AVELLUM Arbitration Practice, within the working group of the Ukrainian Arbitration Association, participated in drafting and submitting the Amici Curiae Brief to the Grand Chamber of the Supreme Court (“GC of the SC”). The Amici Curiae Brief addressed the issue of extending the applicability of an arbitration clause outlined in a contract to a dispute involving a person who did not sign the contact but assumed rights and obligations under it. The Amici Curiae Brief was prepared at the request of the GC of the SC to assist in the consideration of case No. 910/3208/22 between Berezanskyi Processing Plant (“Plant”) and Grain Power Limited Liability Company (“Grain Power LLC”).The full text of the Amici Curiae Brief is available via the link.
Under the circumstances of the case, the Plant, as the seller, and Orsett Trading SA (“Company”), as the buyer, concluded a contract for the supply of goods. The contract provided that any disputes arising from it shall be settled by arbitration in accordance with the Arbitration Rules of the Grain and Feed Trade Association (GAFTA Arbitration Rules Nо. 125). Subsequently, the Plant, Grain Power LLC, and the Company entered into an additional agreement to the contract, whereby the Company assumed all buyer obligations arising from the contract.
The court of first instance dismissed the Plant’s claim, ruling that the parties to the contract agreed to an arbitration clause in light of the additional agreement. However, the appellate court revoked the decision of the court of first instance, stating that the additional agreement to the contract is a separate contract that does not contain an arbitration clause.
Taking into account the Amici Curiae Brief, the GC of the SC noted that a dispute arising out of private legal relations with a foreign element between legal entities registered in Ukraine may be submitted to foreign arbitration under the provisions of the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“Convention”), and the Laws of Ukraine “On Private International Private Law” and “On International Commercial Arbitration”.
Furthermore, the GC of the SC highlighted Article II of the Convention, which obliges each Contracting State to recognise an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this Article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.
In view of the above, the GC of the SC concluded that the arbitration clause in the contract applies to legal relations under this contract involving the person who entered into these legal relations as a party, provided that the parties did not terminate the arbitration agreement or deprive it of its binding force for such a party.
The GC of the SC upheld the conclusion of the court of first instance that the dispute in this case should be referred to arbitration, which is the basis for dismissing the claim.
The full text of the resolution of the Supreme Court of Ukraine in case No. 910/3208/22, dated 1 November 2023, is available via the link.
This case is significant both in terms of the complex legal issues related to international arbitration that were addressed and because the Supreme Court, for the first time in its practice, turned to the amici curiae instrument, commonly used in international courts. AVELLUM team was pleased to join this project, which represents a crucial contribution to enhancing the attractiveness of Ukraine as a pro-arbitration jurisdiction.
Posted on November 10, 2023