11 April 2013 - KYIV Arzinger Law Office (Ukraine) and Wragge & Co (Great Britain) held a joint seminar dedicated to “Resolving complex international disputes: use of UK and other foreign jurisdictions for effective dispute resolution.” The event was attended by over 60 participants, including top managers, heads of legal and finance, as well asexperienced in-house lawyers from Ukrainian and international companies that cooperate closely with foreign companies and are active in foreign trade.

At the opening, Timur Bondaryev, Managing Partner of Arzinger, noted that the seminar was an excellent opportunity to learn more about the possible ways of business risks’ mitigation, effective dispute resolution and debt collection in different jurisdictions in terms of UK experience and Ukrainian practice.

The first report on the most optimal institution was presented by Andriy Selyutin, Counsel and Head of South Ukrainian Branch of Arzinger. In particular, he told about the advantages of international arbitration, such as neutrality, the possibility to select the arbitrator, the place of arbitration, and the applicable law, etc., and the finality and enforcement of awards, process flexibility, speed, privacy and reduced corruption. He also emphasized that problems with the recognition and enforcement of arbitral awards may occur in Ukraine.

Anthony Wilson, Partner at Wragge & Co, spoke about the strategy of choice and about drafting the most appropriate and enforceable arbitration clause with regard to UK experience. He noted particularly that the place of arbitration was an important factor, which should only be chosen in terms of law rather than of geography. Moreover, one should take into account the number of arbitrators and their qualification, how many parties are involved in the dispute etc. The English lawyer recommends using model arbitration clauses when drafting an arbitration clause and writing as simple as possible, however, with due regard to such important elements as the place of arbitration, the mechanism for the appointment of arbitrators and the number of arbitrators, the applicable law, and the rules. Also, one needs to be careful about agreements with more than two parties. In such cases the UNCITRAL Rules are applied.

MarkianMalskyy, attorney-at-law, Dr. jur., Partner, Head of West Ukrainian Branch of Arzinger and Head of its ADR practice, spoke on how to determine the arbitration jurisdiction for dispute resolution. In particular, he considered the arbitrability of disputes in accordance with Ukrainian legislation, the appeal of an arbitration clause in order to avoid dispute resolution in arbitration, asset tracking with a view to determining the most appropriate jurisdiction to enforce the award, and the problem of asset tracking in Ukraine and in offshore jurisdictions.

At the stage of drafting a contract and an arbitration clause, as well as at the stage of recognition and enforcement, asset tracking makes it possible to determine the most appropriate jurisdiction for arbitration and ensures the enforceability of the award. According to Markian Malskyy, to assess the enforceability of a court decision a series of steps may be taken to identify liquid assets, namely the search of the debtor’s movable and immovable property in different jurisdictions, analysis of recent transactions with the debtor’s disposal of property, analysis of the debtor’s corporate rights in other companies and initiating the disclosure of bank secrecy, obtaining information about encumbrances of property.

The next to take the floor was Tom Price, Director of Wragge & Co. He spoke about “piercing the corporate veil” and collecting debts from the final beneficiaries in the UK, as well as about the requirements of disclosure, excluding third parties and prior disclosures. In particular, in the UK each party must disclose documents unrelated to or unhelpful for its business or the other party’s business, as well as documents that may be useful to the opponent. In this case, the essence of the dispute may be changed after the disclosure. Disclosure of information is desirable at the stage of pre-arbitrary proceedings, in order to ensure a fair trial and to minimize costs. In English law, the disclosure requirement applies only to documents in the possession, power or under arrest of the parties involved in the dispute, but not in the least for third parties. Third parties may be asked to disclose information, if the required documents may support the applicant’s position or may have a negative effect on its opponent instead.

English law admits the existence of a corporate personality (Salomon vs. Salomon [1897] AC 22). The idea of “piercing the corporate veil” arises in situations, when a suit is brought against the owners of the company that has entered into a contract, or in the case of enforcement of the judgment against those who are behind the company that has lost the dispute. “Piercing the corporate veil must be accompanied by two mandatory conditions: the offender controls the company and the company is used to conceal the offense,” Tom Price noted.

The issue of interim measures in international commercial arbitration was highlighted by Timur Bondaryev, Managing Partner of Arzinger. According to him, the problem of applying interim measures in arbitration is especially relevant if the respondents involved are from CIS. They often use procedural sabotage or the so-called “guerilla tactics”, hide their assets, drag out the process etc. Application of interim measures in such cases is a tool for ensuring the effectiveness of arbitration. It is important to find the assets in the right (pro-arbitration) jurisdiction and to justify the application of interim measures. At the same time, the need for an arbitration claim may arise before or during arbitration proceedings, as well as during the procedure for recognition and enforcement of the award.

Summing up the results of the seminar, the organizers highlighted again the benefits and features of international arbitration and, in particular, of the UK as an attractive jurisdiction in terms of arbitration proceedings.