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.
The dispute arose out of the contract for the sale of 7,000 mt of Ukrainian milling wheat on a CIF Marmara delivery basis. While the seller was loading the vessel at the Ukrainian port of Kherson, the buyer’s surveyor took the samples of the goods and determined that their quality was not contractual. Given these problems with the cargo, the client refused to make payment against the certificate of the seller’s surveyor showing full compliance with the quality specification. In response, the seller terminated the contract because the buyer refused to pay for the goods.
After the seller commenced arbitration, the buyer revealed that the date of the bill of lading was inconsistent with the daily reports from its surveyor on the progress of loading. The seller’s solicitors, however, denied the argument on the backdated bill of lading and tendered the agent’s statement of facts showing the contractual shipment date. They further argued that, in any event, it was too late for the buyer to raise this matter in arbitration almost a year after the dispute arose.
In the end, the arbitrators upheld our position on the ground that the date of the bill of lading indeed contradicted the circumstantial evidence presented in the case. The tribunal considered such evidence sufficient to find that the bill of lading was not genuine and the seller wrongfully demanded payment for the cargo. It also noted that the buyer had the right to raise objections to the documents already in arbitration as they contained hidden defects which were not apparent on their face at the time of tender.
On this basis, the tribunal awarded the Turkish buyer USD about 300,000 in damages together with the compensation of the arbitration costs.
We are pleased to announce that Ievgen Boiarskyi, a senior associate at AGA Partners, will act as a guest lecturer for the course "Model Trials: International Aspect" for students of the Yaroslav Mudryi National Law University.
AGA Partners continues cooperation with the Ukrainian Bar Association in 2023! A lot of events and work are planned! Together to victory, each on his own front!
On February 4, Managing Partner of AGA Partners Aminat Suleymanova was among the speakers at educational conference organized by the International Academy of Family Lawyers dedicated to the issue of family law in times of uncertainty.
Aminat spoke at the session on the topic "Family Law Practice in a Period of Uncertainty", telling what changes the legislation has undergone during the period of russian aggression, how state institutions work now, and also clearly demonstrated what challenges lawyers faced in their daily work, including rocket strikes, lack of electricity, heating, internet and mobile communications, which, despite everything, continue to do their job with dignity!
AGA Partners successfully represented a large Australian agribusiness and processing company on an appeal stage of London-based arbitral proceedings over a dispute against a Swiss agricultural trader.
The dispute emerged due to the seller’s failure to deliver the goods within the contractual delivery period. As a result, the buyer terminated the contract and claimed damages against the seller in a first-tier London arbitration. The first-tier arbitral tribunal satisfied the buyer’s claims in full.
Disagreeing with this result, the seller lodged an appeal against the first-tier award. The appeal proceedings concerned a number of legal issues related to an alleged variation of the contract during oral negotiations in lack of a written agreement as well as a dispute on quantum of damages.
After long-lasting exchange of written submissions between the parties, the board of appeal dismissed the seller’s appeal in its entirety, confirming the first-tier award and even awarding the buyer with a higher sum of damages.
The event was devoted to the issue of the functioning of the courts for the consideration of minor cases and the institute of justice of the peace in the United States and the appropriateness of their introduction in Ukraine.
Among the participants of the event there were judges of the Supreme Court, judges of local courts, members of the High Council of Justice, the Council of Judges of Ukraine, the Ukrainian Bar Association, representatives of the Ministry of Justice of Ukraine, the State Judicial Administration, the National School of Judges of Ukraine, mediators.
AGA Partners became a member of the Ukrainian National Committee of the International Chamber of Commerce - ICC Ukraine. Representatives from our company in the committee are partners Ivan Kasynyuk and Iryna Moroz.
The partners are grateful to the Association for their trust and, in turn, undertake to fulfill their duties, actively participate in the activities and initiatives of ICC Ukraine and provide professional support within their competence.
Managing Partner Aminat Suleymanova and Senior Associate Olena Sibirtseva will take part as guest lecturers in the Selective Educational Component of the Master's Educational Program "Law" at the "School of Practical Law" organized by Yaroslav the Wise National Law University. Today there was the introductory lecture for the course.
Aminat Suleymanova drew the attention of the audience to the ethical component of a lawyer when working in the field of family law and spoke about interesting cases in practice. In particular, on the conclusion of prenuptial agreements, where several jurisdictions are involved; division of property located in several countries; international child abduction and surrogacy.
Olena Sibirtseva drew the audience's attention to the fact that family law includes a significant layer of knowledge and is relevant in any conditions. She noted that the knowledge base in this area is always relevant, since whether it is banking or corporate law, there are non-obvious risks associated with family legal relations.
Iryna Moroz, having 15 years of experience in representing clients in the leading international arbitration institutions LCIA, ICC, SCC, ICACU, GAFTA, FOSFA, LMAA, highlighted the main aspects of the topic, and also conducted a practical task for university students.
AGA Partners successfully represented a large UAE agricultural company in London arbitration. The dispute related to a contract for the sale of commodities for a total value about USD 6,1 million.
The dispute arose out of the respondent’s failure to supply our client 25,000.00 metric tons of wheat. Among other things, the dispute involved complicated legal issues related to the variation of the contract by change of the respondent’s company as the party to the contract, and validity of the notice of arbitration submitted by the client.
After an exchange of written submissions between the parties, the arbitral tribunal rendered the award in favor of the client, by ruling that the client submitted valid notice of arbitration against two companies, whilst change of the respondent’s company did not affect the client’s legal stance on jurisdiction in arbitration.
The tribunal found that due to the respondent’s failure to supply the goods, our client was entitled for damages in sum of USD 2 million.
AGA Partners will act as a legal sponsor of Agro&Food Security Forum. Grains, Oilseeds, Pulses', which will be held on September 14-15 in Warsaw, organized by UkrAgroConsult.
Due to Russian military aggression, the ports of Mariupol, Berdyansk, Skadovsk and Kherson are temporarily closed, according to the Ministry of Infrastructure of Ukraine.
In connection with the blockade of seaports, the Ukrainian authorities have already started looking for alternative ways to export grain. For example, Ukrzaliznytsia is working on organizing exports by rail through Romania, Poland, Slovakia and Hungary.
In particular, the team is working on logistical routes that will allow the delivery of grain through the following crossings:
- in the direction of Romania:
- Reni Station (capacity 87 carriages per day),Giurgiuleşti Station (capacity 5 carriages per day),
- Izmail station (capacity 18 carriages per day),
- Vadul-Siret Station (capacity 40 carriages per day);
- in the direction of Poland:
- Maciejów Station (capacity of 20 carriages per day),
- Mostyska-2 station (capacity 25 carriages per day),
- in the direction of Hungary:
- Batyovo station (capacity 17 carriages per day);
- in the direction of Hungary and Slovakia:
- Chop station (capacity 20 carriages per day),
- Mukachevo station (capacity of 10 carriages per day),
- Esen station (capacity 30 carriages per day).
The existence of alternative ways to perform contracts may lead to the termination of force majeure. Therefore, we strongly recommend that you identify, analyze and seek appropriate advice in a timely manner, if necessary.
The news is available on the Ukrzaliznytsia website at the link.
Russian military aggression against Ukraine (which became the basis for the introduction of martial law in Ukraine) was recognized as force majeure by the Ukrainian Chamber of Commerce and Industry on February 28, 2022 (the corresponding letter is available in Ukrainian and English).
Also on March 5, 2022, the Cabinet of Ministers of Ukraine adopted Resolution No. 207, according to which:
1. Quotas have been introduced for the export of livestock, frozen meat, meat and meat by-products, rye, oats, buckwheat, millet, sugar and edible salt from the territory of Ukraine with the zeroing of their export quotas; And
2. The export of wheat, meslin, corn, poultry meat, eggs and sunflower oil is subject to licensing.
The export ban is also included in the list of force majeure circumstances under the standard GAFTA and FOSFA contract forms.
The restrictions are currently active until at least the end of 2022. The issue of their renewal and / or removal will be decided by the government. Most likely they will operate until the end of the war and some time after that.