Ukraine has taken several important steps in recent months towards improving the country’s domestic dispute resolution mechanisms. One of those steps was the complete overhaul of the judicial system and the adoption of completely new procedural rules governing domestic litigation.
In the course of this reform of the judicial system, the highest judicial body of the state – the Supreme Court of Ukraine – ceased its operations and was replaced with a new Supreme Court. To ensure a fundamental change of approach to the delivery of justice, the judges of the new Supreme Court were selected through a rigorous and transparent procedure. As a result, a number of experienced private practitioners and notable legal scientists have managed to secure places as judges on the new Court, and they have, already, brought a fresh outlook to a number of corporate, tax, and general commercial matters, including revisiting certain obsolete rulings rendered by their predecessors. In addition, the Supreme Court’s judgments are now set out in a structured fashion inherited from the decisions of the European Court of Human Rights, which facilitates better comprehension of the Court’s reasoning and makes its position clear and straightforward.
Alongside the changes to Ukraine’s court system, there has been a significant amendment to the procedural rules. Traditionally, Ukrainian court proceedings in civil, commercial, and administrative matters were purely inquisitorial. However, the new procedural rules restrict the role of the judge by shifting the focus of the proceedings from the court towards the parties. Considering the evolved role of the parties in the fact-finding process, the proceedings became, to a certain extent, adversarial. Having tested the new procedural rules, we feel safe in reporting that the proceedings have become far more sophisticated, as well as more streamlined and efficient. In particular, and among other changes, litigants can now engage their own expert witnesses without a judge’s approval, submit electronic evidence, and invoke a simplified procedure for minor disputes. One of the major challenges for the judicial reform effort was to implement forceful mechanisms to prevent dishonest litigants from abusing procedural rights and causing unreasonable delays of the proceedings. We have experienced certain cases in which the courts executed their powers to punish the opposing parties employing unfair tactics by imposing fines on their counsels and rejecting applications submitted with no plausible purpose.
Another important innovation introduced by the new procedural rules concerns the domestic support of international arbitration. Several foreign companies have already obtained interim measures rendered by domestic courts to secure Ukrainian-based respondents’ performance under arbitral awards. These precedents are important, since they demonstrate Ukraine’s position as an arbitration-friendly jurisdiction. At the same time, it is fair to mention that parties seeking interim measures (either in support of international arbitrations or within domestic proceedings) may occasionally encounter difficulties relating to counter-security. Considering the absence of clear guidance on how to measure the counter-security, court practice in this respect has been quite inconsistent so far. To this end, parties seeking interim measures should be prepared to provide security in an amount equal to the amount of their claims.
It is nearly a year since the new Supreme Court started to operate and the new procedural rules came into force. It seems quite clear that Ukraine is heading in the right direction – towards complying with the best standards of transparent and efficient judicial systems – despite the inevitable impediments down the road. In addition, in coming months we expect the launch of an electronic system for administering court proceedings. This system is meant to facilitate document exchanges between the parties and the court, as well as to allow remote access to evidence and other case files. Meanwhile, the Ukrainian parliament is set to pass a new law expanding the professional rights of attorneys and enhancing the attorney-client privilege. We truly hope that these improvements to the Ukrainian judiciary and procedure will make Ukrainian courts a more attractive and predictable dispute resolution venue for foreign investors.
By Aminat Suleymanova, Co-Managing Partner, and Andriy Fortunenko, Associate, Avellum
This Article was originally published in Issue 5.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
