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Litigation features involving non-residents in Commercial Litigation

As the jurisprudence of the most problematic issues in disputes involving non-residents occur in determining the jurisdiction of the dispute. With this in mind, we offer briefly on some of the features that must take into account the part of the foreign economic agreement for handling economic courts of Ukraine.

As a general rule, established by Article. 124 of the Commercial Procedure Code of Ukraine, jurisdiction of cases involving foreign entities defined by this Code, law or international agreement, to be bound by the Verkhovna Rada of Ukraine.

Given the contents of the above standards, we can conclude that the non-resident entity, the detection intends to initiate a lawsuit against the legal entity located in Ukraine should be guided by the general provisions on jurisdiction contained in Art. Art. 13-16 GIC Ukraine.

However, the above rules are a few exceptions that need to be taken into account by foreign business entities in handling economic courts. In particular, such exceptions relate to cases where the parties have incorporated into the content of the foreign trade agreement to arbitrate, or prorogation agreement. In this case, the side initiating a lawsuit, you must carefully analyze the content of such reservations, and to choose the competent court.

Considering the above, we propose to consider two special cases, the neglect of which may become an obstacle for the interested parties to protect their violated rights.

As the jurisprudence of the most problematic issues in disputes involving non-residents occur in determining the jurisdiction of the dispute. With this in mind, we offer briefly on some of the features that must take into account the part of the foreign economic agreement for handling economic courts of Ukraine.
As a general rule, established by Article. 124 of the Commercial Procedure Code of Ukraine, jurisdiction of cases involving foreign entities defined by this Code, law or international agreement, to be bound by the Verkhovna Rada of Ukraine.
Given the contents of the above standards, we can conclude that the non-resident entity, the detection intends to initiate a lawsuit against the legal entity located in Ukraine should be guided by the general provisions on jurisdiction contained in Art. Art. 13-16 GIC Ukraine.
However, the above rules are a few exceptions that need to be taken into account by foreign business entities in handling economic courts. In particular, such exceptions relate to cases where the parties have incorporated into the content of the foreign trade agreement to arbitrate, or prorogation agreement. In this case, the side initiating a lawsuit, you must carefully analyze the content of such reservations, and to choose the competent court.
Considering the above, we propose to consider two special cases, the neglect of which may become an obstacle for the interested parties to protect their violated rights.
1) Presence of foreign economic contract arbitration transactions (warning)
In the understanding of hours. 1 tbsp. 7 of the Law of Ukraine "On International Commercial Arbitration" arbitration agreement - an agreement of the parties to submit to arbitration all or certain disputes which have arisen or may arise between them in respect of any defined legal relationship, regardless of whether they have a contractual or not . An arbitration agreement may be in the form of an arbitration clause in a contract or in a separate agreement.
In turn, Art. 8 of the Act provides that the court in which the action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the merits of the case, to terminate the proceedings and refer the parties to arbitration if It recognizes that this agreement is void, inoperative or incapable of being performed.
Given the foregoing, the economic courts are competent to deal with disputes which, in accordance with the arbitration caution (agreement) shall be referred to arbitration institutions only under the following conditions:
• none of the parties prior to the examination of the merits does not file an objection to the jurisdiction of the economic court on the ground that the parties have an arbitration agreement (caution) to refer the dispute to arbitration, or
• Economic Court recognizes that the arbitration agreement (the warning) is void, inoperative or incapable of being performed. At the same time, as indicated in para. 5 Explained Presidium SECU N 04-5 / 608 dated 31.05.2002 was. "On some questions of practice of consideration of cases involving foreign companies and organizations," the inability to perform under the arbitration agreement should be understood cases where set out the name of the wrong side of the arbitral tribunal or the arbitral institution noted that does not exist.
Otherwise, if none of the above conditions is not working, the economic courts should terminate proceedings on the basis of para. 1 hr. 1 tbsp. 80 Code of Ukraine due to the fact that the dispute is not to be considered in the economic courts of Ukraine.
2) The presence of foreign economic contract prorogation agreement
Another obstacle, which may cause complications in ascertaining the competent court to hear a dispute between the parties is the presence of foreign economic contract prorogation agreement, or as it is called - an agreement on contractual jurisdiction. If you have such an agreement in the contract, there are two possible situations:
a) Parties to a contract can specify that in the event of a dispute, the latter shall be subject to the decision of a competent court in the country of location of the parties a non-resident or a foreign general to clearly establish the state court, specifying the name and location.
In such a case should proceed from the fact that the existence of such an agreement does not preclude an interested party of the right to appeal to the economic courts of Ukraine. In particular, as indicated in para. 1 Clarification of the Presidium of the SECU N 04-5 / 608 dated 31.05.2002, at Article 80 of the Code of Civil Procedure the termination of the proceedings in the case where the parties have agreed to refer the dispute to the court of a foreign state, not provided.
In such a case, the competent economic court should be determined on the basis of common rules on jurisdiction set Art. 13-16 Code of Ukraine (for example, Resolution Kharkov Economic Court of Appeal in case number 47 / 284-10).
b) The other case concerns a situation where the part of foreign economic contract define specific economic court to resolve the dispute. In this case, the question arises, will not be a specific election by the parties of the court contrary to the general provisions of the CPC of Ukraine on the rules for determining jurisdiction (Art. Art. 13-16 CPC of Ukraine). To answer this question should be guided by the following:
As stated in para. 1 Clarification of the Presidium of SECU N 04-5 / 608 dated 31.05.2002, the, in cases of disputes involving foreign companies and organizations of the economic courts of Ukraine should proceed from the fixed part of the third paragraph of Article 4 of the rules COD priority of international treaties Ukraine agreed to be bound by the Verkhovna Rada of Ukraine, concerning the rules stipulated by the legislation of Ukraine.
It should be noted that Ukraine is a party to certain international conventions and agreements which provide for the possibility of concluding an agreement by the parties of the contractual jurisdiction. In particular the latter include the Agreement on the Settlement of disputes relating to the implementation of economic activity, concluded Mr .. 03/20/92 (known as Kiev Agreement) and the Convention on legal assistance and legal relations in civil, family and criminal cases, in which vstrepila force for Ukraine on 04.14.95 g .. For example, in Art. 21 of the Convention states that the courts of the Contracting Parties may consider the case and in other cases if there is a written agreement between the parties to refer the dispute to those vessels. A similar provision is contained in Part 2 of Art. 4 of Kiev Agreement.
Analysis of the above provisions gives grounds to conclude that if the parties to the contract, bypassing the general provisions on jurisdiction of the dispute gave particular the Economic Court of Ukraine, the court will have jurisdiction to hear the case provided that the parties to such a contract are members of the above-mentioned international agreements. It should be noted that the above also applies in cases where the defendant is a country in another country. That is, if the corresponding prorogation agreement is possible that the Ukrainian company, the plaintiff may appeal to the Commercial Court of Ukraine with a claim against a non-resident company (decision of the Economic Court of Kiev on 24.06.11 on the case № 22/178).
At the same time, it is necessary to note that the above rule does not apply in a situation where the dispute falls within the exclusive jurisdiction of cases as provided for in Art. 16 Code of Ukraine and article. 77 of the Law of Ukraine "On International Private Law". The above warning is contained in Art. 21 of the Convention, which states that the exclusive competence resulting from the domestic law of the Contracting Party concerned, can not be changed by agreement. Thus, an agreement on contractual jurisdiction in a particular Commercial Court of Ukraine may be used only under the condition if this is required by applicable international treaties of Ukraine and, provided it does not contradict the provisions on exclusive jurisdiction.
Given the foregoing, the parties of foreign economic contract should carefully approach the issue with regard to determining the competent court to consider possible disputes. Otherwise, it can lead to complications for the parties concerned with the application to the court or directly during a court hearing.

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