Most disputes in Ukraine are resolved through litigation or arbitration, litigation being the most common remedy. Arbitration is widely used in the field of international trade, while other alternative dispute resolution methods such as mediation are practically out of use.
Ukrainian court system includes general courts, commercial and administrative courts. Civil, commercial and administrative proceedings may include four levels: (i) fist instance (local) courts; (ii) courts of appeals (regional); (iii) courts of cassation (the Superior Court of Ukraine on Civil and Criminal Matters, the Superior Administrative Court of Ukraine or the Superior Commercial Court of Ukraine, accordingly) and (iv) the Supreme Court of Ukraine. The Constitutional Court of Ukraine is a stand-alone body dealing with specific issues of Ukrainian constitutional law.
General courts consider civil, criminal and some administrative matters, while commercial and administrative courts consider only commercial and administrative disputes. The decisions of local (first instance) courts may be appealed to the administrative, commercial and general courts of appeals accordingly. The decisions of the courts of appeals may be further appealed (via “cassation complaint”) to the relevant superior court. The last appeal option (on very limited grounds) may be filed to the Supreme Court of Ukraine.
The Supreme Court of Ukraine used to be the final cassation instance reviewing the decisions of courts of appeals (in civil and criminal cases) and the decisions of superior specialized courts (in administrative and commercial cases). However, its role changed pursuant to the Decision of the Constitutional Court of Ukraine No. 8---/2010 of 11 March 2010 in case No. 1-1/2010 and the Judicial System and the Status of Judges Act No. 2453-VI of 7 July 2010.
Following them, the competence of the Supreme Court of Ukraine in terms of reviewing lower courts decisions was limited to reviewing those decisions of the superior specialized courts (courts of cassation instance) on the grounds of (1) different application of the same legal rules resulting in different judgments in similar legal relations and (2) an international court institution finding Ukraine to be in breach of its international obligations at considering a case by a Ukrainian court. At the same time, judgments of the Supreme Court of Ukraine have been endowed with generally binding effect for lower courts not only in the particular case in which they are rendered (as was the case before), but for any case in which the same legal rules are applied.
Court decisions (jurisprudence) are generally not recognized as source of law, except the judgments of the Constitutional Court of Ukraine interpreting the law and recognizing certain pieces of legislation as constitutional or unconstitutional, and the decisions of the Supreme Court of Ukraine on unified application of law by the courts as mentioned above.
Notwithstanding the above, in practice courts usually tend to consider the jurisprudence of higher courts as guidelines to be followed. Moreover, the superior courts (e.g. Superior Commercial Court of Ukraine) from time to time prepare and make public overviews of their jurisprudence (“overview letters”) and recommendations as to proper application and interpretation of law in certain types of cases. As a rule, the lower courts take into account the opinions expressed in the overview letters and recommendations of the superior courts, as well as their judgments in particulars cases. The overview letters and recommendations are often quoted in the lower courts judgments.
The civil court procedure is set forth by the 2004 Civil Procedural Code (the “CPC”). Administrative proceedings (disputes arising out of public legal relations involving a state or municipal official or a state body) are considered according to the 2005 Administrative Proceedings Code. Commercial disputes involving legal entities and individuals as entrepreneurs are governed by the 1991 Commercial Procedural Code (the “ComPC”).
Ukraine is a member of a number of treaties on international cooperation in court proceedings, including the Hague Conventions on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (1965), on Civil Procedure (1954), on the Taking of Evidence Abroad in Civil or Commercial Matters (1970), and the Minsk (CIS) Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Cases (1993), as well as number of bilateral agreements on legal assistance in civil and criminal cases.
International arbitration in Ukraine is regulated primarily by the 1994 International Commercial Arbitration Act (the “ICA Act”), which is almost completely based on the 1985 UNCITRAL Model Law. Ukraine is also a party to a number of international treaties regarding arbitration, such as the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) and the European Convention on International Commercial Arbitration (1961).
Domestic arbitration covers the dispute between Ukrainian legal entities and/or individuals only, and is primary governed by the 2004 Arbitral (Treteyski) Courts Act (the “Domestic Arbitration Act”), which provisions differ from the International Commercial Arbitration Act.
Some laws, such as the Private International Law Act, provide for exclusive jurisdiction of the Ukrainian state courts. The latter provides that the following disputes fall under the exclusive jurisdiction of Ukrainian courts, the below list being non-exclusive:
- disputes concerning real estate located in Ukraine;
- disputes arising out of the legal relationship between children and parents where all parties reside in Ukraine;
- in probate cases if the estate-leaver was a citizen of Ukraine and resided in Ukraine;
- disputes related to registration of intellectual property rights in Ukraine;
- disputes related to the registration or liquidation of foreign companies or individual entrepreneurs in Ukraine;
- disputes related to validity of records in the Ukrainian state registers or cadastres;
- insolvency matters where the debtor is established under Ukrainian laws;
- disputes regarding issuance or destruction of securities registered (issued) in Ukraine;
- adoption matters in Ukraine.
Disputes arising out of foreign trade, provided that the place of business one of the parties is located abroad, as well as disputes involving Ukrainian entities with foreign investment or their participants may be referred to international arbitration. Certain types of disputes are non-arbitrable, including:
- disputes on invalidation of decisions of state bodies (including those related to registration of intellectual property rights, securities issuance, validity of records in public registers, etc.);
- disputes arising out of public procurement contracts;
- disputes related to state secrets;
- family disputes, except marriage contract disputes;
- insolvency matters;
- disputes involving a state body or local government body concerning its public functions;
- disputes concerning real estate;
- disputes regarding establishment of legal facts;
- corporate, labour, consumer rights’ protection and other disputes falling within exclusive jurisdiction of Ukrainian courts; and
- disputes falling under the jurisdiction of the Constitutional Court of Ukraine.
Disputes involving a foreign party may not be resolved by means of domestic arbitration.
Awards of both international and domestic tribunals are binding upon the parties and enforceable through local courts. The international arbitral awards rendered in Ukraine are enforced under by the ICA Act and Chapter VIII of the CPC, while the awards of domestic arbitration courts are enforced pursuant to the Domestic Arbitration Act and respective provision of the CPC or ComPC.
Foreign arbitral awards can be enforced in Ukraine pursuant to international treaties which Ukraine is party to (such as 1958 New York Convention) as well as under the assumed reciprocity principle. The foreign court judgments are enforced mainly on the basis of international bi-lateral treaties, as well some multinational treaties, such as the 1993 Minsk (CIS) Convention on Legal Assistance; assumed reciprocity principle is also applicable.