalence

Is there a requirement that the judicial proceedings where the judgment was entered correspond to due process in your jurisdiction, and if so, how is that requirement evaluated?

There is no requirement that the judicial proceedings where the judgment was entered correspond to due process in Ukraine. Article 396 of the Code of Civil Procedure, as well as most of the mutual assistance treaties, requires only that a party to the dispute has to be properly notified and given an opportunity to participate in the proceedings.

14 Personal jurisdiction

Will the enforcing court examine whether the court where the judgment was entered had personal jurisdiction over the defendant, and if so, how is that requirement met?

There is no requirement that the enforcing court shall examine whether the court where the judgment was entered had personal jurisdiction over the defendant.

15 Subject-matter jurisdiction

Will the enforcing court examine whether the court where the judgment was entered had subject-matter jurisdiction over the controversy, and if so, how is that requirement met?

Article 396 of the Code of Civil Procedure, as well as most of the mutual assistance treaties, prescribe that the enforcing court should deny the recognition and enforcement of a foreign judgment if Ukrainian courts or other Ukrainian authorities possess an exclusive jurisdiction over the relevant dispute.

Article 77 of the Law on Private International Law provides for the cases in which the Ukrainian courts' jurisdiction is exclusive and to which a case belongs where:

real estate under dispute is located on the territory of Ukraine;
both parties to the case regarding legal relations between parents and children reside in Ukraine;
in the case of inheritance, the testator is a citizen of Ukraine and resides there;
the dispute is connected with the registration of intellectual property rights that requires registration or issue of a certificate (patent) in Ukraine;
the dispute is connected with the registration of liquidation on the territory of Ukraine of foreign legal entities or individual entrepreneurs;
the dispute relates to the authenticity of records in the state register (cadastre) of Ukraine;
in cases of bankruptcy, where the debtor was established in Ukraine according to the legislation of Ukraine;
the case relates to the issue of securities registered in Ukraine;
the case relates to an adoption that was performed or is being performed on the territory of Ukraine; and
in other cases determined by the laws of Ukraine.

16 Service

Must the defendant have been technically or formally served with notice of the original action in the foreign jurisdiction, or is actual notice sufficient? How much notice is usually considered sufficient?

If a party to the dispute was not given an opportunity to participate in the proceeding due to improper notification, it is a ground for denial in recognition and enforcement of a foreign judgment. In cases where a party as to which a judgment is made did not take part in the court proceeding, the applicant must provide to the court a document that proves that such party was properly informed about the time and place of the hearing.

Taking into account that the courts often carefully analyse whether a defendant was properly notified, it is recommended to meet all the formal requirements of the foreign jurisdiction and applicable treaty as to the service of process.

Ukraine is a party to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of 1965. However, according to the reservation made by Ukraine to article 10 of the Convention, Ukraine does not use methods of transmitting judicial documents such as sending them by postal channels or directly through judicial officers, officials or other competent persons on its territory.

17 Fairness of foreign jurisdiction

Will the court consider the relative inconvenience of the foreign jurisdiction to the defendant as a basis for declining to enforce a foreign judgment?

Ukrainian law does not directly prescribe such a ground for declining to enforce a foreign judgment as the relative inconvenience of the foreign jurisdiction to the defendant. At the same time, article 396 of the Code of Civil Procedure prescribes that the enforcement court should decline the enforcement if the foreign judgment threatens the interests of Ukraine. Taking into account that there is no established court practice relating to the interpretation of the term 'interests of Ukraine', a defendant may succeed in proving that the enforcement of a judgment from an inconvenient jurisdiction would threaten the interests of Ukraine.

18 Vitiation by fraud

Will the court examine the foreign judgment for allegations of fraud upon the defendant or the court?

Ukrainian law is silent in this respect. The Ukrainian court should not analyse any allegations of fraud, unless they are at least duly established by the competent court.

19 Public policy

Will the court examine the foreign judgment for consistency with the enforcing jurisdiction's public policy and substantive laws?

Article 396 of the Code of Civil Procedure stipulates that the Ukrainian court should decline the enforcement of a foreign judgment, inter alia, if the enforcement of such a judgment will threaten the interests of Ukraine.

The term 'interests of Ukraine' is interrelated with the term 'public policy'. The definition of 'public policy' is not clearly established under Ukrainian law. According to paragraph 12 of the Decree of the Supreme Court of Ukraine of 24 December 1999 'On practice of consideration by the courts of applications for recognition and enforcement of foreign judgments and arbitral awards, and annulment of arbitral awards issued on the territory of Ukraine', public order is defined as the legal order of the state and the basic principles and fundamentals to the existing state order (relevant to its independence, integrity, inviolability, main constitutional rights, freedoms, guarantees, etc). Ukrainian courts often and widely apply public policy as a ground for declining the enforcement of foreign judgments.

20 Conflicting decisions

What will the court do if the foreign judgment sought to be enforced is in conflict with another final and conclusive judgment involving the same parties or parties in privity?

Article 396 of the Code of Civil Procedure, as well as most of the mutual assistance treaties, prescribes that the enforcing court should decline the recognition and enforcement of a foreign judgment if a Ukrainian court has rendered a judgment or is currently considering a dispute in the same matter between the same parties, and such consideration has started before the opening of the proceeding by the foreign court. Some of the mutual assistance treaties also provide for the situation in which a third country's judgment involving the same party and relating to the same dispute was already recognised or enforced in Ukraine is a ground for declining the enforcement.

21 Enforcement against third parties

Will a court apply the principles of agency or alter ego to enforce a judgment against a party other than the named judgment debtor?

No, those principles are not used in Ukrainian law.

22 Alternative dispute resolution

What will the court do if the parties had an enforceable agreement to use alternative dispute resolution, and the defendant argues that this requirement was not followed by the party seeking to enforce?

Ukrainian law does not directly provide for this issue. The main ADR method is arbitration (domestic or international). Ukrainian law does not stipulate any rules for mediation as an ADR method; however, mediation is more and more frequently practiced.

Ukrainian procedural law prescribes that the court should terminate the proceeding if the parties had concluded an arbitration agreement, since the case is not subject to court consideration. Article 396 of the Code of Civil Procedure stipulates that the Ukrainian court should decline the enforcement of a foreign judgment if, under Ukrainian legislature, a disputed matter is not subject to court consideration. However, not all mutual assistance treaties contain such ground for declining the enforcement of foreign judgments.

Thus, a Ukrainian court will decline the enforcement of a foreign judgment if an enforceable arbitration agreement was not followed by the parties unless it is not prescribed by an applicable treaty. At the same time, in such a situation the court may also apply public policy in order to decline the enforcement of the foreign judgment.

23 Favourably treated jurisdictions

Are judgments from some foreign jurisdictions given greater deference than judgments from others? If so, why?

The law does not prescribe more favourable treatment to any jurisdiction. At the same time, the possibility of successful recognition and enforcement substantially increases if there is a treaty that applies to the reciprocal recognition and enforcement of foreign judgments.

24 Alteration of awards

Will a court ever recognise only part of a judgment, or alter or limit the damage award?

The law does not provide for the possibility of partial recognition of an award. However, neither does it preclude such an option.

25 Currency, interest, costs

In recognising a foreign judgment, does the court convert the damage award to local currency and take into account such factors as interest and court costs and exchange controls? If interest claims are allowed, which law governs the rate of interest?

If the sum that shall be collected is indicated in the judgment in foreign currency, the court shall recalculate it into the national currency of Ukraine (the hryvnia) according to the exchange rate of the National Bank of Ukraine.

The law does not preclude the recognition and enforcement of interest claims and court costs.

26 Security

Is there a right to appeal from a judgment recognising or enforcing a foreign judgment? If so, what procedures, if any, are available to ensure the judgment will be enforceable against the defendant if and when it is affirmed?

After the consideration of an application for recognition and enforcement of a foreign court judgment the court issues one of the following decisions: it grants recognition and enforcement or declines the recognition and enforcement. Any of those decisions is subject to appeal in a competent court of appeals within five days after the issue. A court of appeals' decision may be further challenged by appealing to the Highest Specialised Court of Ukraine for Civil and Criminal Matters within 10 days after the announcement of the court of appeals' ruling. The above terms may be renewed by the relevant court at the request of the appellant if the failure to meet the above term was attributed to good reason.

A decision of a court of appeals enters into force immediately after its declaration and may be submitted to enforcement notwithstanding the submission of a statement of cassation against it, unless the Highest Specialised Court of Ukraine for Civil and Criminal Matters, by separate ruling, postpones the enforcement of that decision.

There is a possibility to obtain interim measures (eg, freezing injunction) at the time of submission of an application for enforcement or during appeal or cassation proceedings.

27 Enforcement process

Once a foreign judgment is recognised, what is the process for enforcing it in your jurisdiction?

If a competent Ukrainian court issues its final decision on granting recognition and enforcement, it also issues an executive order that shall be submitted to the competent authority of the State Enforcement Service. The enforcement process is regulated in detail by the Law of Ukraine On Enforcement Proceedings. A bailiff commences the enforcement proceeding and gives a defendant a seven-day time period for the voluntary execution of the judgment. If the defendant fails to perform the judgment voluntarily, the bailiff commences coercive enforcement within which he or she may, inter alia, arrest and sell the defendant's property, withdraw from the defendant and transfer certain things to the creditor, etc.

The enforcement process shall last up to six months; however, it may last even longer depending on the defendant's actions. The latter may use a number of instruments to avoid payment. For instance, the debtor may challenge the actions of the enforcement authorities or commence a parallel proceeding in order to stop the enforcement proceeding against him or her.

28 Pitfalls

What are the most common pitfalls in seeking recognition or enforcement of a foreign judgment in your jurisdiction?

Ukrainian courts are not used to dealing with the issues of a party being a foreign company in court. The judges are reluctant to consider 'untypical' cases that involve foreign parties or foreign law. Those who wish to recognise and enforce foreign judgments in Ukraine face a number of obstacles, which prove that Ukraine is not friendly as to the 'foreign element' in the process.

If there is a relevant applicable bilateral or multilateral treaty for the reciprocal recognition and enforcement of foreign judgments, the Ukrainian court will usually grant recognition and enforcement of a foreign judgment. If there is no treaty, recognition and enforcement is possible, in theory, based on the principle of reciprocity. However, the court practice of enforcing foreign judgments based on the reciprocity principle is still not formed taking into account that the relevant alterations that stipulate assumption of existence of reciprocity were made quite recently (February 2010).

A foreign arbitral award is easier to enforce in Ukraine than judicial decisions, since Ukraine is a party to the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards 1958. The procedure of the recognition and enforcement of foreign judgments is not a mere formal requirement in Ukraine, and it is usually a time-consuming process that may involve up to three or four instances.

Originally published in Getting The Deal Through - Enforcement of Foreign Judgments 2013

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.

Ukraine: Enforcement Of Foreign Judgments - 2013