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"With the introduction of new procedural institutions promoting arbitration, the popularity of our jurisdiction will increase, including among foreign business", — Sergei Uvarov, Senior Associate with AVELLUM Law Firm, predicts
— What are the grounds for reform of arbitration in Ukraine?
— The issue of arbitration reform has been doing the rounds for many years in our country. Various, sometimes radically different options of arbitration settlement were proposed, as was implementation of the new version of UNCITRAL Law on international commercial arbitration. Reform of legislation on the promotion and monitoring of international arbitration on the part of state courts is an alternative option. The latter was chosen.
— What issues in existing legislative regulation are practitioners unhappy with?
— There are two points. The first one lies in the fact that there are a lot of gaps and conflicts in existing legislation. And the second one is that some institutions are simply not available, for example, those concerning interim measures in support of arbitration or disclosure of evidence. Both the parties to the arbitration process and legal practitioners are interested in taking these measures. Similar procedural institutions are widely used around the world. The state should also be interested in this, as there is a new category of cases for consideration of which you should pay a rather substantial court fee.
— What is your attitude on the terms of cooperation between state courts and arbitration?
— Our proposals are implemented in draft law No. 4351, developed with the assistance of arbitration community representatives, primarily with that of the Ukrainian Arbitration Association and the National Committee of the ICC Ukraine. I was a member of several working groups for preparation of this draft law, within which my colleagues-arbitrators and I spent dozens or even hundreds of hours discussing and developing each provision.
Our proposals can be separated into two parts: issues of monitoring of international arbitration and changes on judicial support for arbitration. Concentration of all issues related both to the support and monitoring in one court – Kyiv City Appeal Court as a court of first instance – is one of the proposed innovations.
— Why exactly this court?
— The reason is simple: the majority of such disputes are considered in Kyiv and the judges of this court have, at the present time, broad experience, knowledge and expertise in this area. And it is much easier to gather experts in one court, than to train a specialized judge in each district court.
We also had a long discussion as to whether it is reasonable to transfer this category of disputes to the jurisdiction of commercial courts, but decided to select courts of general jurisdiction, as they already consider such issues.
— And what is new that you proposed in matters of support to arbitration?
— We propose to implement two new institutions: interim measures in support of arbitration and disclosure of evidence. These institutions are widely known in almost all countries with advanced international arbitration. Unfortunately, in our country such opportunity is not provided for yet. Proposals outlined in draft law No. 4351 come down to the fact that we should not reinvent the wheel, but should make a specific "superstructure" which will allow us to use the existing institution of interim measures in the civil process in support of international commercial arbitration. When my colleagues and I started to develop this "superstructure", it turned out that there are so many nuances that we failed to put them all in one sentence amending Article 151 of the Civil Procedure Code. We had to write down all the nuances in minute detail, and that is why we propose to dedicate a separate Chapter to this issue in CPC. At the same time, general principles on the application of interim measures do not differ, which means that a practice well-established for years will apply to these cases. This will minimize the law-enforcement vacuum, which would arise in case of implementation of an entirely new institution.
— Is your groundwork the consolidation of global best practices or benefit from the experience of one country?
— We did not rely upon a specific state for the foundation. On every issue we tried to compare the practices of different countries and, in addition, to take into account Ukrainian reality and to add, when necessary, certain safeguards against abuse.
— Are there alternative proposals to your draft law, in particular from the Council on Judicial Reform within the context of preparation of new procedural codes?
— Some of our proposals have already been implemented in the existing new versions of CPC and CCP, dated April this year (particularly with regard to oversight over the judiciary). But at the same time there are certain issues concerning arbitrability of disputes and adjustment of measures in support of arbitration. The Ukrainian Arbitration Association is preparing to file a request on this issue to the Council on Judicial Reform.
— What are the discrepancies between your draft law and the Council's groundwork?
— According to draft law No. 4351, it is proposed to implement common criterion of arbitrability. That is, all disputes which the parties can settle out of court may be submitted to international commercial arbitration. Such an approach is reasoned by the following: arbitration is based on the agreement of the parties and all issues which the parties can settle by this agreement can be submitted to arbitration. This is common world practice.
At the same time, there is a very broad list of exceptions and disputes in the proposed draft CCP, which cannot be submitted to the arbitration tribunal and international commercial arbitration. These are, in particular, all corporate disputes regarding sale and purchase agreements on the sale of corporate rights , all bankruptcy disputes, intellectual property infringement disputes, etc.
— Will proposed legislative changes regarding international arbitration promote the creation of a pro-arbitration environment in Ukraine?
— It depends on the extent of their implementation. When developing the draft law, we sought to take into account the experience of the most arbitration-friendly jurisdictions. And we believe that this should really help. But legislative changes will only get you so far, there is always the issue of law-enforcement practice and it will take time to acquire experience of application of the new provisions.
— And where are we with the arbitration infrastructure: is it sufficient to have only the ICAC at the Ukrainian CCI; and to what extent is the arbitration practice represented in law firms; do we have enough arbitrators and experts?
— First and foremost, it should be understood that all international arbitration is a specific market, and if there is demand, there will be supply. I believe that currently the infrastructure is developed enough and that there are many qualified experts, both legal advisors-practitioners and arbitrators. The ICAC seems to be doing quite well in handling its function as the local arbitration institution. However, nothing impedes the parties to choose international arbitration or ad hoc arbitration with the venue in Ukraine. I am sure that with the introduction of new procedural institutions to promote arbitration, popularity of our jurisdiction will increase, including among foreign business. By the way, one of the objectives, set by the developers of the draft law, is to stop the drain of disputes with the participation of Ukrainian business to foreign jurisdiction authorities. Foreign investors, aware of the fact that their rights will be efficiently protected by arbitration, will have another incentive to invest in Ukraine.