The decision of the Supreme Court has a precedential value for future cases regarding the recognition and enforcement of foreign arbitral awards in Ukraine. In particular, this relates to cases in the field of supply of agricultural products in accordance with standard GAFTA/FOSFA contracts.
Application for recognition and enforcement of the GAFTA award on compensation of damages in the amount of USD 476,000 was submitted to the Kyiv Court of Appeal in 2021. After reviewing the case materials, the Kyiv Court of Appeal rejected our client's application, concluding that there was no original of contract. According to the Kyiv Court of Appeal, given that the parties did not exchange signed originals of the contract with an arbitration clause, but instead concluded it by exchanging electronic scan copies, the contract and the arbitration clause were invalid with reference to some contractual provisions.
Disagreeing with this result, our client appealed to the Supreme Court. In the appeal, our lawyers explained that the contract in question is an example of one of thousands of agreements concluded in Ukraine every day regarding the export of agricultural products. Like most similar agreements, the contract in this case was governed by English law with a GAFTA arbitration clause. The lawyers of our team explained that under the terms of English law, a contract and an arbitration agreement can be concluded in both written and electronic form, and there is simply no requirement to exchange the originals of the signed agreement. It was emphasized that Ukrainian law also does not contain any such formal requirements, allowing the conclusion of contracts and arbitration agreements through the exchange of electronic copies.
After exchange of written documents between the parties, the Supreme Court supported our client's position and overturned the decision of the Kyiv Court of Appeal in full, recognizing the GAFTA arbitration decision and granting permission for its implementation on the territory of Ukraine. In its decision, the Supreme Court referred to Art. II of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, noting that:
“The term “agreement in writing'' shall include an arbitration clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. For the validity of the arbitration clause, it does not matter whether it is drawn up as a handwritten text or with the use of technology; it is important that the written form is followed”.
We believe that this decision is of great importance for positive judicial practice in cases regarding recognition and enforcement of arbitral awards. The decision of the Supreme Court confirmed the guarantees of parties to contracts on the export of agricultural products regarding the possibility of enforcing the arbitration award even if the contract was concluded by electronic means, without the exchange of signed originals.
You can access the decision of the Supreme Court using the link.