In this article, we discuss the peculiarities of arbitration proceedings in the ICAC at the Ukrainian CCI, as well as how to appeal and enforce the arbitral award.
What is the ICAC?
The International Commercial Arbitration Court (the ICAC) at the Ukrainian Chamber of Commerce and Industry (the Ukrainian CCI) is an arbitration institution in Kyiv. The ICAC operates under the Law of Ukraine "On International Commercial Arbitration". The ICAC Rules and other related regulations govern arbitration and other procedural matters.
The ICAC awards are binding on the parties to the dispute and can be recognized and enforced in Ukraine or abroad.
When a dispute is settled at the ICAC?
The ICAC deals with a dispute if the parties have entered into a written arbitration agreement to that effect. As usual, the parties incorporate an arbitration clause in their contract; less commonly, a separate arbitration agreement is concluded. The recommended arbitration clause of the ICAC at the Ukrainian CCI is available on the ICAC website.
The ICAC may accept disputes if one of the parties to the contract is a foreign company or a Ukrainian company in which at least 10% of the share capital is foreign investment.
What disputes are heard at the ICAC?
- Disputes on foreign trade contracts, particularly on supply of goods, provision of services, transportation of goods and passengers, trade representation and intermediation, rent (leasing), construction of industrial facilities, licensing operations, investments, credit and settlement operations, insurance and others.
- Disputes regarding the exercise and protection of property rights, including intellectual property rights.
- Corporate disputes between members of a company or between a company and its members, as well as over deals involving shares, units, other corporate rights or securities.
How much does arbitration cost?
A registration fee for filing a claim amounts to US$600.
If the ICAC accepts the claim, the claimant shall pay the arbitration fee. The arbitration fee depends on the value of the claim. Here are the rates or use the ICAC calculator to calculate the exact amount. For example, if the claim is up to US$100,000 — the arbitration fee will be US$4,200 + 4% of the amount over US$50,000. If the claim is up to US$1,000,000 — the arbitration fee will be US$15,200 + 1% of the amount over US$500,000.
The arbitration fee may increase due to the complexity of the case, the multiplicity of claims or parties, the length of the dispute, etc.
The arbitration fee is reduced by 20% if a sole arbitrator hears the dispute. In some cases, a partial refund of the arbitration fee is possible. For example, if the tribunal renders a decision at the first hearing on the parties' terms — 25% of the fee is refunded.
The losing party will probably be obliged to pay the arbitration fee and legal costs.
What are the terms of dispute consideration?
The ICAC Rules at the Ukrainian CCI stipulate that the consideration of the dispute shall not exceed six months from the date of the formation of the tribunal. Depending on the case's complexity, the activity of the parties, and other circumstances, the term may be longer.
According to ICAC statistics in 2021, about 30% of cases were considered in less than 3 months, 50% of cases — in 3-6 months, the rest — in 6-12 months.
How is the arbitral tribunal constituted?
The parties choose arbitrators from the ICAC list. When selecting an arbitrator, it is worth considering the country of his qualification, relevant experience, languages spoken, etc.
The parties may determine the number of arbitrators to hear the dispute in the arbitration agreement. It may be a sole arbitrator or another odd amount of arbitrators. If the parties do not agree on such an amount, the dispute shall be considered by three arbitrators (if the claim is simple and for a small value — by a sole arbitrator).
If the case is to be heard by three arbitrators, each party shall appoint one arbitrator, and then these arbitrators shall appoint the third.
A sole arbitrator shall be appointed by agreement of the parties or by the President of the Ukrainian CCI.
What is the arbitration procedure?
A party who wishes to commence arbitral proceedings shall file a claim with the ICAC. After the claim is accepted, the claimant shall pay the arbitration fee.
After that, the ICAC forwards the claim to the respondent and invites it to submit a response within 30 days. In addition, the respondent may file a counterclaim.
The arbitrators consider the dispute based on the documents submitted by the parties. By agreement of the parties or at the request of one of the parties, oral hearings may be held at the seat of the arbitral tribunal, at a place of the parties' choice (with compensation of the relevant costs) or via videoconferencing.
The parties may agree on the language of the dispute. If not, the language shall be determined by the Secretary General of the ICAC, taking into account the language of the contract, correspondence of the parties, etc.
In the arbitration agreement, the parties shall determine the law governing the dispute. If such law is not specified, the arbitral tribunal shall determine the applicable law according to the conflict of laws rules.
The arbitral tribunal shall make the award within 30 days after the completion of the hearings.
The award of the ICAC at the Ukrainian CCI is final and binding on the parties from the date of its rendering.
At any stage of the proceedings, the claimant may apply to the Ukrainian court for interim measures (e.g. seizure of the respondent's property or funds). The court shall grant interim measures if it is proved that there is a real threat of non-enforcement or difficulty in enforcement of the arbitral award without such measures.
Expedited arbitration proceedings
The parties may agree to resolve the dispute through the expedited arbitration procedure. The features of this procedure are as follows:
- a sole arbitrator considers the dispute;
- 15 days to pay the arbitration fee;
- 10 days to file a response after receiving the claim;
- the parties file only a claim and a response, if necessary — a counterclaim and objections;
- in most cases, oral hearings are not held;
- the tribunal shall render an award within 20 days after the completion of the case.
Is the ICAC award subject to appeal?
Yes. The parties can appeal the award before the Kyiv Court of Appeal no later than three months from the date of receipt of the arbitral award.
The appeal application shall be accompanied by the original or a duly certified copy of the arbitral award and the arbitration agreement with a Ukrainian translation if they are in a foreign language.
The court may set aside the award if:
- The party was incapacitated when concluding the arbitration agreement, the arbitration agreement is invalid.
- The party against whom the award was made was not notified of the arbitrator's appointment or the arbitration proceedings, for other valid reasons failed to submit its explanations.
- The award is made in respect of a dispute not covered by the arbitration agreement or in respect of matters outside the scope of the arbitration agreement.
- The composition of the tribunal or the arbitration procedure did not comply with the parties' agreement or the law of the state of arbitration.
- According to the law, the dispute, given its subject matter, could not be submitted to arbitration.
- The decision contradicts the public policy of Ukraine.
The decision of the Kyiv Court of Appeal can be appealed to the Supreme Court.
According to statistics, on average, only 2.5% of the ICAC awards are appealed, of which only about 1% of the awards are reversed, which indicates the parties' satisfaction with the quality of the arbitration.
How to enforce the arbitral award?
In case of refusal of voluntary execution, the award may be enforced in Ukraine or abroad, depending on the location of the debtor and its assets that can be recovered.
We discussed in detail the process of recognition and enforcement of arbitral awards in Ukraine here.
To enforce the award of the ICAC in Ukraine, it is necessary to apply to the Kyiv Court of Appeal for recognition of the award, and if the court satisfies this application — to the executor, who will collect the debt from the debtor by force.
Apart from Ukraine, the ICAC award can be enforced in one of the states parties to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. Today there are 170 such states (list here). As for the rest, the principle of reciprocity applies — the presumption that the country of enforcement and the country of issuance of the award enforce each other's decisions.
Does the ICAC consider disputes in times of war?
Yes, the ICAC considers the disputes as usual.
If you would like to assess the prospects of the ICAC case or enforcement of the arbitral award, please contact us at [email protected] or [email protected].