An arbitral award in international commercial arbitration is generally final and binding. However, Ukrainian legislation provides for the possibility of challenging (setting aside) it in court in exceptional cases.
Legal Grounds for Setting Aside an Arbitral Award
National courts do not review the merits of the dispute—they do not re-evaluate the evidence or the correctness of the arbitrators’ application of the law. Instead, they examine compliance with fundamental procedural requirements and the parties’ agreement.
Under Ukrainian law, an award of an international commercial arbitration seated in Ukraine may be set aside only on one of the grounds listed below (unless otherwise provided by a ratified international treaty of Ukraine). These grounds, harmonised with standard norms of international arbitration law, include:
Incapacity of a party or invalidity of the arbitration agreement. If, at the time of concluding the arbitration agreement, one of the parties lacked capacity or was legally incapacitated, or if the agreement itself is invalid under the law chosen by the parties (or, in the absence of such choice, under Ukrainian law), the validity of consent to arbitration is called into question. This may constitute a ground for setting aside the award.
Failure to give proper notice or opportunity to be heard. If the party against whom the award was made was not duly informed of the appointment of an arbitrator or of the arbitration proceedings, or, for other valid reasons, could not present its case and defend its position, a serious breach of the principle of due process may lead to the award being set aside.
Exceeding the scope of the arbitration agreement. If the arbitrators decided matters not covered by the parties’ arbitration agreement or awarded more than what the agreement envisaged, the court ensures that the arbitration remains within the powers granted by the parties. If the dispute (or any part of it) was not submitted to arbitration, the relevant part of the award may be set aside.
Improper composition of the arbitral tribunal or procedure. If the composition of the tribunal or the arbitration procedure did not comply with the parties’ agreement or mandatory legal requirements, the award may be challenged. For example, violation of the parties’ agreement regarding the appointment of arbitrators or the language of the arbitration, or non-compliance with mandatory statutory procedures, can constitute grounds for setting aside the award.
Non-arbitrability of the subject matter. A court will set aside an award if it finds that, under Ukrainian law, the dispute could not have been submitted to international commercial arbitration. In Ukraine, certain categories of disputes, particularly those concerning public interests (e.g., criminal matters, some family or employment disputes), are non-arbitrable. If the arbitration considered a non-arbitrable dispute, its award is subject to annulment.
Conflict with public policy of Ukraine. Also referred to as public policy, these are fundamental principles of law and morality underlying the legal order of the state. If the consequences of an arbitral award grossly violate Ukrainian public policy, the court may set aside the award. In practice, this ground is applied cautiously: courts often refuse to annul an award on the basis of public policy unless a clear violation is proven. Public policy is a discretionary concept, so it is important to substantiate precisely what the violation entails—for example, infringement of core principles of legality or good faith.
It should be noted that the applicant (the party that lost in arbitration) must prove the existence of grounds 1–4. In contrast, grounds 5 and 6 may be invoked by the court of its own motion. This allocation aligns with international practice: parties are responsible for protecting their procedural rights, whereas issues of arbitrability and public policy fall within the special supervision of the court.
Procedure for Challenging an Arbitral Award in Ukraine
The competent court for considering applications to set aside international arbitral awards in Ukraine is the Kyiv Court of Appeal. Regardless of where the arbitration was actually conducted within Ukraine, this court is legally empowered to consider applications for annulment.
An application must be submitted no later than three months from the date the parties receive the text of the arbitral award, unless a different timeframe is established by an international treaty or the parties’ agreement. The application should be accompanied by the original or duly certified copy of the arbitral award and the arbitration agreement, as well as their translation into Ukrainian (if the documents are in a foreign language).
The application is reviewed by a panel of judges of the Court of Appeal. The court does not re-examine the merits of the dispute; it only verifies the existence of the statutory grounds for setting aside the award. Each party may submit written explanations, and if necessary, a court hearing may be scheduled, during which the parties can present oral arguments. If an application for annulment is filed, it is advisable for the claimant (the party that won in arbitration) to participate in the proceedings to defend the award. Fortior Law provides full support to both applicants and respondents in annulment proceedings: we prepare all procedural documents, formulate the legal position, and represent the client in court hearings.
Following the review, the Court of Appeal issues a decision either upholding the arbitral award or setting it aside (in whole or in part). The decision of the Court of Appeal may be appealed to the Supreme Court by filing a cassation appeal within 30 days.
The Supreme Court reviews the case to ensure the correct application of the law by the Court of Appeal. It is important to note that Ukrainian courts generally adopt a pro-arbitration approach, with intervention being rare. According to statistics, only about 2.5% of awards of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry are challenged, and approximately 1% are ultimately annulled by the court.
Consequences of a Successful Challenge (Setting Aside) of an Award
If a Ukrainian court sets aside an arbitral award, the award ceases to have legal effect in Ukraine. Consequently, it cannot be enforced either in Ukraine or abroad, as recognition under the 1958 New York Convention requires that the award remain valid in the country of origin.
However, setting aside the award does not prevent the parties from submitting the same dispute to arbitration again, unless otherwise provided by law. If the award is annulled for procedural reasons (e.g., improper notice to a party or violation of the agreed tribunal composition), the parties may refer the dispute to arbitration again, correcting the procedural defect. The arbitration agreement remains valid, except in cases where the court has declared it invalid or the dispute non-arbitrable—in such cases, repeat arbitration is not possible.
It should be noted that while the annulment proceedings are pending, enforcement of the same award may proceed in parallel if the prevailing party has applied for execution.
Our team develops an optimal strategy to protect the client’s interests in both areas—we coordinate the annulment proceedings with the recognition and enforcement process to safeguard the client’s rights. For example:
- If you are a debtor under the award, filing an application to set it aside may provide grounds to suspend enforcement until the court issues a ruling.
- If you are a claimant facing what you consider an unfounded attempt to annul the award, it is crucial to convince the court that no statutory grounds for setting aside exist, in order to maintain the award’s validity and continue its enforcement.
How Fortior Law Can Help Protect Your Interests
The procedure for challenging an arbitral award is complex and requires detailed knowledge of both Ukrainian procedural law and international arbitration standards. Mistakes in preparing the application or in presenting your legal position can result in losing the case, and in many instances, the application cannot be resubmitted. Our team supports clients at every stage of the annulment process.
We conduct a thorough analysis of the arbitral award and the case materials to objectively assess the prospects of annulment or the risks of a challenge. If you intend to file an application to set aside an award, we will prepare comprehensive legal arguments, referencing Ukrainian law, provisions of international treaties, and relevant case law. If you are opposing the annulment, we will develop an effective defence strategy to maintain the validity of your arbitral award.
If you or your company are involved in court proceedings in Ukraine, contact us at [email protected]—we will ensure professional representation of your interests.
