Ukraine: New Litigation Rules In Ukrainian Courts As Of 15 December 2017

On 3 October 2017 the Ukrainian Parliament passed a law (the Law), which amends and restates the Commercial Procedural Code of Ukraine, the Civil Procedural Code of Ukraine and the Administrative Litigation Procedure Code of Ukraine, and which came into force as of 15 December 2017.

The Law introduces many important changes aimed at improving the litigation process in Ukraine, in particular:

Arbitrability of disputes

The Commercial Procedural Code clearly states that generally any dispute, which is subject to jurisdiction of commercial courts, can be resolved by commercial arbitration, save for cases set out in the law (disputes in respect of state registration of property rights to immovable property (trademarks), disputes in respect of public procurement agreements, etc.).

Previously, such provisions were absent, which provided room for debate regarding whether a particular dispute could be subject to arbitration.

Interim measures in support of arbitration

The Law introduced the rules, which allow the parties to seek interim measures (e.g. arrest over assets) in support of pending arbitration. A party seeking the interim measures may apply to the Ukrainian Court of Appeal having jurisdiction over the adverse party (its assets) or place of arbitration (if in Ukraine), asking the court to impose interim measures.

If interim measures are granted, the applicant may be obliged to provide the adverse party with cross-security coverage (see below).

The court ruling in respect of interim measures in support of arbitration may be appealed to the Supreme Court.

Recognition of foreign arbitral award

Pleadings for the recognition of foreign arbitral awards (where place of arbitration was outside of Ukraine) would be considered by the Kyiv City Court of Appeal as a court of first instance. Grounds for refusal to recognize a foreign arbitral award are brought in line with provisions of the New York Convention (1958).

The court ruling in respect of recognition of (refusal to recognize) a foreign arbitral award may be appealed to the Supreme Court.

Interim measures. Cross-security coverage

The Commercial Procedural Code significantly enlarges options for interim measures. In particular, the code clearly states that the list of interim measures is non-exhaustive, and the court may apply any other interim measures (not expressly provided by law), which would provide effective remedy for the parties.

If the court grants interim measures, it may oblige the claimant to provide cross-security coverage, aiming at compensation of damages, which could be caused to the defendant due to interim measures, should the claim be dismissed (in full or in part). Cross-security coverage could be provided in the form of cash deposit, banking guarantee or other form of financial security. The type of cross-security coverage (its amount) is determined by the court.

Court judgments in debt recovery disputes

Both Commercial Procedural Code and Civil Procedural Code introduce new rules in respect of court judgments on debt recovery.

If the court invalidates the facility agreement (underlying security), it will impose arrest over the underlying collateral (if any). It is not yet clear how these rules will apply in practice; however, it is expected that such measures should increase the protection for the creditors.

As of 1 January 2019, the courts would be allowed to indicate in the court judgment on debt recovery that the debtor is obliged to pay interests (if any) until full debt repayment. Currently, such option is not available, and creditors should initiate additional proceedings in respect of specific amount of accrued but unpaid interests for respective periods of time.

Terms for submission of appeals/cassation appeals increased

Commercial courts:

  • Appeal – 20 days (for court judgment) and 10 days (for court ruling) (previously – 10 days and 5 days, accordingly)
  • Cassation appeal – 20 days for court judgments and court rulings.

Civil courts:

  • Appeal – 30 days (for court judgment) and 15 days (for court ruling) (previously – 10 days and 5 days, accordingly)
  • Cassation appeal – 30 days for court judgment and court ruling (previously – 20 days for court judgment and court ruling).

Administrative courts:

  • Appeal – 30 days (for court judgment) and 15 days (for court ruling) (previously – 10 days and 5 days, accordingly)
  • Cassation appeal – 30 days for court judgment and court ruling (previously – 20 days for court judgment and court ruling).

For court judgments and court rulings issued before 15 December 2017, previous terms for appeal should apply.

New rules for evidence submission

The claimant (defendant) should provide to the court and adverse party all evidence it has along with the statement of claims (statement of defense). All evidence, which was not submitted to the court within the terms established by the law or a court, should not be taken into account by the court while considering the case on its merits (unless exceptions apply).

Electronic evidence

Any information in electronic form (e.g., electronic documents, photos, emails etc.) may be acceptable as evidence in litigation. Such evidence should be submitted to the court either in original or copy, certified by electronic digital signature.

The simplified litigation proceedings introduced

Today insignificant claims could be considered by the court in simplified litigation proceedings. Both new Commercial Procedural Code and Civil Procedural Code confer to the court a right to decide whether a particular case is "insignificant" (depending on merits of the case), but generally "insignificant" are claims, the amount of which does not exceed 100 living minimums for work able persons (in 2018 – UAH 176,200.00 (approx. €5,340)). Both codes contain the list of cases, which can be considered by the court only in general order (e.g., bankruptcy proceedings, corporate disputes, IP disputes, claims exceeding 500 living minimums for work able persons (in 2018 – UAH 881,000.00 (approx. €26,700), etc.).

With regard to administrative disputes, the new the Administrative Litigation Procedure Code of Ukraine prescribes that any administrative dispute can be considered in simplified litigation proceedings save for certain exceptions.

Simplified litigation procedures imply that litigation could be made with shorter time periods, without mandatory participation of the parties (their representatives) in the court hearings etc.

The court judgments in respect of insignificant claims are subject to appeal only (not to cassation appeal), unless exceptions apply.

Source: Law of Ukraine No. 2147-VIII dated 03 October 2017 "On Amendments to Commercial Procedural Code of Ukraine, Civil Procedural Code of Ukraine, Code of Ukraine on Administrative Litigation and other Legislative Acts"

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