There's honor in filing a claim
"When a foreign jurisdiction delivers a judgment, then, as a rule, nobody risks not to enforce it" ALEXEY IVANOV, MANAGING PARTNER AT KONNOV & SOZANOVSKY, SAYS
— How often does Ukrainian business have to participate in legal proceedings abroad?
— Such a need arises quite often. Business needs to protect its rights and obtain fair verdicts, whether in commercial, corporate or other disputes.
Our judicial system is much and largely justifiably criticized. It is being actively renewed now. This gives us hope, but business needs to work and solve problems today and right now. I emphasize that obtaining a fair court decision is only half the case, and the other half is getting it enforced. This factor also gives business a hard time. In this regard, a number of disputes can be considered outside the Ukrainian court system.
— Is it possible to enforce the judgment without Ukrainian jurisdiction?
— That's quite possible, but the issue of enforcement in such cases can be solved in an easier manner. When a foreign jurisdiction (where there are also subsidiaries, assets of holders, etc.) delivers a judgment, then, as a rule, nobody risks not to enforce it. The decisions of English or Cypriot courts are respected and enforced even by those who believe that only cowards pay their debts.
— In such cross-border disputes, is the presence of a foreign element always necessary, or can it be disputes only between residents of Ukraine?
— There must be a foreign element. If we are talking about Ukrainian companies that have parent companies abroad, it can be either in the event of disputes with counterparties from other jurisdictions, or in cases when funds from the Ukrainian company were sent directly abroad and used for other purposes (fraud).
By the way, in some jurisdictions, fraud is not always regarded as exclusively a criminal offense, it is also a civil offense – a matter in commercial and business disputes. There is no such thing in Ukraine, but this practice should be implemented. When it comes to economic and business interests, it makes no sense to involve the prosecutor's office and law-enforcement agencies if everything can be decided in court by restoring property and paying fines. Economic punishment in this case is much more effective than criminal punishment.
If it is possible, we recommend our clients to apply to a court outside Ukraine's jurisdiction. We can dispel worries that such a process will be long and costly: in fact, a foreign court hearing is no longer or more expensive than several rounds of judgments in Ukraine without any guarantees of their enforcement.
— What are the most common cases that are considered in foreign jurisdictions? Can they be put into types?
— The main categories of cases relate to the execution of contracts, corporate disputes, corporate governance. A good many cases involve the search for assets. Basically, such proceedings are derivative or preparatory to disputes over default of obligation or corporate fraud. The number of such cases has increased due to the global and Ukrainian crisis. Cypriot courts have a lot of work now. The same can be said about courts in London, Switzerland...
— What is the role of Ukrainian lawyers in such cases?
— In general, a Ukrainian lawyer acts as a kind of intermediary or mediator between the client's wishes and the requirements for documents and evidence imposed by a certain jurisdiction. The forms of documents that are used there, the ways of describing the processes differ from how it is done in Ukraine. We come up against this situation constantly, and it can be useful for the client to prepare the documents in Ukraine, but with a focus on proceedings abroad. This objectively saves the client money. It will be more expensive to have such processes and documents prepared by foreign lawyers, and it may cause difficulties in communication with foreigners.
Ukrainian lawyers are also de facto involved in the coordination of the entire project, but we cannot be called lead managers, because "the pace is set" by local lawyers who know the specifics of a particular jurisdiction better. The goals are set by the Ukrainian team, but we expect a foreign advisor to show us how to achieve them.
It is worth noting that some domestic law firms have partners or advisors who have the right to represent the interests of clients, for example, in London. These are no longer isolated cases.
— Will the specialization of Ukrainian law firms on accompanying cross-border disputes continue to develop?
— Of course it will. There have always been disputes that are considered in foreign jurisdictions due to business structuring, contractual obligations, the same fraudulent actions. The desire of the parties to resolve the dispute in a neutral jurisdiction cannot be excluded either. The issue of searching for assets removed from a country will remain relevant for some time.
— Will judicial reform in Ukraine influence the restoration of confidence in our justice system?
— I'd like to believe that our judicial system will, after all, become more stable and predictable. With the new Supreme Court, the ground will be laid that will enable us to hope for the adoption of fair decisions. In addition, active steps have been taken to enforce decisions, and the appearance of the institution of private bailiffs is evidence of this. It is hoped that we will arrive at the conclusion that laws and the rules of the game must be observed: it's one thing when parties have different points of view and interpretations of a particular situation, but if the court gives a judgment, there must be effective mechanisms for its enforcement.
— Which Western practices would it be appropriate to introduce into Ukrainian legislation?
— As I’ve already said, the idea of considering corporate fraud within the framework of the civil process is quite promising. A very important institution is personal bankruptcy, the introduction of which will significantly help business and financial institutions to communicate with formally indigent persons.
— Are there any prospects for the introduction of new procedural tools as an analogy with of the orders of English courts, used actively worldwide in the sphere of fraud management?
— This issue largely depends on whether courts overseas are ready to perceive and accept the restrictions imposed by Ukrainian courts. I don’t think it is worth counting on this in the short term.