Law on Arbitration

Arbitration tribunals established by individuals or organizations were not popular because of some difficulties in implementing their awards. The well-known arbitration tribunals in Ukraine are International Commercial Arbitration Court and Maritime Arbitration Commission at the Ukrainian Chamber of Commerce and Industry. These arbitration tribunals act on the basis of the Law of Ukraine On International Commercial Arbitration and the corresponding Rules of Arbitration and are widely used as a competent authority for dispute resolution by Ukrainian and foreign companies engaged in foreign trade activity.

On May 11, 2004, the new Law On Arbitration Tribunals (hereinafter referred to as "the Law") was adopted and entered into force on June 16, 2004. The Law sets forth the procedure for establishment and activity of Ukrainian Arbitration Tribunals which are established ad hoc or on a constant basis. The Law considers the jurisdiction of the tribunals (in particular, the nature and identity of the disputes which the tribunal may examine), and goes on to cover what the tribunal should do, may do, and should not do in the course of dealing with such disputes.

These tribunals consider cases where the parties are residents of Ukraine. So, they do not rule international arbitration cases. The disputes which could be referred are disputes resulting from commercial(economic) and other civil law cases.

Arbitration tribunals are independent bodies and may be created by decision or agreement of physical or/and legal persons in accordance with the Law On Arbitration Tribunals .

Arbitration Tribunals are institutional arbitrations and ad hoc arbitrations. Registration of institutional arbitrations is handled by the Ministry of Justice or by its corresponding administrations of Justice. Institutional arbitrations act on the basis of the Statute & its Rules.

Form and Contents of the Agreement

It is common practice among many companies to incorporate into their contracts a reference to a separate document containing an arbitration agreement. It is important for the arbitration agreement to be in a written form. This requirement is satisfied if the arbitration agreement is contained in a document signed by the parties or by an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract.

Arbitrators

In the appointment of arbitrators their special experience as to the subject-matter of the issues involved should be taken into account. The Law is established that the number of arbitrators should be always odd. Special experience or juridical practice could be one of the conditions for the appointment.

Each of the parties appoints an even number of arbitrators, and the appointed arbitrators select the last arbitrator who shall act as a chairman of the tribunal, and may be given authority to make directions for the conduct of the arbitration proceedings on his own.

However, if a tribunal of one is chosen, but no candidate can be agreed by the parties, the dispute may be handed over to the competent court.

Place of Arbitration

As a general rule the place of arbitration is the place of the arbitration tribunal, if something else is not stipulated by the rules of the arbitration tribunal. The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be determined by the arbitration tribunal having regard to the circumstances of the case, including the convenience of the parties and stuff of the arbitration tribunal.

Interim Measures of Protection

The Law empowers the arbitration tribunal, on request of a party, to order interim measures of protection and the arbitration tribunal may request any party to provide appropriate security in respect to such measure. The amount and form of the security may be determined by the the arbitration tribunal.

Fees and expenses

An arbitrator's fee, and the manner in which it is fixed and paid, depends largely on the character and standing of the arbitrator, the nature of the arbitration and, in particular, on whether the arbitration is institutional or ad hoc.

a) Institutional arbitration - payment order and fees are fixed by the Rules or Statute of the Institutional arbitration.

b) Ad hoc arbitration - if nothing is agreed about fees, an arbitrator is usually entitled to a "reasonable" fee. What is reasonable may differ considerably, depending on the standpoint from which it is viewed. To avoid further possible argument, fees should be agreed at the time of appointment. The most common method of remuneration is by reference to a rate for time, but fees may be agreed on the basis of the amount in dispute, or such other formula as the parties consider appropriate.

Arbitral proceedings

It should be mentioned that the Law does not show the arbitral proceedings in details. It is a special peculiarity of tribunal proceedings. The ability of the parties is to choose the procedure for an ad hoc arbitration to their own requirements and indicate it in the arbitration agreement.

In accordance with the Law the institutional proceedings shall be conducted according to the procedure established by the Rules of the institution.

Evidence

The powers of the arbitral tribunal include the power to determine the admissibility, relevance, materiality and weight of any evidence. For taking evidence arbitrators are not bound to follow the rules of evidence for the common courts in Ukraine.

Experts

Unless otherwise agreed by the parties, the arbitral tribunal may require a party to give the expert any relevant information or to produce or to provide access to any relevant documents, goods or other property for his inspection. No previous consent of the both parties is necessary and the arbitral tribunal is not bound to consult the parties about the questions which will be submitted to the expert. The reasons and challenge order of the experts shall be determined in the Rules or arbitration agreement.

Arbitral Award

The goal in any arbitration is the decision of the arbitral tribunal contained in a valid and enforceable award. The award shall be made in writing and signed by the arbitrators or by the sole arbitrator. The award shall state the reasons upon which it is based, a resolution regarding the granting or rejection of the claim, the arbitration fee and its apportioning between the parties. The award shall state the date and place where the dispute was made.

Unless otherwise agreed by the parties, a party, with notice to the other party, may request, within 7 days of receipt of the award, the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award. If the arbitral tribunal considers the request as justified, it shall make the additional award within 7 days.

The Law provides that recognition and enforcement of awards may be refused by the competent (state) court, where:

• the dispute does not belong to the jurisdiction of the arbitration;
• the award was made on the dispute not agreed by the parties in the arbitration agreement;
• the arbitration agreement is not valid by the award of the state court;
• the composition of the arbitral tribunal was not in accordance with the Law.

If the enforcement of award is not performed voluntarily, it is to be performed in forced way on the basis of the Law of Ukraine On Enforcement Process of 21 April 1999. In order for the award to be executed an application to be lodged to a competent (state) court of Ukraine within three years after the corresponding judgment. The term for such proceedings makes fifteen days from the date of receipt of the application.

According to the Law the arbitration tribunal awards are final and are not subject to appeal. That is why there is no second arbitral instance.

So, there are many questions coming from the fact the above Law became effective. And only the time would be able to provide their solution and show the mechanism of arbitration tribunals procedure in practice.