UKRAINE LEGAL UPDATE
1 October 2022
In what seems to be a case of first impression the Supreme Court rules on when a Ukrainian court can grant provisional relief in foreign arbitration. No relief is available where the respondent has neither presence nor assets in Ukraine. The court must further consider a plea for relief, including jurisdictionally, on its own merits, without joining it to other parties' similar requests.
In this case a Chinese company held a mortgage on a solar power station in Ukraine that it helped build and finance.
In early 2022 the owner brought an arbitration claim against the mortgagee under the DIAC rules, including for damages due to improper building work.
The claimant then asked a Ukrainian court for provisional relief in connection with the arbitration, in the form of restraining the respondent from enforcing the mortgage. Both the local and appeal courts agreed.
The Supreme Court canceled the lower courts’ decisions. It held that where a respondent has neither presence nor property in the country, Ukrainian courts lack jurisdiction.
Further, the courts’ joining the relief application to those filed against other parties in court (presumably to extend the court’s jurisdiction to the respondent) was improper. Each request for relief must stand or fall on its own, the Court concluded.
The Supreme Court also pointed out that the arbitration claim was by its nature inconsistent with the kind of relief sought. Clearly, the Court in effect said, there is no way a monetary demand can be secured by keeping the other party from enforcing a claim of its own. The lower courts failed in their statutory duty to ensure a match.
Finally, the Court noted that the provisional measures sought by the claimant were disproportionate to the claims’ amounts.
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