Avellum wins precedent-setting case for Australian investor before the Supreme Court

AVELLUM successfully defended the interests of an Australian investor in a dispute over the shares in limited liability companies. The Supreme Court upheld our team’s position that the dispute should be resolved in international commercial arbitration, not before Ukrainian courts.

The case concerned a claim by the sellers under a share purchase agreement seeking the return of half of the transferred shares. Despite the arbitration clause referring disputes to the London Court of International Arbitration, the sellers argued that the case qualified as a “corporate dispute” and therefore was not arbitrable.

AVELLUM prevailed in establishing that disputes arising out of share purchase agreements are not corporate disputes and are arbitrable. The court of first instance left the sellers’ claim without consideration, and this ruling was subsequently upheld by the court of appeal and the Supreme Court.

The Supreme Court’s judgement is significant for investors acquiring shares in Ukrainian companies, as it confirms beyond doubt that disputes under such agreements are arbitrable and that Ukrainian courts will enforce valid arbitration agreements.

In this case, the Supreme Court reached the following important conclusions:

• Disputes under a share purchase agreement are not related to the creation, operation, management, or dissolution of a company and are therefore arbitrable.
• A dispute does not become non-arbitrable solely because the return of shares – if ordered – may require state registration.
• The choice of remedy, its effectiveness, and the applicable law relate to the merits of a dispute and do not affect its arbitrability.
• Public policy considerations are relevant only at the stage of recognition and enforcement of an arbitral award, not when determining the arbitrability of a dispute.
• Attempts to disregard a valid and freely agreed arbitration agreement may amount to bad faith conduct.

The full text of the Supreme Court judgement is available here.

The AVELLUM team was led by partner Oleksii Maslov, with key support from managing associate Oleksandra Syerova, senior associates Kristina Mysenko, Khrystyna Shvab, and associate Tetiana Zavalko.