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Dr Anna Tsirat
Jurvneshservice, Kyiv
a.tsirat@jvs.com.ua

 

The Ukrainian law on International Commercial Arbitration was enacted in 1994 (the ICA law). As stated in its Preamble it ‘takes into account the provisions on arbitration as are found in the international treaties of Ukraine, as well as in the model law adopted in 1985 by UNCITRAL (the UNCITRAL model law) for possible use by states in its legislation’.

Having followed this basic rule, the ICA law fully repeats the UNCITRAL model law as to the mode of written communications to the parties of an arbitration process. Any written communication is deemed to have been received by an addressee if it is delivered to them personally or at their place of business, habitual residence or mailing address; if none of these can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee’s last-known place of business, habitual residence or mailing address by registered letter or any other means which provides a record of the attempt to deliver it.

Valid process is vital for an award not to be set aside and to be recognised and enforced. The key aspects defining valid communication on arbitral proceedings to an addressee that is a legal entity are last known place of business, reasonable inquiry, and attempt to deliver. If the notification submission complies with these, the notification is duly delivered.

The ICA law, having followed the UNCITRALmodel law, lists the grounds on which the award may be set aside, including lack of notice of appointment of an arbitrator or of the arbitral proceedings. These grounds mirror those contained in the article IX of the European Convention on International Commercial Arbitration (Geneva, 1961) and article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958).

The UNCITRAL Secretariat has issued guidance on the New York Convention (the Guide)^[1] that among others analyses requirement to the ‘proper notice’ on appointment of an arbitrator or of the arbitral proceedings. The New York Convention applies more liberal standards that are usually applied for giving notice under domestic law.^[2] Recognition and enforcement may be refused under article V (1)(b)where there is clear proof that no notice has been given.^[3] Article V (1)(b)is silent as to the form of notice. As a result, no specific form is required for notice and national courts are left to interpret what is acceptable notice and what constitutes a breach.^[4]

There are no formal requirements under the New York Convention for service of notice either.^[5] The majority of courts have not been prescriptive concerning a person receiving a notice. Arguments that the party who received the notice was not a legal representative, authorised agent or any precise legal entity have generally failed.^[6] These liberal standards are applied in consideration of due process issues relating to setting aside the award as well.

The Ukrainian courts that considered statements on setting aside, or recognition and enforcement of arbitral awards in general, followed the above guidelines as they were led by ICA law and Resolution of the Plenum of the Supreme Court of Ukraine No. 12 of 24 December 1999, entitled ‘On the practice of consideration by courts of applications for recognition and enforcement of decisions of foreign courts and arbitrations and on the annulment of decisions rendered in the procedure of international commercial arbitration in the territory of Ukraine’.

Item 15 of this notes that:

‘when a document submitted to support a party’s subpoena does not indicate how and when the subpoena was served, and it disputes the fact of subpoena, the court must find out the true circumstances of its service on the basis of other evidence presented by the parties, and if necessary, to ask an arbitration tribunal to submit the documents confirming service of the process for review by the court... In determining whether the said subpoena was duly served, the court should take into account relevant procedures as determined by the parties in an arbitration agreement or arbitration clause or those agreed by them, from … the European Arbitration Convention as well as rules of the body which, by agreement of the parties, govern the arbitration.’

As an illustration, in a case pertaining to recognition and enforcement of arbitral awards, the Supreme Court of Ukraine stated that notifications have been duly served if the court proceeded according to the procedures agreed by the parties to the arbitration agreement or arbitration clause, or to which they have agreed.^[7]

In a case pertaining to the setting aside of arbitral awards, the Supreme Court declared that the respondent’s service at all its known addresses with appropriate materials by registered mail with return notification was valid.^[8] In another case, the Supreme Court repeated the UNCITRAL model law as to the mode of written communicationsubmission, adding ‘the notice is considered received even if the person did not show up after its receiving or refused to receive it. The notice shall be deemed received by the party on the day of the delivery’.^[9]

These cases have been overturned by the Supreme Court in Altum Air, Inc. v. WindRose Airlines (No. 761/17236/17 as of 9 October 2019).^[10] The Supreme Court has established a new standard of due notification for arbitral process, according to which an arbitration body must serve a respondent not only at its registered address but also at the address of the seat of management (if this is different). Notification is treated as duly submitted only if it is received by a person authorised in writing (by a power of attorney, for example, or by internal resolution of a company) by the respondent to receive postal submissions. In case of submission by courier service, the person that receives the notification must sign and provide their full name, passport or another ID details. Courier service statement on submission of postal delivery is not treated as proof of due submission.

This new standard is higher than one used for notification of legal persons in local procedures. For example, the Ukrainian Commercial Procedural Code provides that notification is duly submitted if made in electronic form or by registered letter with a postal service note about service. The date of service is the day of electronic submission. If made by registered mail, the date of service is the day on which the postal office puts:

• an appropriate note about service,  

• a note about the addressee’s refusal to receive notification; or

• a note about addressee’s absence at the address.^[11]

The Civil Procedural Code repeats the above rules and adds that notifications are delivered to registered address of a legal person unless another address is stated.^[12]

We consider that the Supreme Court erred in laying down this new standard. The mistake is in substitution of concept of ‘notification’ with that one on ‘summons’, as domestic law^[13] provides for different requirements for each. The introduction of this new standard,that shall be applied now to any communication made to a legal person irrespective of whether it applies to international or local litigation or arbitration, will have negative impact on access to justice in Ukraine. It opens a door to the possibility of deliberately avoiding receipt of ‘unwanted’ notifications from any court or any participant in a court proceeding.

 

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