Supreme Court judges outline prospects for development of alternative dispute resolution in Ukraine

The pro-arbitration principles in the legal opinions of the Supreme Court, cases challenging the recognition of the grant of permission to arbitrate before the International Commercial Arbitration Court, the involvement of the state court in alternative dispute resolution, controversial issues of arbitrability of disputes in Ukraine, ADR as a way to improve the situation in the judicial system of Ukraine - these and other issues were discussed by Supreme Court judges Olha Stupak, Olena Kibenko and Yevhen Petrov during the roundtable 'Justice of the Future: Alternative Dispute Resolution'.

Judge of the Grand Chamber of the Supreme Court Olha Stupak focused on cases challenging the recognition of the ICAC award. This is the only category of disputes in which civil courts apply the Commercial Procedural Code of Ukraine, in particular, in determining the arbitrability or non-arbitrability of a dispute considered by international arbitration.

She spoke about the important changes introduced by the 2016 judicial reform and the new procedural codes, which had a significant impact on the development of alternative dispute resolution in Ukraine. 

The changes also affected proceedings outside the jurisdiction of state courts. First of all, the jurisdiction in cases of challenging international arbitral awards has been reduced to two instances; in particular, the participation of the Kyiv Court of Appeal as the first instance greatly facilitates the process for the parties, reducing time and costs.

Olha Stupak noted that the new procedural legislation introduced a new function of the state court to apply interim measures in cases considered in international arbitration.

According to the judge of the Grand Chamber of the Supreme Court, the most complicated cases are those involving the annulment of an international arbitral award. At the same time, the grounds for setting aside an award are clearly defined by international instruments and national legislation.  

Olena Kibenko, judge of the CommCC of the Supreme Court, spoke about the principles of pro-arbitration in the Supreme Court's legal opinions and the development of the relevant court practice.

In her speech, the speaker focused on the important issue of whether a claim for invalidity of an arbitration agreement (clause) can be the subject of a separate lawsuit. According to Olena Kibenko, this issue should be considered only in the procedural order, if it is clearly defined by the current legislation. If there is an issue of annulment of an arbitral award or permission to enforce the award in Ukraine, and one party files a substantive lawsuit, but the other party raises a reservation on the existence of an agreement in accordance with the requirements of the Commercial Procedural Code of Ukraine or the Civil Procedural Code of Ukraine, the court will consider this issue at the procedural stage, i.e. before considering the merits of the claim.

Finally, Olena Kibenko stressed the importance of maintaining a pro-arbitration approach and preventing abuses by litigants seeking to prevent the enforcement of arbitral awards. 

Yevhen Petrov, Judge of the CivCC of the Supreme Court, focused on the involvement of the state court in ADR in the context of national and international jurisprudence.

He gave the example of Germany, where there was great resistance in some regions when ADR was introduced into the procedural codes.

At the same time, according to the speaker, the Grand Chamber of the Supreme Court continues to point out that, in the context of the decisions of the European Court of Human Rights, the voluntary renunciation of judicial proceedings for the resolution of a dispute in favour of arbitration is generally acceptable in terms of compliance with Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms. In particular, the Grand Chamber of the Supreme Court, in its decision of 1 November 2023 in case no. 910/3208/22, expressed a pro-arbitration position in a case where the dispute arose from private law relations with a foreign element.

According to the judge, the Supreme Court of Canada also encourages parties to try to resolve disputes out of court in order to save not only time but also financial costs.

Referring to the German experience, Yevhen Petrov also drew attention to the mandatory training of judges to act as mediators. However, there is no such requirement in Ukrainian law.

In terms of international practice, the speaker cited examples of countries such as England and Wales, where the courts expect the parties to settle the dispute out of court in order to save time and money.

Yevhen Petrov concluded by stressing the importance of strengthening the legal regulation of ADR in Ukraine, in particular by defining the categories of cases for which pre-trial settlement should be mandatory.

The event was organised by the Yurydychna Praktyka publishing house in cooperation with the International Commercial Arbitration Court and with the support of the Supreme Court.