Ukraine: Construction Law International. Chapter On Ukraine

For convenience, in this questionnaire, clause references are references to clauses in the 1999 FIDIC Red Book.

1. What is your jurisdiction?

Ukraine, a civil law jurisdiction.

2. Are the FIDIC forms of contract used for projects constructed in your jurisdiction? If yes, which of the FIDIC forms are used, and for what types of projects?

FIDIC forms of contracts are used for some projects constructed in Ukraine, including in particular large-scale infrastructure projects with funding from international financial institutions (eg, the European Bank for Reconstruction and Development, European Investment Bank and International Bank for Reconstruction and Development). Various FIDIC forms have already been used in Ukraine, including the Conditions of Contract for Construction (1999 Red Book), Conditions of Contract for Plant and Design-Build (1999 Yellow Book) and Conditions of Contract for Construction (Multilateral Development Bank Harmonised Edition). The industries in which FIDIC is most commonly used include transport, energy, municipal and port infrastructure.

3. Do FIDIC produce their forms of contract in the language of your jurisdiction? If no, what language do you use?

There is no official Ukrainian translation of any of the FIDIC forms. In practice, the contracts are translated on an ad hoc basis for the purposes of each particular project. Bilingual English-Ukrainian or English-Russian versions of contracts are generally executed by the parties.

4. Are any amendments required in order for FIDIC Conditions of Contract to be operative in your jurisdiction? If yes, what amendments are required?

No. However, if there are any discrepancies between the contract and imperative provisions of Ukrainian law, the latter might supersede.

5. Are any amendments common in your jurisdiction, albeit not required in order for the FIDIC Conditions of Contract to be operative in your jurisdiction? If yes, what (non-essential) amendments are common in your jurisdiction?

It is common to amend FIDIC General Conditions by introducing provisions in the Particular Conditions concerning the details of the procedures of taking over and payment for work, as well as other provisions, to reflect local regulatory requirements.

6. Does your jurisdiction treat Sub-Clause 2.5 of the 1999 suite of FIDIC contracts as a precondition to Employer claims (save for those expressly mentioned in the Sub-Clause)?

There is a lack of established practice on this. Ukrainian State authorities, which usually act as the Employer in FIDIC contracts, are likely to follow the procedure provided in Sub-Clause 2.5 of the 1999 suite of contracts in case of claims against the Contractor.

7. Does your jurisdiction treat Sub-Clause 20.1 of the 1999 suite of FIDIC contracts as a condition precedent to Contractor claims for additional time and/or money (not including Variations)?

There is a lack of established practice on this issue. There is a risk, however, that, if the Contractor does not follow the procedure of Sub-Clause 20.1 of the 1999 suite of contracts, the respective claim will be dismissed in case of litigation in Ukraine.

8. Does your jurisdiction treat Sub-Clause 20.1 of the 1999 suite of FIDIC contracts as a condition precedent to Contractor claims for additional time and/or money arising from Variations?

There is a lack of established practice on this.

9. Are dispute boards used as an interim dispute resolution mechanism in your jurisdiction? If yes, how are dispute board decisions enforced in your jurisdiction?

There is a practice of using dispute boards or an individual adjudicator's services under FIDIC contracts carried out in Ukraine. The decisions of the boards or an adjudicator might be enforced voluntarily; there is no procedure for their compulsory enforcement. Most likely, a party wishing to enforce such a decision would be required to seek recourse in arbitration or litigation and plead the merits of the dispute once again.

10. Is arbitration used as the final stage for dispute resolution for construction projects in your jurisdiction? If yes, what types of arbitration (ICC, LCIA, AAA, UNCITRAL, bespoke, etc) are used for construction projects? And what seats?

It is common to choose arbitration for dispute resolution in cross-border construction projects in Ukraine. At the same time, in some FIDIC contracts, the parties exclude both dispute boards and arbitration in favour of litigation in the courts of Ukraine. In the case of arbitration, the most commonly used rules are the rules of the International Chamber of Commerce or London Court of International Arbitration, as well as the United Nations Commission on International Trade Law) rules for ad hoc arbitration. The rules of the local arbitration institution – the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry – are also chosen by the parties in some projects.

11. Are there any notable local court decisions interpreting FIDIC contracts? If so, please provide a short summary.

There is still a lack of established court practice in Ukraine in relation to FIDIC contracts.

12. Is there anything else specific to your jurisdiction and relevant to the use of FIDIC on projects being constructed in your jurisdiction that you would like to share?

The participation of an engineer in the implementation of FIDIC contracts is ver y atypical for Ukrainian practice. The functions of a FIDIC Engineer overlap with the authorities of a number of State institutions. In order to fill in the legislative gap of the role of a FIDIC Engineer in Ukraine, the Cabinet of Ministers adopted a resolution on 28 December 2016, No 1065, which introduced the notion of a 'consulting engineer' into the Ukrainian legal framework. However, the resolution exclusively concerns road construction and is the first step only, which generates more questions than answers on the role of a FIDIC Engineer under Ukrainian law.

Usually, an Employer under FIDIC projects carried out in Ukraine is a State authority. This means that public procurement rules apply to the Employer, and the contract is considered to be a 'State procurement contract'. Hence, the Employer might need to take into account, in addition to contract provisions, imperative public procurement rules, which differ significantly from FIDIC provisions, in particular on the adjustment of time or money. In the case of projects funded by international financial institutions, the procurement rules of the respective financial institutions supersede local procurement regulations in the case of any discrepancies.

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.

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