Ukraine and foreign court rulings by alicejenny


									     Ukraine and foreign court rulings

     Ukrainian legislative integration: mutual recognition and the enforcement of foreign court awards

          egislation introduced in early 2010 set new ground rules gov-       comparison of preconditions of recognition and enforcement of
          erning the issue of Ukrainian recognition and enforcement of        foreign awards in Germany and Ukraine can answer the question
     court awards rendered by foreign courts. This most recent inno-          of whether Ukrainian court awards can be enforced in Germany
     vation introduced the principle of reciprocity while providing the       and vice versa.
     framework for practical implementation. What are the practical
     implications of the new legislative provisions and their meaning
     for the relationships between the law courts of Ukraine and for-         According to both Ukrainian and German legislation, the primary
                                                                              Competent courts and awards

     eign courts?                                                             condition for recognition of foreign court awards is that they have
                                                                              entered into full force and effect. In each individual case, the issue
                                                                              of whether a court decision has entered into full force and effect
     Prior to introduction of the 2010 legislative amendments, an             must be analyzed in accordance with the laws of the country in
     Introducing the reciprocity principle
     award rendered by a foreign court would only be recognized and           which the award was rendered. We will find the same rule in the
     enforced in Ukraine provided that Ukraine maintained an inter-           German ZPO.
     national treaty with the country seeking enforcement. Such trea-         According to Germany’s ZPO, a foreign court award will not be
     ties have been signed with most CIS countries, the Baltic States,        recognized if the court is not authorized to resolve the respec-
     some Eastern Europe nations and a few Asian countries. Crucially,        tive disputes in line with the relevant German laws. An award is
     there are no such treaties in place with the majority of European        deemed to have been delivered by the authorized court if the case
     Union member states and the US.                                          is not subject to the exclusive ju¬risdiction of a German court in
     In line with the Civil Procedural Code (the CPC) of current legis-       line with German law. One reason for this is fairly obvious: prior
     lation, a foreign court ruling may be recognized and enforced in         to recognition of an award rendered by a foreign court, the Ger-
     Ukraine pursuant to the principle of reciprocity. In other words,        man court must first verify whether the rules of exclusive juris-
     reciprocity means that a foreign court award will only be recog-         diction were violated under German procedural law.
     nized and enforced in Ukraine when no evidence appears that              A similar provision is contained in Ukraine’s CPC, whereby a plea
     Ukrainian court rulings are not recognized and executed in the           seeking mandatory enforcement of the foreign court award is
     country in question. It should be pointed out that Ukraine had           dismissed if the case falls within the exclusive jurisdiction of the
     long remained an exception to this rule of reciprocity despite it        court or other authorized body under Ukrainian law (e.g. in cases
     being the practice in the majority of Western markets. Indeed,           dealing with real estate ownership). Furthermore, both Ukrainian
     without this principle, it is difficult to imagine how the legal pro-    and German procedural codes provide for the same general re-
     tection of commercial relationships could be ensured in an in-           quirements for the recognition of foreign awards, such as wheth-
     creasingly globalized economy.                                           er the claimant was duly notified about the court hearing. Based
                                                                              on comparison of the general preconditions of recognition and
                                                                              enforcement of foreign awards, there should be no obstacle to
     In order to understand whether the newly introduced principle            reciprocity in Germany and Ukraine.
     Case study: Germany’s ZPO

     of reciprocity can work in practice, it helps to look at existing
     preconditions of foreign awards recognition and enforcement, for
                           example Germany’s Civil Procedural Code            One of the most controversial and widely used conditions for rec-
                                                                              Recognition: rules and exceptions

                              (known in Germany by the acronym                ognition of a foreign court award is the absence of contradictions
                               ZPO). In German court practice it is pre-      with the fundamental principles of public policy. Specifically, an
                                sumed that a foreign court award can          award rendered by a foreign court will not be recognized under
                                be recognized and enforced in Germa-          ZPO if this recognition leads to a result which so patently offends
                                ny if the recognition and enforcement         the fundamental principles of German law, and, particularly,
                                of a German court award in the foreign        when the award violates constitutional rights. In Ukraine’s CPC
                                state is not hindered by ‘more signifi-       the public policy exception is worded in such a manner that one
                                        cant difficulties’, than would be     may arrive at the conclusion that recognition and enforcement
                                         expected for recognition and         of a foreign court award may be denied if execution threatened
                                         enforcement of the respective        the interests of Ukraine. New interpretations of public policy are
                                         award in Germany. Hence the          problematic due to the fact that Ukrainian laws already contain

                                          About the author: Dr. Oleksiy Feliv, LL.M., ( is a Partner with Beiten Burkhardt
                                          international law firm. He specializes in real estate, private international law, litigation and international
                                          arbitration, and alternative energies.

clear definitions of public policy, as demonstrated by court prac-
tice. The introduction of a new statement purporting to regulate

                                                                          legal sector
a norm which in practice already exists should be attributed to
imperfect legislative drafting by Ukraine’s lawmakers. As a result,
both countries provide for the correspondence of the award with
public policy as a precondition of the recognition and enforcement
of foreign awards.

Unlike German legislation, Ukraine’s Civil Procedural Code contains
Timeframes for enforcement

an additional condition for enforcement which provides that recog-
nition and enforcement of a foreign court award may be denied if
the specified time period – set according to international treaties
approved by the Supreme Council of Ukraine - has lapsed. A foreign
court award must be submitted for enforcement in Ukraine within
three years from the date of entry into full force and effect thereof,
except for awards where regular payments are to be recovered. Fail-
ure to submit the award makes it unfit for enforcement, meaning that
the award takes legal effect in Ukraine. The Major difference there-
fore between the recognition and enforcement requirements in Ger-
many and Ukraine is Ukraine’s emphasis on time lapses.
In comparison with Ukrainian law, German legislation contains
no ‘ad hoc conditions’, providing grounds which could be used as
evidence for the absence of mutual reciprocity. Correspondingly,
awards delivered by German courts (naturally, this primarily means
awards rendered in civil cases - which in Germany also covers com-
mercial disputes) must be recognized in Ukraine in line with the
reciprocity principles laid out in the CPC.
Given that Ukrainian laws set an additional requirement for recog-
nition of a foreign court award (specifically, the term for its submis-
sion for enforcement), then the question arises of what this would
mean in the context of Germany’s ZPO. German court practice has
outlined that the situation regarding recognition hinges on the
absence of what legislators term as ‘more significant difficulties.’
In practice this means that a Ukrainian court award submitted for
enforcement after the expiry date of three years will not be rec-
ognized and, correspondingly, enforced in Germany by referring to
the respective restrictions under Ukrainian law. In all other cases
the German courts are obliged to recognize and enforce Ukrainian
court awards, since the Ukrainian law provides for ‘more signifi-
cant difficulties’ only if there is a longer-than-three-years delay in


October 2011                                                              19

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