Litigation 2019 Second Edition

Last Updated December 05, 2019

Ukraine

Law and Practice

Authors



DLA Piper Ukraine LLC has a Litigation and Regulatory group covering more than 40 countries in the Americas, Asia Pacific, Europe the Middle East and Africa. DLA Piper's network of litigation and regulatory lawyers provides exceptional multi-jurisdictional coverage and experience. A full-service firm, DLA Piper provides a complete solution to clients’ global dispute resolution and regulatory needs, whether through risk assessment and mitigation, investigations, compliance, white-collar crimes, crisis management, regulatory representation, mediation, international arbitration, general dispute resolution or strategic litigation. The firm leverages extensive experience and judgment from thousands of national and international controversies to develop business-driven solutions in litigation matters. This includes case management of multiparty high-exposure cases to trial and resolution. The firm's attorneys have designed and implemented sophisticated dispute resolution programs. Clients include pre-eminent local and Fortune 500 companies across a broad range of sectors, from commercial banks, consultancy, telecoms, energy, agriculture, manufacturing through to construction, aircraft and aerospace, infrastructure and shipbuilding.

Ukraine is a civil law-based country, which relies on the system of codified law. The Constitution of Ukraine prevails over other legislation. Statutory law and other regulatory instruments (sub-legislative acts) are adopted in compliance with, and on the basis of, the Constitution, and form a hierarchical system where they are subordinated pursuant to their legal force and scope.

Court practice is not a source of law in Ukraine. That being said, where the Supreme Court rules on application of the law, the dicta of the Supreme Court shall be followed by public authorities in applying the respective legal provisions. Other courts shall as also take into account the findings of the Supreme Court, however, the courts may derogate from those findings where they have provided a just reason for the action.

Judgments and decisions of the European Court of Human Rights, on the other hand, are recognised as a source of law in Ukraine. However, legal doctrine is not deemed to be a source of law and is seldom used to substantiate judicial decisions.

Ukraine’s legal system tends to lean toward the inquisitorial model. National courts actively investigate facts during court proceedings and questioning parties, witnesses and experts. Nonetheless, the adversarial model is provided for in all rules of procedure; namely, the requirement that each party shall prove the circumstances to which it refers as the basis of its claims or objections.

As to the form of the court proceedings, the legal process is conducted through both written submissions and oral arguments. As a rule, the parties shall put forward their claims, objections, arguments, explanations and considerations regarding the subject matter of the dispute in writing. Although the court will usually analyse the oral arguments of the parties in-depth and evaluate the facts of the case at court hearings (if the case shall be heard in a hearing), in practice, written submissions tend to have more impact on the outcome of the case. It is also worth mentioning that certain minor cases may be decided by the court based on written submissions on an ex parte basis.

The court system of Ukraine is based on the principles of territoriality, specialisation (subject-matter jurisdiction) and level hierarchy. As to the levels (instances) of courts, the system is comprised of local courts, courts of appeal, and the Supreme Court of Ukraine. The Law of Ukraine "On Judiciary and Status of Judges" further differentiates between local general courts hearing both civil and criminal cases and cases concerning administrative offences, local commercial courts hearing commercial cases, and local administrative courts hearing administrative cases.

Appellate courts consider, mostly, appeal petitions on decisions of first instance courts. In some cases, where directly provided by law, as appellate courts act as courts of first instance. In accordance with their subject-matter jurisdiction, appellate courts comprise of appellate courts for consideration of civil, criminal cases and cases concerning administrative offences, appellate commercial courts and appellate administrative courts.

The Supreme Court of Ukraine is the highest judicial body in the court system of Ukraine. It is tasked with ensuring the sustainability and uniformity of court practice, in a manner specified by the procedural law. The Supreme Court of Ukraine is empowered, inter alia, to administer justice as a court of cassation instance and, in cases stipulated by procedural law, as a court of first or appellate instance.

In addition, apart from other courts in the court system of Ukraine, the High Court on Intellectual Property and the High Anti-Corruption Court of Ukraine operate as courts of the first and appeal instance for consideration of cases which fall under their jurisdiction pursuant to the procedural law.

Ukrainian legislation follows closely the principle of open justice and court proceedings are generally open to the public. Members of the public may not only attend most court hearings, but also film or audio record the hearing using personal devices without any special permission from the court. In order to ease access to justice, the official website of the Judiciary of Ukraine also publishes information on the court considering a case, parties to the dispute and subject matter of the claim, date and time of the scheduled court hearing, and other information.

At the same time, Ukrainian law does not provide for publication of submitted court filings. The court filings remain available to parties of a particular dispute and the court exclusively.

When publishing a court decision, the court shall also classify all personal information and data in the respective decision, bank account and payment card numbers, as well as vehicle registration numbers.

The court may also decide to hold closed hearings, with no public present, in cases where open proceedings may result in the disclosure of secret or other information which is protected by law, or in order to protect the privacy and family life of a person, as well as in other cases established by law. Text of any court decisions rendered while considering the case in closed proceedings will be confidential and not available to the general public.

In accordance with the Constitution of Ukraine, only advocates (licensed attorneys) may represent another person(s) in court proceedings, as well as defend them against criminal charges, except for certain exceptions provided by law. However, abolition of this exclusive representation-by-advocate rule in civil, commercial and administrative cases is at the top of the agenda of the Ukrainian Parliament and could presumably be achieved by 1 January 2020.

The Constitution of Ukraine stipulates that statutory law may provide for exceptional categories of cases in which interests of a party may be represented by persons other than an advocate.

For example, legal guardian shall participate in cases where the rights and interests of children, incapacitated individuals and individuals with limited legal capacity need protection.

Procedural codes also allow for legal representation of parties to proceedings by persons acting on the basis of the power of attorney in:

  • minor disputes where the amount in dispute does not exceed one hundred subsidence levels;
  • disputes of minor complexity;
  • labour disputes;
  • disputes concerning the protection of social rights; and
  • cases on the matters relating to elections and referendums.

Furthermore, a party may represent itself in the court proceedings personally (self-representation). A legal entity is represented by its director or members of the executive body in accordance with the law, articles of association, or internal regulations.

Foreign advocates may represent interests of their clients before Ukrainian courts of all instances only after being included in the Unified Register of Advocates of Ukraine, and only in co-operation with Ukrainian advocates on the terms of the relevant contract between them. Furthermore, foreign advocates are eligible to provide legal services specifically on questions of international law and the law of the country of their admission. To qualify for client representation in Ukraine, foreign advocates shall apply to a regional qualification and disciplinary commission of the Bar at the place of their residence or stay in Ukraine.

Third-party litigation funding is not specifically regulated by Ukrainian law. Ukrainian legislation directly stipulates that litigation costs are to be allocated and apportioned between parties to the dispute. If a party resorts to third-party funding, a funder would not be able to recover litigation costs from the losing party due to the absence of respective enforcement mechanisms.

Apart from that, litigation costs could be secured through insurance. In Ukraine, insurance companies could reimburse litigation costs, in particular, court fees and legal fees if expressly provided in the insurance contract.

See 2.1 Third-Party Litigation Funding.

See 2.1 Third-Party Litigation Funding.

See 2.1 Third-Party Litigation Funding.

See 2.1 Third-Party Litigation Funding.

Although recently contingency fees were often used both solely and in combination with other types of fee arrangements, in 2018 the Supreme Court decided against this practice. Having considered that payment of contingency fees is conditional to the outcome of the dispute and therefore conditional to the judge's discretion in deciding a case, the Supreme Court ruled that outcomes of a case shall not be subject to an agreement. Consequently, provisions contained in legal services agreements establishing contingency fees may be recognised invalid by a court.

See 2.1 Third-Party Litigation Funding.

In most cases, pre-action conduct before initiating formal court proceedings is not obligatory for the parties. According to procedural law, any pre-action conduct aimed to amicably settle the dispute is solely at the parties’ discretion, unless otherwise is provided by law.

As an example of mandatory pre-action conduct, potential litigants shall submit a pre-action letter to their counterparties in cases related to carriage of goods performed on the basis of the Agreement on International Goods Transport by Rail (SMGS) and the Convention concerning International Carriage by Rail (COTIF). In these cases, should a plaintiff fail to file an evidence of submission of a pre-action letter with the court, the lawsuit shall be returned without consideration.

Ukrainian legislation differentiates between general, reduced and extended statutory limitation periods. The general limitation period amounts to three years. In turn, a reduced or extended limitation period may be expressly imposed by the law in relation to certain types of claims. In particular, a one-year limitation period applies to, among others, the following claims:

  • claims relating to contractual penalties for non-performance;
  • claims relating to refutation of false information;
  • claims arising out of the transfer of goods of improper quality;
  • claims regarding the termination of a gift agreement; and
  • claims regarding defects of certain structures.

Furthermore, contracting parties are entitled to extend, but not reduce, the statutory limitation period that applies to the contractual relationship between them.

A limitation period shall be calculated from the day the aggrieved party became aware of a breach of its rights or of the person responsible for the breach, or could reasonably have been become aware of these circumstances.

As a general rule, Ukrainian courts have territorial jurisdiction to consider disputes submitted to them at the defendant's location or place of residence. Procedural codes establish a unified list of rules for determining the defendant’s location and, consequently, for determining the competent court that has a territorial jurisdiction to hear disputes against the defendant. For natural persons, the defendant’s location is determined as the place of residence or stay registered in accordance with the law. The location of legal entities is usually defined pursuant to the data provided in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations. Claims against defendants whose place of residence or stay in Ukraine is unknown shall be submitted to the court whose jurisdiction extends to the location of the defendant’s property or the registered place of their last stay or the place of their employment. Similarly, in case a person has no permanent place of residence in Ukraine, disputes will be submitted to the courts at the location of the defendant’s property.

Apart from the above, procedural codes also provide for an exhaustive list of claims in which plaintiff may choose to submit the claim at one of the several courts having the territorial jurisdiction, at the plaintiff's choice. The procedural codes contain another exhaustive list of claims which fall into exclusive jurisdiction of courts other from the court of the defendant's location or place of residence.

In order to commence court proceedings, a plaintiff shall file a written statement of claim before the competent court, setting out the claims regarding the subject matter of the dispute. A statement of claim shall, primarily, contain the following:

  • the name of the court before which the statement of claim is filed;
  • names and addresses of the parties;
  • amount in dispute, along with the method for calculating the amount;
  • the relief or remedy sought;
  • statement of facts supporting the claim;
  • information on the pre-action conduct of the parties, if applicable;
  • information on measures taken before filling the statement of claim to secure evidence or claims;
  • list of attachments to the statement of claim;
  • preliminary calculation of the amount of litigation costs to be incurred by the plaintiff; and
  • confirmation by the plaintiff that no other claim against the same defendant(s) with the same subject-matter and on the same grounds has been filled.

Furthermore, the statement of claim shall have copies of all documents and evidence relied upon by the plaintiff attached, along with powers of party's representative (in case a representative signs the statement of claim on behalf of the plaintiff), and proof of payment of court fees.

The plaintiff is entitled to change the subject-matter, grounds for the claim and the amount in dispute, prior to the end of the preparatory hearings (before the case proceeds to the merits).

In Ukraine, responsibility for informing parties about commencement of proceedings, place, date and time of the court hearings lays with the courts.

In commercial cases, the plaintiff is additionally obliged to send a copy of a lawsuit to the court and to the defendant simultaneously. Therefore, in commercial disputes the defendant finds out about a suit filed against them earlier.

In case the parties fail to properly inform the court of their correct addresses, subpoenas shall be sent to their registered place of residence or place of employment. For legal entities, subpoenas shall be delivered to entity's registered office, the location of its representative, or a specific branch – if the claim arose in connection with the branch's activities. If the defendant's address is unknown, the court summons the defendant through an announcement on the official website of the Judiciary of Ukraine.

Subpoenas may be served upon the parties directly in a court. The subpoenas are handed over to the parties against a proof of receipt and shall be returned to the court with a specific note on the date of its delivery. 

In case a person resides outside Ukraine, a subpoena could be delivered, at the request of Ukrainian courts, through foreign courts in the manner prescribed by international treaties on legal aid, or through diplomatic channels.

In accordance with the procedural laws of Ukraine, defendants are entitled to submit their written objections to the lawsuit. The court specifies a deadline for filing written objections that shall not be less than 15 days from the date of the delivery of court’s ruling on commencement of proceedings. If the defendant fails to respond to a lawsuit within the deadline set by the court without any compelling reasons, the court shall resolve the dispute based on the materials contained in the court case file. In administrative proceedings, failure to file objections to a lawsuit by a public authority without any compelling reasons may be qualified by the court as an acknowledgment of the lawsuit.

Collective action (class action) lawsuits are not clearly regulated by Ukrainian law and, as a result, are not widespread in practice. Ukrainian law stipulates that a lawsuit may be filed jointly by several plaintiffs acting independently only if:

  • the subject-matter of the dispute are joint rights or obligations of several plaintiffs;
  • rights and obligations of several plaintiffs arose out of the same grounds; and
  • the subject-matter of the dispute are congeneric rights and obligations.

In Ukraine, legal services are mostly provided on the basis of an agreement between an advocate and a client. Consequently, the parties are free to negotiate the amount of legal fees, as well the payment conditions for legal representation in courts. The Law of Ukraine “On Advocacy and Advocates Activities” stipulates that legal services agreement shall specify legal fee structure, namely, fixed rate or per hour rate, grounds for changing the amount of legal fees, procedures for payment and recovery of advance payment. However, Ukrainian legislation does not set any requirements to provide clients with a cost estimate of the potential litigation at the outset.

According to Ukrainian procedural law, before the claim proceeds to the merits stage, parties may submit applications on case management, issues as well as on obtaining remedies from the court. Participants of court proceedings are entitled to submit before the end of preliminary hearings a lawsuit, rejoinder, counter claim, reply to rejoinder, objections, explanations, etc. In addition, it is feasible for the participants of court proceedings to seek for different security remedies. In particular, a plaintiff may request for injunctive relief against a defendant if there is a risk of evidence being destroyed or the risks of assets being alienated.

Ukrainian procedural law does not provide for early judgements on the merits of the case.

Ukrainian law does not provide for dispositive motions.

Ukrainian law allows for participation of both third parties that make separate claims on the subject matter of the dispute, and those that do not make separate claims. To join the proceedings, a third party with separate claims shall file a claim, related to the subject matter of the dispute lawsuit, against at least one party of the dispute. A third party without separate claims shall file a written application explaining what rights and obligations might be affected by the resolution of a respective dispute. Additionally, third parties without separate claims may also be involved in the case at the request of parties or by court's own motion. Third parties may enter the case before commencement of substantial consideration.

At the request of a defendant, a court is entitled to oblige a plaintiff to deposit money into the court's deposit account to secure the possible reimbursement of the defendant's future expenses for professional legal assistance and other costs that the defendant will or is likely to suffer in the course of proceedings. The court may render a decision to secure the defendant’s costs, if:

  • the lawsuit has signs of being knowingly groundless, or if there are other signs of abuse of the right to sue; and/or
  • a plaintiff does not have a registered place of residence or stay in the territory of Ukraine and, in case of a claim being rejected, property located in the territory of Ukraine would be not enough to compensate damages suffered by the defendant.

As a rule, these remedies are provided when the court was presented with sufficient evidence to conclude that a financial situation of the plaintiff or their actions may, in the event of a case being dismissed, significantly complicate or prevent compensation of damages to the defendant.

Ukrainian law "On Court Fees" provides for an exclusive list of applications and motions, the filing of which is subject to a court fee, along with rules for calculating the exact amount to be paid. To prove due payment of court fees, a party shall annex original proof of payment to its submission. If a statement of claim/application/motion was submitted to the court without a proof paying the court fees, the court may leave it without action and give the party time to present valid proof. If the party fails to file valid proof of payment for a second time, the court leaves a statement of claim/application/motion without action.

Ukrainian legislation does not provide for a right to request considering an application on an urgent basis. However, the time frame to consider a motion depends on the type of motion requested and the substantiation of its urgency. Most types of applications shall be considered by a court during preparatory hearings. However, procedural law establishes deadlines for consideration of several specific applications, eg, an application for injunctive relief shall be considered by a court no later than two days from the date of its receipt.

Ukrainian law does not envisage a discovery procedure. Nevertheless, procedural laws provide for an alternative mechanism which allows disclosure of evidence (production). Each party shall prove the facts on which it relies as the basis for its claims or objections. In case a party cannot submit evidence on its own, it has the right to request the court to order the production of evidence to the court by the person in possession of the evidence. This request shall be filed together with the first application on the subject matter of each party.

Parties may request the court to render a decision on obtaining evidence that support the position of the requesting party from the third persons. The request shall indicate reasons why a party is unable to submit the requested evidence on its own, and what actions have been taken to receive the evidence.

If the court satisfies the request, a person possessing an evidence shall turn it over. The person refusing to turn the evidence over may be subjected to measures of procedural compulsion.

The court may request production of evidence on its own motion only when it doubts that parties act in good faith in providing evidence.

Ukrainian law also offers a separate procedure for securing evidence. A litigant may request the court to secure the evidence if there are reasonable grounds to assume that the evidence may be lost, or it will be impossible or difficult to collect it in future. The means of securing evidence by court are:

  • examination of witnesses;
  • commissioning of expert evidence;
  • disclosure and/or examination of evidence; and
  • prohibition or obligation to perform certain actions regarding evidence.

Where necessary, the court may determine and apply other means of securing evidence.

See 5.1 Discovery and Civil Cases.

See 5.1 Discovery and Civil Cases.

See 5.1 Discovery and Civil Cases.

Under Ukrainian law, an attorney-client privilege is called advocacy secrecy. It means that an advocate, as well as members of their staff, are not allowed to disclose information or documents received from clients or generated within the advocate’s professional activity. It also means that it is guaranteed that the advocate and/or members of their staff shall not be interrogated in relation to issues that are subject to an advocacy secrecy, and law enforcement authorities shall not be able to have access to or otherwise seize information or documents falling under advocacy secrecy. Advocacy secrecy also precludes the court from requesting evidence directly from an advocate.

The law grants the above duties and guaranties only for an advocate. In-house counsel acting for their employer does not enjoy same or similar privilege as an advocate. Therefore, the law enforcement authorities still may officially request in-house counsel to provide respective information or interrogate them about this information.

See 5.1 Discovery and Civil Cases.

In Ukraine, an injunctive relief may be awarded in situations where the absence of remedies may significantly complicate or prevent an enforcement of court decisions, or to secure an effective protection or restoration of the plaintiff's infringed rights or interests. An application for injunctive relief may be submitted at any stage of court proceedings. At the request of a party, the court may apply, among others, the following types of injunctions:

  • seizure of property and/or monetary assets that are in the possession of a defendant or will be transferred or paid to the defendant shortly;
  • prohibition to perform certain actions;
  • imposition of an obligation to take certain actions;
  • prohibition for other persons to perform actions regarding the subject-matter of the dispute or to make payments or to transfer property to the defendant etc;
  • suspension of the sale of distrained property if a claim of ownership regarding such property and on abolition of distraint on such property was submitted to the court;
  • suspension of a foreclosure on the basis of a writ of execution, which is appealed by the debtor;
  • transfer of property that is a subject matter of the dispute to other persons, who have no interest in the outcome of the dispute for safe keeping;
  • suspension of customs clearance of goods or objects; and
  • putting a seagoing vessel under arrest to secure a seafarer's claim.

A court may grant several types of injunctions simultaneously providing that such measures are proportionate to the plaintiff’s claims.

Ukrainian procedural law envisages that an application for injunctive relief shall be considered by the court no later than two days from the date of its receipt without notification of the parties. In practice, Ukrainian courts usually do not meet this deadline. No arrangements for obtaining urgent injunctive relief is provided under Ukrainian legislation.

As a rule, the court examines applications for injunctive relief without notifying the parties and without their presence. The court may, however, summon the applicant for additional explanations. In exceptional cases, where the plaintiff’s explanations and evidence submitted to the court are not enough for granting injunctive relief, the court may schedule an open court hearing, summoning both parties. 

A plaintiff may be held liable for damages suffered by the defendant if the respondent successfully later objects against the injunction. Thus, a counter injunction may be requested, under which a respondent may request from the court security for potential damages.

To fulfil the requirements of a counter injunction, a plaintiff shall send a specified amount of money to the deposit account of the court. This security may be enforced to the benefit of the defendant in the case of leaving a lawsuit without action or termination of court proceedings on grounds other than absence of the subject matter of dispute or conclusion of the settlement agreement, as well as in case of full or partial dismissal of the claim.

As a rule, injunctive reliefs issued by Ukrainian courts may be enforced only in the territory of Ukraine.

Several types of injunctions specified in 6.1 Circumstances of Injunctive Relief may be applied to third parties.

Injunctive relief is subject to immediate enforcement from the date of its adoption, regardless of whether it was appealed. If a respondent fails to comply with the terms of an injunction, the court may impose a fine on the respondent. The amount of the fine may vary according to the discretion of the judge. Furthermore, failure to voluntarily execute court decisions is considered as a criminal offence in Ukraine.

In Ukraine, the court proceedings consist of the following stages:

  • submission of a statement of claim and other written applications of parties to the court;
  • commencement of court proceedings;
  • preparatory proceedings;
  • substantive hearing on merits;
  • examination of evidence and facts of the case;
  • legal debates; and
  • promulgation of the court decision.

As a rule, court hearings are held orally. After hearing the opening remarks, the court clarifies the circumstances the parties refer to as the basis of their claims and objections and examines the evidence presented by the parties, including findings of experts and statements of witnesses. Furthermore, the court provides the parties with the opportunity to present additional explanations that can supplement the case file. During their pleadings, both plaintiff and defendant may only refer to the circumstances and evidence that were examined at the court hearing. After legal debates, the court renders a decision on the merits.

Apart from this, minor cases may be heard in summary proceedings following same procedure, except the court does not hold hearings and decides the case based on the materials contained in the case file.

The court holds a case management hearing during preparatory proceedings in order to:

  • determine whether parties are willing to conclude a settlement agreement, transfer the case to arbitration or settle the dispute with the participation of a judge;
  • hear clarification on claims and objections against such claims, consider relevant applications, if necessary;
  • decide on the joinder of other parties, replacement of an improper defendant, joining a co-defendant, etc;
  • establish whether parties have provided all relevant information for consideration of the case and evidence to which they refer in the lawsuit or objections, as well as evidence requested by court;
  • decide on expert evidence, summoning of experts and witnesses to court hearing, involvement of a translator, specialist;
  • consider rendering an injunctive relief at the request of the parties;
  • consider the applications and motions submitted by the parties;
  • set a default time for filing a response to the rejoinder, objections and explanations;
  • establish amount of the litigation costs claimed by the parties;
  • set out the date, time and place of a court hearing; and
  • carry out other actions necessary for ensuring proper and timely consideration of the case on the merits.

Ukrainian law does not envisage jury trials in civil cases.

Ukrainian legislation determines specific means of proof for substantiation of certain facts. Therefore, these facts shall not be confirmed by any other means. The court will not accept evidence submitted outside the time limits set by law or the court itself, unless the person refers to compelling grounds preventing the submission of evidence within the set timeframe. Furthermore, the court shall not rely on evidence obtained in breach of the law.

Expert examination may be initiated if any special expertise is needed to clarify facts of a case. The court may appoint court expert examination on its own initiative or at the request of the parties. The list of questions on which the expert examination should be conducted is determined by the court. However, the parties could propose some questions that require expert analysis. Parties are entitled to introduce to the court an expert opinion prepared at their request (independent expert report).

Separately, procedural codes provide for the testimony of legal experts concerning application of legal analogy, interpretation of content of foreign norms, case law and doctrine established in foreign countries. A person holding a scholarly degree and being a recognised specialist in the field of law may be involved as a legal expert, approved by the court.

Even though open court hearings may be attended by public visitors, the transcripts of hearings are available for parties of the dispute only. For further details, see 1.3 Court Fillings and Proceedings.

A judge governs the overall process of a court hearing, ensures adherence of the parties to the consistency and prescribed procedural rules, as well as ensures protection of procedural rights and following of obligations by participants in proceedings. A judge guides the proceedings towards complete, multifaceted and objective determination of facts of the case, while removing from the proceedings all superficial elements for the resolution of the case. A judge may question the parties or their representatives, as well as experts and factual witnesses. In addition, a judge may intervene to oblige persons to produce evident or to appoint an expert in the case on its own initiative, etc.

As a rule, court decisions are announced publicly at the court hearing. The court may also decide to issue a short text of the decision immediately after the hearings (introductory and operative parts). In this scenario, delivery of full text of the decision may be postponed for up to ten days.

Under Ukrainian legislation, the timeframes for court proceedings shall be reasonable, meaning, they shall provide enough time to take necessary procedural actions, taking into account the circumstances of the case.

The total timeframe for the hearing of a claim in a general proceeding is 125 days, where five days are allocated for the opening of the court proceedings, 60 days are allocated to the preparatory proceedings, which could be extended for a further 30 days, and the final 30 days are allocated to consideration of the case and rendering a court decision.

For summary proceedings, the time frame is lowered to 65 days, where five days are given for the opening of the proceedings, and the remaining 60 days are allocated for hearing of the case.

Parties may settle a lawsuit at any stage of the proceedings, including at the stage of enforcement. To do so, the parties shall conclude a written settlement agreement and duly notify the court regarding its conclusion. The court shall approve the settlement by its decision, the reasoning part of which shall specify the terms of the settlement agreement.

The court shall deny settlement of a lawsuit in case terms of the settlement are contrary to the law or they violate rights of other persons, or in case conclusion of a settlement agreement by a party representative is contrary to the interests of the represented party.

Under Ukrainian law, a settlement agreement shall be approved by a court, which specifies the terms of the settlement agreement in the reasoning part of its decision approving the settlement. Since court decisions are published in an open register, the text of the settlement agreement is available to the public. The settlement of a lawsuit could remain confidential, however, if the lawsuit is heard in closed proceedings.

The execution of the settlement agreement shall be carried out by parties in the manner and within the terms stipulated by this agreement. If a party fails to execute the settlement agreement or otherwise breaches its provisions, the counterparty may apply for its enforcement in the manner prescribed by law for the enforcement of court decisions.

According to recent court practice, a settlement agreement differs from a usual agreement by its nature, and thus shall not itself be subject to challenge under general grounds for challenging agreements. At the same time, the legislation provides that a court decision on approval of the settlement agreement is subject to appeal.

Ukrainian law provides the following main remedies for the successful litigant:

  • litigation costs;
  • debt recovery;
  • recognition of the right or lack of it;
  • invalidation of the transaction;
  • termination of an action violating the right;
  • restitution;
  • compulsory performance of duties;
  • alteration or termination of legal relationship;
  • compensation of pecuniary damages and non-pecuniary damages; and
  • recognition of the invalidity of a decision, act or omission of a public authority.

A party may seek for remedies which are not specifically listed in the legislation, but which do not contradict existing laws and secure effective protection of rights and interests of persons.

Ukrainian legislation envisages two types of damages: real damages and lost profit. Ukrainian law does not recognise punitive damages. Real damages are those damages that person suffers in connection with the full or partial destruction of their property, as well as the expenses that the person has made or should make to restore their infringed right. In turn, an income that a person could receive under ordinary circumstances if their rights were not violated constitutes lost profit. As a rule, all damages shall be fully compensated. Furthermore, at the request of the injured party, damage to property may be compensated in kind, for example, by transfer of property of the same kind and quality or by repair of the damaged property.

To hold a person liable for damages, a party shall prove the following four cumulative elements:

  • existence of incurred damages and their amount;
  • misconduct of a liable person;
  • direct causal link between the misconduct and incurred damages; and
  • attributable to a liable person fault in causing damages.

Ukrainian law does not provide for limitation of maximum damages.

This is not applicable in Ukraine.

To start the enforcement procedure, the party seeking enforcement shall obtain a writ of execution from the court. The writ shall be submitted with state or, in specific cases envisaged by law, private enforcement officers. The period for submission of the writ of execution to the debtor constitutes three years after the court decision became effective. This period may be prolonged by the court when there are compelling reasons to submit a writ of execution in proper time.

After the enforcement officer opens the enforcement proceedings, he or she takes actions to enforce the court decision by selling of the debtor’s assets at a public auction and by writing off monetary assets while enforcing pecuniary decisions and undertaking actions envisaged by decisions of non-pecuniary character.

In the course of enforcement, the enforcement officer is entitled to, among others:

  • request explanations and information, from governmental bodies and enterprises, officials, parties to and participants of an enforcement procedure;
  • forcibly enter into the estate of a debtor or of a person at whose disposal debtor’s property or funds are;
  • seize assets or any other funds of a debtor; and
  • have recourse to the court in order to impose temporary travel ban on a debtor (natural person or director of a legal person) in case of a debtor’s failure to fulfil obligations under a court decision.

Decisions of foreign courts may be recognised and enforced in Ukraine in accordance with an international treaty, ratified by Ukrainian Parliament, or under the reciprocity principle. A foreign decision should be enforced within three years from the date when it came into force. 

A creditor should file a motion with the court at the place of debtor’s residence or at the location of the property, asking for approval on enforcement of a foreign decision. A creditor should attach to the motion the following documents (if additional documents are not necessary under the respective international treaty):

  • certified copy of the foreign court decision;
  • an official document proving this decision came into force;
  • a document confirming that the debtor was duly notified of the date, time and place of the court hearing if he or she did not participate in the proceedings;
  • a document certifying authority of the creditor's representative; and
  • an official translation of the listed documents into Ukrainian.

The court shall inform a debtor of a claim within five days upon its receipt, and the latter shall be given a month to submit its objections. If no objections are submitted in due time, the court shall then issue a ruling to set the date of the court hearing. In open court proceedings, the judge delivers the ruling to approve the enforcement of a foreign court’s decision. The motion may be dismissed in the following cases:

  • if a foreign court decision did not enter into force;
  • if a party, in relation to which a foreign court decision has been issued, was precluded to take part in the proceedings due to failure to properly notify the party about such proceedings;
  • if a decision is made in a case consideration of which is exclusively within the competence of a domestic court of Ukraine or other body authorised by the law of Ukraine;
  • if Ukrainian courts have previously made a decision in a dispute between same parties, on same subject matter and on same grounds, that has already entered into force, or if Ukrainian courts have already initiated a dispute between same parties, on same subject matter and on same grounds prior to opening of proceedings in a foreign court;
  • if deadlines for requesting an enforcement of a foreign court decision were missed;
  • if subject matter of a dispute is not subject to judicial review under laws of Ukraine;
  • if enforcement of such decision may jeopardise national interests of Ukraine;
  • if decision of a foreign court in a dispute between same parties and on same subject matter was already permitted to be recognised and enforced in Ukraine; and
  • in other cases, prescribed by Ukrainian law.

After the ruling on enforcement of a foreign court decision has been rendered, the court will issue a writ of execution to enforce the decision following the same procedure as for the enforcement of domestic judgements.

The Ukrainian court system envisages two levels of judicial review of court decisions. The first level of review is comprised of the courts of appeal, and the second level is comprised of the Supreme Court. The courts of appeal review decisions of courts of the first instance that have not become effective. The Supreme Court may only be hear a cassation petition after the conclusion of the appeal proceedings.

Ukrainian legislation also envisages a mechanism similar to appeal of review. A decision which entered into force may be reviewed due to newly-discovered or exceptional circumstances.

Grounds for reviewing of a court decision on newly-discovered circumstances are:

  • significant circumstances which were not established by the court and could not be known to an applying individual at the time of consideration of the case;
  • established by a sentence in criminal proceedings fact of misleading evidence that led to illegal decision-making; and
  • setting aside of a decision which became a basis for a decision that is to be reviewed.

Grounds for reviewing of a court decision on exceptional circumstances are:

  • established unconstitutionality of law applied in dispute if the decision is not enforced yet;
  • establishment by an international court of breach of international obligations by Ukraine when resolving a challenged case; and
  • finding a judge guilty for committing a crime which resulted in making a court decision, which has entered into force.

Except for the parties to the dispute, respective petitions may also be filed by a person whose rights, interests or freedoms have been influenced by the judgment of the court.

Both appeal and cassation petitions shall clearly point out why decisions of lower courts are unlawful and specify whether the court of a lower instance violated procedural rules or misused or misinterpreted substantive law. In addition, appeal courts may also consider whether circumstances of the case were not fully and correctly examined, or whether conclusions of the court do not accord to the established facts.

An appeal petition against a decision on merits in civil and administrative cases shall be filed within 30 days after the full text of the challenged decision was prepared. As to the court rulings, the respective period is framed by 15 days. At the same time, appeal petitions against decisions on merits of commercial courts shall be filed within 20 days. Against rulings, they shall be filed within ten days.

A cassation petition in civil and administrative cases shall be lodged to the Supreme Court within 30 days after the full text of the challenged decision was prepared. Appellate decisions in commercial cases shall be appealed to the court of cassation within 20 days.

Once an appeal or a cassation petition is filed with the court, it shall be allocated to a judge chosen by an automatic random selection system. The respective judge shall check whether the filed petition is prepared and filed in compliance with the requirements of procedural law and, if this is the case, shall open the proceedings.

Courts of appeal review judgments based on already available and newly submitted evidence in the scope of arguments of the submitted petition. To submit new evidence, a party shall prove existence of compelling reasons for failure to submit this evidence to the court of first instance. However, despite this, the Supreme Court shall not access evidence or establish facts that were not previously established by lower courts.

Nevertheless, neither Supreme court, nor appellate courts, are bound by arguments set in filed petitions if they establish violation of procedural rules or misuse/misinterpretation of material law on their own.

This is not applicable in Ukraine.

Both appeal and cassation courts are vested with similar powers as to the adjudication of the lodged petitions. Having, considered a petition, the courts may:

  • uphold, set aside or change any decision made by the lower court;
  • set the decision aside and refer the claims for determination by the lower court;
  • cancel its own decision in cases provided by law and deliver one of the decisions listed above; or
  • reverse the decision of a lower court and close the proceedings.

Litigation costs are composed from court fees and litigation expenses.

Generally, save for rare exceptions, the court fees shall be paid by the party that initiates litigation. In turn, the court shall award the reimbursement of court fees to the parties in proportion of claims satisfied in favour of each of the opposing parties.

Although Ukrainian legislation does not provide for an exhaustive list of recoverable litigation expenses, it establishes general categories of expenses which could be refunded. These categories include:

  • advocate's fees;
  • expenses related to engagement of witnesses, specialists, translators and experts, including performance of forensic expertise;
  • expenses related to call and securing of evidence; and
  • expenses occurring from other procedural matters.

For the litigation expenses to be reimbursed, the party shall present estimation of anticipated expenses together with its first application on the subject matter. At the same time, the party is not precluded from claiming more extensive amounts of expenses after the consideration of the case. Failing to provide a timely estimation may result in the court rejecting the reimbursement of litigation expenses.

The mechanism for challenging the amount of costs is the same as for the challenging of any other court decision. Each party may challenge the decision, in part, of allocation of costs before a court of a higher instance.

While, as a general rule, the losing party reimburses litigation costs to the prevailing party, it is within the competence of the court to decide on the amount of reimbursements. The court shall award the reimbursement of court fees to the parties in proportion of claims satisfied in favour of each of the opposing parties. When awarding requested litigation expenses, the judge shall assess whether expenses were incurred in relation to the dispute, whether expenses are justifiable and proportionate to the value of claim, whether a party sought to delay the trial, and the actions of the party aiming to settle the dispute amicably.

The judge may also have regard to the proportionality of the advocate's fees incurred by reference to the following:

  • the complexity of the dispute and offered legal services;
  • time spent by an advocate;
  • scope of provided legal services; and
  • the value of the dispute and/or importance of the case for a party, including public interest.

This is not applicable in Ukraine.

Alternative dispute resolution (ADR) methods are gaining popularity in Ukraine. Currently, the most popular types of ADR are arbitration and mediation.

Arbitration is mainly applied to cross-border disputes, while mediation is primarily used in minor cases and remains rather an exotic method of ADR. Arbitration is quite well-governed in Ukrainian legislation. There is no law governing mediation, nor is there a mandatory mediation procedure under the procedural codes.

Ukrainian legislation does not provide for compulsory ADR procedures. Therefore, these procedures are only applicable where parties agree to them. ADR does not form a part of the court proceedings. Thus, mediation and arbitration remain subject to rules and guidelines, approved by the parties.

Remarkably, in 2019 Ukraine has signed the United Nations Convention on International Settlement Agreements Resulting from Mediation (2018 Singapore Convention on Mediation). It provides new instruments for recognition and enforcement of settlement agreements, resulted from out-off court mediation in commercial disputes with a foreign element. In addition, the working group of the Ministry of Justice currently works on a draft law On Mediation which is aimed at implementing mediation mechanisms into Ukrainian legislation.

The main international arbitration institution in Ukraine is the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC). In the frame of the last seven years, the ICAC has registered 3522 cases, with 286 international cases registered in 2018. The ICAC offers time-efficient consideration of cases, as more than 80% of the cases are decided within three months, whilst only 1% of the cases required over a year for an award to be rendered.

Furthermore, the Ukrainian Chamber of Commerce and Industry also offers services of domestic arbitral institutions called Permanent Court of Arbitration at the Ukrainian Chamber of Commerce and Industry (PAT). The PAT may consider dispute arising out of civil or commercial relations, save for several exceptions.

The Ukrainian Mediation Centre provides the services of professional mediators with extensive legal experience. Most of the mediators are admitted to the Ukrainian Bar. The main practice areas are corporate, labour and family disputes.

Ukraine is party to the following list of international instruments governing arbitration matters:

  • 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention);
  • 1965 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (Washington Convention); and
  • 1961 European Convention on International Commercial Arbitration (European Convention).

In addition to the above, in 1994, Ukraine adopted the Law on International Commercial Arbitration, which largely mirrors the UNCITRAL Model Law on International Commercial Arbitration, except Chapter IV A "Interim measures and preliminary orders". Domestic arbitration is regulated by the Law on Domestic Arbitral Courts (Domestic Arbitration Law) which is not in significant demand since domestic arbitration is rarely applied to by corporations.

Recognition of foreign arbitral awards is regulated by the Law on International Commercial Arbitration and the Civil Procedural Code of Ukraine. The recent procedural reform determined that recognition of foreign arbitral awards shall be considered by the Kiev Court of Appeal, exclusively, in order to unify the court practice and to develop the pro-arbitration approach. The latter was reinforced in the recent court practice of the Supreme Court of Ukraine, acting as a court of appeal for these cases. At the same time, enforcement of domestic arbitral awards does not require recognition by the Ukrainian courts to be executed.

Ukrainian law determines the following subject matters that may not be referred to arbitration, both international and domestic:

  • disputes on invalidation of regulatory acts;
  • disputes on state registration of real estate rights;
  • disputes on intellectual property rights and their registration;
  • disputes related to securities ownership rights;
  • disputes on conclusion, modification, termination and execution of public procurement agreements;
  • privatisation disputes;
  • corporate disputes;
  • disputes related to antitrust issues;
  • bankruptcy disputes;
  • disputes related to challenging and enforcement of domestic arbitral decisions;
  • disputes on damage caused to a legal entity by its management;
  • disputes on recognition of the trademark as well-know; and
  • disputes related to unfair competition. 

In addition, the following subject matters shall not be referred to domestic arbitration:

  • disputes pertaining to state secret;
  • disputes arising out of family relations, except for those arising out of marital agreements;
  • disputes involving public authority;
  • cases on establishment of legal facts;
  • disputes involving a foreign party;
  • disputes, upon deciding which, the enforcement of an arbitral award would require a public authority to exercise its powers; and
  • disputes on consumer rights protection.

Ukrainian courts are restricted from reviewing the arbitral award on the substance. However, the national courts shall set the arbitral award aside on the grounds set forth in Article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, including any of the following grounds:

  • the subject matter of the dispute is not arbitrable under Ukrainian law;
  • the arbitration agreement is invalid;
  • the arbitral award was issued in a dispute not covered in the arbitration agreement; and
  • the composition of the arbitral tribunal was held in violation of the arbitration agreement or applicable laws.

An arbitral award shall also be set aside based on the following grounds:

  • failure to properly notify the party about the arbitration proceedings, composition of the panel or due to other circumstances which precluded the party from expressing its position;
  • the arbitration procedure was held in violation of the agreement of the parties (except if the arbitral agreement contradicts the law); and
  • the arbitral award is in conflict with the public policy of Ukraine.

Domestic arbitral awards may also be set aside in the case the domestic arbitral institute decided on the rights and obligations of non-parties to the dispute.

Ukraine is a party to the New York and European Conventions. Consequently, as a Contracting State, Ukraine recognises arbitral awards rendered in the territory of other Contracting States as binding and enforces them in accordance with its domestic rules of procedure. Arbitral awards made in the territory states not party to the above conventions may be recognised and enforced on the basis of reciprocity.

Ukrainian legislation does not require recognition of the domestic arbitral awards. A party shall only apply to a court for issuance of a writ of execution. For a foreign arbitral award to be recognised and enforced, the party to a dispute shall submit a respective application with the Kyiv Appellate Court, which has exclusive jurisdiction over recognition matters. The application for recognition and enforcement shall be submitted within three years from the day on which an award was rendered. In exceptional circumstances, the term may be extended based on reasonable grounds. 

The above-mentioned application shall be annexed with a duly certified original of the arbitral award or its notarised copy, original of the arbitration agreement or its notarised copy, copies of the application to be sent to other parties, a document confirming authority to sign the application and proof of the payment of court fees. If an arbitral award or an arbitral agreement is put forth in a foreign language, the party seeking enforcement shall also submit a duly certified Ukrainian translation of these documents.

The application shall be considered by a single judge within two months of its receipt. The court shall inform the other party of the application within five days upon its receipt, and the responding party shall be given a month to submit its statement of defence.

The enforcement procedure for both domestic and international arbitral awards are, in essence, the same. After a party to a dispute applies for issuance of a writ of execution, the enforcement shall be carried out by private or state enforcement officers. A debtor has an option to apply for permission of voluntary execution of a foreign arbitral award on collection of debt. This application shall be considered by a judge on an ex parte basis.

DLA Piper Ukraine LLC

77A Velyka Vasylkivska Street
Kiev, 03150
Ukraine

+380 44 490 95 75

+380 44 490 95 77

ukraine@dlapiper.com www.dlapiper.com
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Law and Practice

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DLA Piper Ukraine LLC has a Litigation and Regulatory group covering more than 40 countries in the Americas, Asia Pacific, Europe the Middle East and Africa. DLA Piper's network of litigation and regulatory lawyers provides exceptional multi-jurisdictional coverage and experience. A full-service firm, DLA Piper provides a complete solution to clients’ global dispute resolution and regulatory needs, whether through risk assessment and mitigation, investigations, compliance, white-collar crimes, crisis management, regulatory representation, mediation, international arbitration, general dispute resolution or strategic litigation. The firm leverages extensive experience and judgment from thousands of national and international controversies to develop business-driven solutions in litigation matters. This includes case management of multiparty high-exposure cases to trial and resolution. The firm's attorneys have designed and implemented sophisticated dispute resolution programs. Clients include pre-eminent local and Fortune 500 companies across a broad range of sectors, from commercial banks, consultancy, telecoms, energy, agriculture, manufacturing through to construction, aircraft and aerospace, infrastructure and shipbuilding.

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