Exclusive review of the judicial procedure in Ukraine

LITIGATION

Court system

What is the structure of the civil court system?

According to the Civil Procedural Code of Ukraine, the civil court system is three-tiered and includes:

• local courts;
• courts of appeal;
• and the Supreme Court acting through the Civil court of Cassation.

Additionally, there is a specialised court: the High Anti-Corruption Court, which deals with certain types of cases as the court of the first and appellate instances.

In general, civil courts do not have subdivisions according to the subject matter, nature or size of the claim. The only exception is the High Anti-Corruption Court, which considers the cases on recognition assets as unfounded and their recovery into the government revenue. Such cases are considered by the panel of three judges.

Civil cases in the courts of first instance (local courts) are usually considered by a sole judge. Appellate and cassation reviews are carried out by a panel of at least three or more (an odd number) of judges.

Commercial disputes are considered by the local, appellate and cassation commercial courts.

Judges and juries

What is the role of the judge and the jury in civil proceedings?

In civil proceedings, the judge plays a more passive role in comparison with the participants in the case. In particular, the judge:

• manages the course of the trial;
• favours the reaching of an agreement between the parties;
• explains to the participants their procedural rights, obligations and the consequences of committing or failing to commit proce- dural actions;
• assists participants in exercising their procedural rights;
• prevents the participants’ abusing of their rights and takes meas- ures to fulfil the obligations of the participants. Normally, the judge has no inquisitorial role. However, in certain cases, the judge has the right to collect evidence relating to the subject matter of the dispute on his or her own initiative. Civil cases are normally considered by judges, but in certain types of cases defined by the Civil Procedural Code of Ukraine the tribunal consists of one judge and two jurors. According to the provision of the Law of Ukraine ‘On the Judiciary and the Status of Judges’ the list of jurors is compiled by the relevant local councils with respect to the requirements for the jury estab- lished by this law. Afterwards, the territorial administration of the State

Judicial Administration of Ukraine confirms the proposed list of jurors for three years.

In Ukraine there are no rules to promote diversity on the bench.

Limitation issues

What are the time limits for bringing civil claims?

The Civil Code of Ukraine determines the general limitation period (three years) and specific limitation period (reduced or extended). The specific limitation period is established by law for certain types of claims.

The parties to a dispute may not agree to suspend time limits.

Ukrainian legislation allows the parties to a contract to extend the limitation period established by law, but it is not possible to reduce it.

Pre-action behaviour

Are there any pre-action considerations the parties should take into account?

In accordance with the provisions of the Civil Procedural Code of Ukraine, the pre-action dispute resolution procedures are optional unless otherwise set out in the agreement between the parties or provided by the law.

At the same time the Constitutional Court of Ukraine, in its Decision dd. 09/07/2020 in case No. 1-2/2002, ruled that a person’s right to apply to the court for dispute resolution may not be restricted by law or other regulations. The Constitutional Court of Ukraine decided that the right to apply to the court cannot be conditional on the use of pre-trial dispute resolution procedures.

It is possible to request the preservation of evidence before filing a claim if there is a risk that the evidence may be lost or the collection or submission of such evidence will subsequently become impossible or difficult. Before filing a claim, a claimant can ask the court to impose interim measures.

Starting proceedings

How are civil proceedings commenced? How and when are the parties to the proceedings notified of their commencement? Do the courts have the capacity to handle their caseload?

If the statement of claim meets the requirements of the procedural law, the court commences a case within five days from the receipt of the statement of claim. The claimant must also provide the court with copies of the statement of claim and annexes to it for all participants.

The ruling on case commencement shall be directed to the parties by the court together with the statement of claim and annexes to it.

Local courts, owing to their exceptional caseloads, have difficulties with their timetables, which impact their ability to consider disputes in a timely manner.

Timetable

What is the typical procedure and timetable for a civil claim?

Given the provisions of the Civil Procedural Code of Ukraine, claims are mostly considered at the action proceedings. The action proceedings can be either general or expedited.

Case consideration within the general proceedings shall not exceed 125 days. The time limit for the expedited proceedings is 65 days. However, in practice, due to high caseloads, the established time limits for case consideration can be overrun.

As a rule, typical civil claim consideration includes the filing of four main procedural documents:

• the statement of claim;
• the statement of defence;
• the reply to the statement of defence;
• and the rejoinder to the reply.

The statement of defence shall be filed within the term established by the court’s ruling, which may not be less than 15 days from the date of service of the ruling on a case commencement. The term for submission of the reply and rejoinder is also established by the court’s ruling and usually ranges between five and 20 days from the receipt of the relevant statement on case. Having received the abovementioned statements, the court considers the case on its merits and subsequently renders a decision.

Case management

Can the parties control the procedure and the timetable?

Generally, the parties cannot control the procedure and the timetable. However, the parties may have some influence on the timing of the case, in particular by exercising their rights prescribed by the proce-dural law. Thus, the parties have the right to:

• submit applications and motions;
• provide explanations to the court;
• and provide objections to the applications, motions and explanations of other parties.

Therefore, it is possible to ask the court to fast track case considera- tion or conversely to extend the term of case consideration or postpone the hearing.

Also, the parties to the case, as well as persons who are not partici- pants in the case, if the court has decided on their rights, freedoms, interests and responsibilities, have the right to file appeals and cassa- tion appeals if the court decision violates the rules of procedural law.

In particular, the Civil Procedural Code of Ukraine recognises the violation of procedural law as a ground to appeal the decision.

In Ukraine, the High Council of Justice considers various issues, inter alia, complaints about judges. In the event of unreasonable and intentional delay by the judge in considering the case or when a judge’s actions infringe a person’s rights and freedoms, etc, a person has the right to file a complaint with the High Council of Justice. Such complaints can speed up case consideration.

Evidence – documents

Is there a duty to preserve documents and other evidence pending trial? Must parties share relevant documents (including those unhelpful to their case)?

Ukrainian legislation provides for the possibility to request the pres- ervation of evidence pending trial if there is a risk that the evidence may be lost or the collection or submission of such evidence will subse- quently become impossible or difficult.

The party is obliged to disclose the documents on which it relies. There is no obligation to disclose documents that negatively affect the party’s own position or support the other party’s case unless the court orders it to disclose such documents.

Documents are disclosed by filing the originals or copies with the court and all parties to the case. A party cannot rely on a document that it failed to disclose when submitting the claim, defence or relevant motion. If a party is not able to disclose certain documents, such infor- mation, including the reasons for this, shall be given to the court.

A party also may ask the court to order the disclosure of docu- ments from the person possessing them if such documents are relevant to the case.

Evidence – privilege

Are any documents privileged? Would advice from an in-house lawyer (whether local or foreign) also be privileged?

The provisions of the Law of Ukraine ‘On the Advocacy and Practice of Law’ state that issues raised by clients, advice given and other informa- tion obtained by an attorney during his or her professional activities are subject to attorney-client privilege. The rights and obligations arising from attorney-client privilege do not apply to in-house lawyers and foreignlawyers(unlesstheyareadmittedtotheUkrainianBar).

Documents containing the following information are also deemed confidential and shall be disclosed on the court’s order only. Therefore, Ukrainian law protects the secrecy of:

• personal data and information on an individual’s medical condition; • information stored by notaries;
• confidential information of the business entity, including commer- cial secrets;
• information concerning bank secrecy;
• personal communications and notes;
• information acquired by telecommunications operators on subscribers’ communications and other details on telecommuni-cations services; and
• state secrets.

Evidence – pretrial

Do parties exchange written evidence from witnesses and experts prior to trial?

The Civil Procedural Code of Ukraine does not provide for the possi- bility to submit written evidence from witnesses at the pretrial stage. At the same time, written witness statements and expert opinions can be obtained prior to trial as a means of preservation of evidence.

Written expert opinions, given to the court on a party’s initiative, are usually submitted to the court and parties before the hearing of the case on merits.

Evidence – trial

How is evidence presented at trial? Do witnesses and experts give oral evidence?

The court calls a witness to give oral evidence at trial upon the applica- tion of the participants in the case. Witnesses give their evidence orally. A witness can be cross-examined on the contents of his or her witness statement by the judge and participants to the dispute.

Written witness statements are applicable for the purposes of commercial matters consideration.

Experts rarely give oral evidence at trial. However, they can be called to the court to clarify their expert opinion and answer the partici- pants’ questions.

The court is obliged to examine all evidence duly submitted by the parties.

Interim remedies

What interim remedies are available?

The most popular interim measures in civil cases are the following:

• attachment of the respondent’s assets (freezing orders);
• prohibition on taking certain actions;
• establishment of an obligation to take certain actions (in disputes on family relationships);
• other measures provided by law, as well as by international agreements approved by the Verkhovna Rada of Ukraine.

In Ukraine, interim measures are not available in support of foreign litigations. The only possible option is to recognise and enforce the foreign court decision granting the interim measures.

Remedies

What substantive remedies are available?

In view of the Civil Code of Ukraine the claimant is entitled to seek the following remedies:

• recognition of a right;
• recognition of a transaction as invalid;
• termination of an action violating a right;
• restitution and restoration of the situation that existed before the violation;
• specific performance;
• alteration or termination of legal relationships;
• damages recovery and other methods for property loss recovery;
• compensation for moral (non-pecuniary) damage; and
• recognition of the invalidity of a decision, action and failure to act of a governmental entity, municipal entity or their officers.

The court can apply other remedies to protect a civil right or interest, if established by contract, law, as well as international agreements or by the court in circumstances specified by law.

If the law and the contract do not determine an effective way to protect rights, freedoms or interests, the court at its own discretion may determine a method of protection that does not contradict the law.

Damages are compensatory in nature. Punitive damages are not recognised under Ukrainian law.

According to the Civil Procedural Code of Ukraine, the court decision may contain a provision on interest to be paid on the prin- cipal sum of the debt up to the date of actual payment. In this case, the recovery of such interest shall be executed by means and in the manner as provided for in the court decision. The Bailiffs’ Service officer or private bailiff responsible for the enforcement of the court decision shall carry out the actual calculation of the interest amount to be paid.

Enforcement

What means of enforcement are available?

To enforce a court decision or court order, a person shall obtain a writ of execution from the court. Then the relative application and writ of execution shall be submitted to the Bailiffs’ Service.

The Law of Ukraine ‘On Enforcement Proceedings’ provides for the following means of enforcement:

• recovery of funds, securities, corporate rights, intellectual property rights, objects of intellectual and creative work, other property (property rights) of the debtor, including those belonging o the debtor from other persons, or the debtor manages them together with other persons;
• recovery of salary, retirement benefits, scholarships and other income of the debtor;
• seizure of the items specified in the decision from the debtor and their further transfer to the creditor;
• prohibition on the debtor disposing of or using the property belonging to him or her, including funds; or imposing on the debtor the obligation to use such property under conditions determined by the bailiff.

These enforcement measures are not exhaustive.
If parties disobey the court order, for instance, the ruling on interim measures or evidence preservation, then the court may order the recovery to the state budget revenue a fine of from 0.3 up to 3 subsist- ence rate amounts.

If an individual debtor evades the obligations imposed by the court decision, the court may ban the individual from travelling abroad.

According to the Criminal Code of Ukraine, the intentional non- execution of a court decision that has entered into force shall be punishable by a fine of from 500 to 1,000 tax-free minimum incomes or by imprisonment for a term up to three years.

The bailiff also has the right to impose a fine on the debtor.

Public access

Are court hearings held in public? Are court documents available to the public?

In general, court hearings are held in public, unless the court decides to hold an in camera hearing to protect confidential or other sensitive information.

Case files are not available to the public. At the same time, the text of court decisions (including rulings, resolutions and orders) is available for free online access at the Unified State Register for Court Decisions, but without including personal data.

Costs

Does the court have power to order costs?

The parties can ask the court to recover the court costs that the person has incurred in connection with the case. Based on the results of the case, the court has power to distribute court costs between the parties in accordance with the rules set out in the Civil Procedural Code of Ukraine. The costs are assessed on the basis of the evidence submitted by the parties and in accordance with the established rules of law.

Generally, the payment of court fees and other court costs is ordered against the losing party in the case.

The court may oblige the parties to deposit into the court’s deposit account a predetermined amount of court costs related to the proceed- ings or a certain procedural action.

Funding arrangements

Are ‘no win, no fee’ agreements, or other types of contingency or conditional fee arrangements between lawyers and their clients, available to parties? May parties bring proceedings using third-party funding? If so, may the third party take a share of any proceeds of the claim? May a party to litigation share its risk with a third party?

Contingency and conditional fee agreements between lawyers and their clients are not prohibited in Ukraine. At the same, success fee agree- ments are currently allowed according to the Resolution of the Grand Chamber of the Supreme Court dd. 12.05.2020 in case No. 904/4507/18.

Third-party funding is not regulated in Ukraine. Therefore, it is not prohibited by Ukrainian laws and regulations and is possible to apply. At the same time, third-party funding is not common in Ukraine.

Given the possibility of the third party taking a share of any proceeds of the claim, again this is not regulated and is possible.

Insurance

Is insurance available to cover all or part of a party’s legal costs?

The provisions of the Law of Ukraine ‘On Insurance’ establish the possi- bility of court costs insurance. However, such insurance only covers the court costs that a party could not expect. According to the Civil Procedural Code of Ukraine, the court costs include the court fee and costs related to the case consideration. Notwithstanding this, court cost insurance is not common in Ukraine.

Class action

May litigants with similar claims bring a form of collective redress? In what circumstances is this permitted?

Ukrainian procedural law does not expressly provide for either opt-in or opt-out models of class actions.

At the same time, there exists an equivalent under the Law of Ukraine ‘On Consumer Rights Protection’. Thus, the law allows consumer associations to lodge claims in the interest of an unidentified number of consumers against the sellers or producers of the goods to recognise their actions as unlawful. Such claims happen on rare occa- sions in Ukraine.

Appeal

On what grounds and in what circumstances can the parties appeal? Is there a right of further appeal?

The right to appeal is prescribed by the Constitution of Ukraine. Ukrainian procedural law also entitles persons to file an appeal with the competent appellate court against the court decision on the merits and some types of rulings.

The grounds for appeal can be various and differ for each particular case. The appellant must mention in his or her appeal why the deci- sion of the local court is unlawful or unsubstantiated. Usually, the most common reasons stated by the appellants are the following:

• violation of procedural law;
• incorrect enforcement of material law;
• failure to establish the facts of the case; and
• incorrect establishment of the facts of the case.

The Supreme Court can further review the decisions of the previous instances courts. However, the Civil Procedural Code of Ukraine limits the circumstances for cassation appeals.

Foreign judgments

What procedures exist for recognition and enforcement of foreign judgments?

The legislation of Ukraine provides for the possibility of recognition and enforcement of foreign judgments on its territory.

Before applying to the court, the applicants should establish whether Ukraine and the country where the court has rendered the relevant decision have an international legal treaty that regulates the recognition and enforcement of court decisions of these countries.

If the agreement on mutual legal assistance between the coun- tries provides for rules other than those defined in the relevant act of

Ukrainian legislation, the rules of the international agreement shall be applied. In the absence of such an agreement, the recognition and enforcement of a foreign court decision is carried out on the principle of reciprocity in accordance with the provisions of the Civil Procedure Code of Ukraine. In practice, the Ukrainian courts deem that reciprocity between Ukraine and the respective country exists unless proven other- wise by the opposing party.

The procedure for recognition and enforcement is simple. The applicant submits an application for the recognition and enforcement of foreign decisions together with the requested annexes to the court, which considers the application, renders a ruling thereon and issues a writ of execution, which is a ground for initiating enforcement proceed- ings in the competent enforcement authorities of Ukraine.

Foreign proceedings

Are there any procedures for obtaining oral or documentary evidence for use in civil proceedings in other jurisdictions?

On 21 July 2001 the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters 1970 (Hague Evidence Convention) entered into force in Ukraine. The taking of witness evidence is also governed by bilateral agreements on mutual legal assistance between Ukraine and other countries.

The provisions of the Civil Procedure Code state that Ukrainian courts may assist foreign courts with witness examination, conducting expert examination, etc.

The procedures for obtaining oral or documentary evidence for use in civil proceedings in other jurisdictions start with a request to the Ministry of Justice of Ukraine from a foreign authority. Then the ministry transfers the request to take evidence to its territorial depart- ment, which passes it to the court at the location of the witness.

The court summons the witness to give evidence at a court hearing. The witness must respond to the questions listed in the request. The Ukrainian court can order the police to deliver a witness if a properly summoned witness fails to appear before the court with no valid reason.

Afterwards, the Ukrainian court records in a protocol the witness’s responses to the listed questions and transmits the protocol to the foreign court via the Ministry of Justice of Ukraine.

---

ARBITRATION

UNCITRAL Model Law

Is the arbitration law based on the UNCITRAL Model Law?

The Law of Ukraine ‘On International Commercial Arbitration’ is based on the 1985 version of the UNCITRAL Model Law.

Arbitration agreements

What are the formal requirements for an enforceable arbitration agreement?

An enforceable arbitration agreement must be in writing and contain a reference to an arbitral institution selected by the parties or contain a reference to ad hoc arbitration.

Choice of arbitrator

If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?

According to the Law of Ukraine ‘On International Commercial Arbitration’, if the parties fail to determine the number of arbitrators, the case shall be considered by three arbitrators. In such case, each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator. If a party fails to appoint an arbi- trator or if the two arbitrators fail to agree on the third arbitrator, the appointment shall be made by the President of the Ukrainian Chamber of Commerce and Industry.

Given the provisions of the Law of Ukraine ‘On international commercial arbitration’, the decision of the President of the Ukrainian Chamber of Commerce and Industry on the appointment of an arbi- trator is not subject to appeal.

The Law states that the arbitrator may be challenged only if there exist justifiable doubts as to their impartiality or independence, or if he or she does not possess the qualifications required by the agreement of the parties. A party may challenge an arbitrator appointed by itself only for reasons of which the party becomes aware after the appoint- ment has been made.

Arbitrator options

What are the options when choosing an arbitrator or arbitrators?

The Law of Ukraine ‘On International Commercial Arbitration’ does not provide for any specific requirements for the qualifications or other characteristics of arbitrators, except the requirement for independ- ence and impartiality. The law also states that no person shall be precluded by reason of his or her nationality from acting as an arbi- trator, unless otherwise agreed by the parties.

Moreover, the parties are not prohibited to specify additional qual- ification requirements for the arbitrators in the arbitration agreement. The International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry has its list of recommended arbi-trators, which includes 122 arbitrators from 35 countries.

Arbitral procedure

Does the domestic law contain substantive requirements for the procedure to be followed?

The Ukrainian Law ‘On International Commercial Arbitration’ allows the parties to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings. Notwithstanding this, the parties shall be treated equally and each party shall be given a full opportunity to present his or her case.

Court intervention

On what grounds can the court intervene during an arbitration?

Generally, in matters governed by the Law of Ukraine ‘On International Commercial Arbitration’ no court shall intervene, with the exception of:

• considering the issue of the arbitration agreement being null and void, inoperative or incapable of being performed;
• issuing interim measures;
• assisting in taking evidence;
• considering the application for setting aside the arbitra- tion award; or
• recognition and enforcement of the arbitration award.

Interim relief

Do arbitrators have powers to grant interim relief?

At the request of a party, the arbitral tribunal may order any party to take interim measures that it may consider necessary in respect of the subject matter of the dispute.

Award

When and in what form must the award be delivered?

No time limits are prescribed by the Ukrainian Law ‘On International Commercial Arbitration’ for the delivery of the award.

The award shall be made in writing and signed by the arbitrators. The text of the award shall include the reasoning, a resolution regarding satisfaction or rejection of the claim, the amount of the arbitration fee and costs and their apportioning. The award shall contain its date and the place of arbitration.

Appeal

On what grounds can an award be appealed to the court?

An arbitration award may be set aside by the court only if there exists proof that:

• a party to the arbitration agreement was under some incapacity;
• the arbitration agreement is invalid;
• the party was not duly notified of the arbitrators’ appointment or of the arbitral proceedings;
• the party was unable to present his or her case for a valid reason; • the award was made regarding a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration; or
• the composition of the arbitral tribunal or the arbitral procedure
• was not in accordance with the agreement of the parties.

An arbitration award may also be set aside by the court if it finds that the subject matter of the dispute is not capable of settlement by arbitra- tion under the law of Ukraine or the award contradicts the public policy of Ukraine.

The application for the award to be set aside shall be submitted to the appellate court at the place of the arbitration hearing.

Enforcement

What procedures exist for enforcement of foreign and domestic awards?

Foreign arbitration awards are recognised and enforced in Ukraine on the basis of the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

Domestic arbitration awards are enforced after the relevant Ukrainian court has issued a writ of enforcement of an arbitration award.

Costs

Can a successful party recover its costs?

Yes. The arbitration award shall state the amount of the arbitration fee and costs and their apportioning. Arbitration awards are enforced in Ukraine, including the element of costs.

---

ALTERNATIVE DISPUTE RESOLUTION

Types of ADR

What types of ADR process are commonly used? Is a particular ADR process popular?

The most popular type of ADR process in Ukraine is arbitration. Mediation and conciliation are not used very often.

Requirements for ADR

Is there a requirement for the parties to litigation or arbitration to consider ADR before or during proceedings? Can the court or tribunal compel the parties to participate in an ADR process?

In accordance with Ukrainian legislation, on the preparatory court hearing, the judge enquires whether the parties wish to reach an amicable settlement, refer the case to arbitration or apply mediation. However, in practice, the parties rarely agree on the proposed options. If any party refuses ADR the court cannot compel it to participate in such a process.

---

MISCELLANEOUS

Interesting features

Are there any particularly interesting features of the dispute resolution system not addressed in any of the previous questions?

Not applicable.

---

UPDATE AND TRENDS

Recent developments

Are there any proposals for dispute resolution reform? When will any reforms take effect?

A number of changes regarding interim measures were made in 2020. Thus, the Civil Procedural Code of Ukraine now includes a new interim remedy: the suspension of recovery on the basis of an executive docu- ment that is challenged by the debtor in court.

Moreover, the Civil Procedural Code of Ukraine currently estab- lishes a number of unavailable interim measures, for example:

• suspending the decisions of the National Bank of Ukraine;
• seizure of wages, pensions and scholarships, or compulsory state social insurance benefits paid in connection with temporary inca- pacity for work;
• seizure of property (assets) or funds of an insolvent bank, a bank with the absence of a banking licence and a bank in the process of liquidation as established by law;
• seizure of property (assets) or funds of the Deposit Guarantee Fund of Ukraine;
• suspension of the temporary administration or liquidation of the bank;
• suspension of decisions of Cabinet of Ministers of Ukraine on state participation in the withdrawal of an insolvent bank from the market; and establishment for the Cabinet of Ministers of Ukraine, the Ministry of Finance of Ukraine, the National Commission on Securities and Stock Market and their officials a ban or obligation to act, or the obligation to refrain from certain actions arising from such decisions or acts; and
• termination, postponement, suspension or other interference in the conduct of a tender, auction, bidding or other public tender proce- dure conducted on behalf of the state (state body) or territorial community (local government body) or with the participation of a state-appointed entity in composition of the commission conducting the tender, auction, bidding or other public tender procedure.

Coronavirus

What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programs, laws or regulations been amended to address these concerns? What best practices are advisable for clients?

To ensure rights of access to courts, as well as to protect the population from covid-19, Ukrainian courts have put in place a number of additional measures to facilitate remote justice. Thus, at the very beginning of the quarantine, the Ukrainian parliament adopted a law allowing the parties during the quarantine period to take part in hearings using their own devices, without the necessity of appearing in a courtroom.