IMPROVING COMMERCIAL DISPUTE RESOLUTION IN UKRAINE

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IMPROVING COMMERCIAL

DISPUTE RESOLUTION IN

UKRAINE

PRESENTATION OF A PRELIMINARY ASSESSMENT

OF THE UNDERLYING ENVIRONMENT

December 16, 2020

OVERVIEW OF THE

ASSESSMENT

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How do you assess the environment for the commercial dispute

resolution in Ukraine?

– Poor

– Fair

– Good

– Very good

– Excellent


Polling Question No. 1

How do you assess the environment for the commercial dispute

resolution in Ukraine?

– Poor 30%

– Fair 33%

– Good 27%

– Very good 6%

– Excellent 3%


Answers to the Polling Question No. 1 from the

participants of the event on December 16, 2020

• Data collection and analysis, including court statistics

• Review of research reports

• Examination of the legal and regulatory framework

• Key stakeholder interviews with both governmental and

non-governmental groups


METHODOLOGY

• Ministry of Justice

• National Investment Council of Ukraine

• American Chamber of Commerce (ACC)

• Supreme Court

• Kyiv Court of Appeals

• ICAC

• Ukrainian Arbitration Association

• National Association of Mediators of Ukraine

• Ukrainian Business Ombudsman

• International Arbitral Institutions (ICC, LCIA, SCC, SIAC, and VIAC)

• International Donor Community


MEETINGS AND CONSULTATIONS

• Opening of a Ukrainian branch office of a leading foreign

arbitral institution to administer dispute resolution services

• Establishing a new arbitral institution based in Ukraine

• Establishing a high-level specialized commercial court


POTENTIAL OPTIONS TO IMPROVE

COMMERCIAL DISPUTE RESOLUTION

What of the mentioned below you consider as the most appropriate

solution for improving CDR in Ukraine? Please select all applicable.

– Opening of a Ukrainian branch office of a leading foreign arbitral

institution to administer dispute resolution services

– Establishing a new arbitral institution based in Ukraine

– Establishing a high-level specialized commercial court






institution to administer dispute resolution services 44%

– Establishing a new arbitral institution based in Ukraine 38%

– Establishing a high-level specialized commercial court 59%




OPENING A BRANCH

OFFICE OF AN EXISTING

INTERNATIONAL

ARBITRATION INSITUTION


• Immediate higher level of public trust and confidence in a proven institution with broad international acceptance and reputation and established system of referrals to mediation and arbitration.

• Increased independence, impartiality, ethics and professional skills of case administrators, mediators and arbitrators.

• A modern system for case management, oversight, practice guides, forms, and training programs for users, lawyers, mediators and arbitrators.

• “Trickle-down” effect of engaging Ukrainian staff and conducting seminars and programs to help educate the local community, with parties and lawyers also gaining knowledge and experience in cases and interactions.

• Applied best practice in arbitration and alternative dispute resolution (ADR) standards.

• Direct access to modern case management and administration systems.


BENEFITS

• Enticing leading arbitration institutes to open a Ukraine branch office will

likely be difficult.

• Costs for disputing parties will not be reduced and will likely be much

higher under this scenario. The ICC and LCIA are expensive, the SCC and

SIAC less so, but still probably more expensive than ICAC.

• International provider rules of arbitration and other ADR proceedings may

not be fully compatible with the Ukrainian regulatory framework. However,

the main providers generally embrace similar procedures with some

differing details. The rules are designed to interface with most national

arbitration laws applicable at the seat of arbitration (“lex arbitri”).

However, if the Ukrainian regulatory framework and practice create

problems, foreign institutes will be reluctant to establish a branch office.

Due diligence is required to investigate and suggest any needed measures

or revisions.


CHALLENGES

ESTABLISHING A NEW

INTERNATIONAL

ARBITARTION INSTITUTION


To what extent do you agree or disagree with the following statement:

“A new independent arbitration institution in Ukraine that offers a range

of ADR dispute resolution mechanisms for dispute resolution, would

contribute to the attractiveness of Ukraine for business and investors."

– Strongly disagree

– Disagree

– No opinion

– Agree

– Strongly agree




“A new independent arbitration institution in Ukraine that offers a range

of ADR dispute resolution mechanisms for dispute resolution, would

contribute to the attractiveness of Ukraine for business and investors."

– Strongly disagree 4%

– Disagree 7%

– No opinion 4%

– Agree 70%

– Strongly agree 15%




• Create a new independent and transparent institution with supervisory

authority over international commercial arbitration-related issues

• Offer a range of ADR services for effective, fair and timely resolution of

international commercial disputes with integrity and professionalism

• Build in best practices for ADR mechanisms by promoting quality

assurance and an integrated dialogue and training for stakeholders

• Propose a more affordable pricing scheme based on user needs

• Ensure transparency and competence by not limiting the choice of

arbitrators or mediators by advancing institutional list

• Promote Kyiv as a regional hub with a modern institution for

commercial dispute resolution and generate positive “buzz”


BENEFITS

• Establishing a new institution requires considerable resources

• Building trust entails not only time, but also integrated and consistent

actions

• Increasing competition for ADR services in the region and low number

of international arbitrations in Ukraine

• Recruiting and training qualified staff and incorporating a cutting-edge

case management system

• Continuing low levels of trust and confidence in the courts making Kyiv

a less attractive place of arbitration


CHALLENGES

• Structure and

Infrastructure

– Governing board

– Qualified

personnel

– Office space

– Technical

equipment

– Hearing and

meeting facilities

• Outreach

– Business

community

– Arbitrators and

mediators

– Professional

associations


OPERATIONAL CONSIDERATIONS

• Services

– Dispute

resolution

services

– Institutional rules

– Training and

accreditation

ESTABLISHING A HIGH LEVEL

SPECIALIZED COMMERCIAL

COURT


“The 10 top economies in the ease of doing business ranking

share common features of regulatory efficiency and quality,

including mandatory inspections during construction,

automated tools used by distribution utilities to restore

service during power outages, strong safeguards available to

creditors in insolvency proceedings and automated

specialized commercial courts.”


DOING BUSINESS 2019


“The specialization of commercial courts and/or judges in international

trade and commerce will improve the consideration of relevant cases and

overall contribute to the investment climate in Ukraine?

– strongly disagree

– disagree

– no opinion

– agree

– Strongly agree




“The specialization of commercial courts and/or judges in international

trade and commerce will improve the consideration of relevant cases and

overall contribute to the investment climate in Ukraine?

– strongly disagree. 0%

– Disagree 0%

– no opinion 4%

– Agree 81%

– Strongly agree 15%




Option A: Establishing a New

High-Level Specialized

Commercial Court


• Allows for the appointment of specialized independent and impartial

judges with integrity and expertise in international commercial

litigation, international arbitration, and respectful of party autonomy.

• Increases the quality of judicial decisions and reduces enforcement

problems.

• Reduces the imbalance between transaction costs and case value.

• Reduces court backlogs and waiting times.

• Increases transparency, predictability of outcomes of court proceedings

and unified caselaw.


BENEFITS

• Integrates of ADR mechanisms, such as mediation and early neutral

evaluation, into the scope of court services.

• Includes expediting of categories of cases and development of an online

dispute resolution platform for small claims.

• Creates better business environment and attracts foreign investments.

• Increases the possibility to select places in Ukraine as a seat of

international commercial arbitration.

• Contributes to making Ukraine a regional dispute resolution hub when

undertaken with parallel reforms of the international commercial

arbitration system.


BENEFITS (CONTINUED)

• Requires political will to amend laws, such as the Law on the Judiciary

and Status of Judges, Civil Procedure Code, and Commercial Procedure

Code; and drafting a new law, demanding involvement and leadership

from the Office of the President, Ministry of Justice, High Council of

Justice, High Qualification Commission, and Parliament (Verkhovna

Rada).

• Requires precise definition of jurisdiction to avoid jurisdictional

disputes due to gaps or overlapping of applicable laws.

• Necessitates an innovative approach as concerns composition of the

court, language of proceedings, and optional procedural rules.

• Requires further developing criteria of integrity and new professional

qualifications for assessing judicial candidates.


CHALLENGES

• Demands engaging the Public Council of International Experts (PCIE)

or setting up a similar body to vet judicial candidates.

• Compels a lengthy appointment process for selecting qualified judges

and continuing education and capacity building.

• Requires development of a roadmap for establishing the new court.

• Involves time and financial resources in a time of limited budget

allocations for the judiciary.

• Requires introduction of corresponding internal specialization of judges

at the Supreme Court.

• Makes necessary the creation of an accessible database of

jurisprudence.


CHALLENGES (CONTINUED)

Option B: Creating Specialized

Chambers and/or Panels at

Existing Courts


• Increases slightly the quality of judicial decisions and reduces court

backlogs and waiting times.


and unified case-law

• Integrates the potential for ADR mechanisms, such as mediation, into

the scope of court services.

• Creates message of commitment by courts and judges to ensure better

business environment.


BENEFITS

• Requires support of chief judges and majority of judges of all courts.

• Necessitates the development of clear criteria for determining the

caseload and corresponding number of judges to be assigned with

international commercial cases.

• Requires amending the rules for the automated assignment of cases.

• Demands consent of individual judges to be assigned with international

commercial cases.

• Requires continuing education and capacity building.

• Requires setting up an accessible database of jurisprudence.


CHALLENGES

Option C: Introducing Individual

Specialization of Judges at

Existing Courts


• Increases slightly the quality of judicial decisions and reduces court

backlogs and waiting times.


and unified caselaw.

• Integrates the potential for ADR mechanisms, such as mediation, into

the scope of court services.

• Creates message of commitment by courts and judges to ensure better

business environment.


BENEFITS

• Requires support of chief judges and majority of judges of first instance

commercial courts.

• Necessitates the development of clear criteria for determining the

caseload and corresponding number of judges to be assigned with

international commercial cases.

• Requires amending the rules for the automated assignment of cases

• Demands consent of individual judges to be assigned with international

commercial cases.

• Requires continuing education and capacity building.

• Requires setting up an accessible database of jurisprudence.


CHALLENGES




institution to administer dispute resolution services

– Establishing a new arbitral institution based in Ukraine

– Establishing a high-level specialized commercial court






institution to administer dispute resolution services 29%

– Establishing a new arbitral institution based in Ukraine 29%

– Establishing a high-level specialized commercial court 67%




RECOMMENDATIONS


• Create advisory body of key stakeholders to design and implement

activities

• Design, plan and implement a comprehensive and scientifically reliable

survey of stakeholder perceptions, use and needs in commercial

dispute resolution

• Conduct public consultations to build consensus and seek constructive

input for further development and planning

• Prepare a full review and comprehensive study of the legal and

regulatory framework to determine any necessary legislative reforms


NEXT STEPS

Thank you!


IMPROVING COMMERCIAL DISPUTE RESOLUTION IN UKRAINE

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