CJSC “Peter-Service” v. PrJSC “Telesystemy Ukrainy”

At a glance

Parties

CJSC "Peter-Service" (Russia), applicant for enforcement, v. PrJSC "Telesystemy Ukrainy" (Ukraine), debtor

Case no.

Supreme Court of Ukraine No. 755/6749/15-ц (proceeding No. 61-18629св18)

Court

Dniprovskyi District Court of Kyiv; Court of Appeal of Kyiv; Supreme Court (Civil Cassation Court, First Judicial Chamber)

Underlying award(s)

Final award of 22 December 2013, German Institution of Arbitration (DIS), case DIS-SV-CB-1119/11, seat Düsseldorf

Forum and rules

Ukrainian courts; New York Convention 1958, Law of Ukraine "On International Commercial Arbitration", Civil Procedure Code of Ukraine

Treaty

New York Convention (Articles II, V(1)(d), V(2))

Court

Supreme Court panel: V. A. Strilchuk (presiding), V. O. Kuznetsov, S. O. Pohribnyi, O. V. Stupak (rapporteur), H. I. Usyk

Sector

Telecommunications; software licensing

Outcome

Recognition and enforcement of the DIS award granted; the Supreme Court dismissed the debtor's cassation appeal on 26 September 2018.

Amount

Award: USD 116,358.68 and EUR 18,171.65. Writ of execution issued for UAH 3,036,658.75 and UAH 509,041.17 (converted at the National Bank of Ukraine rate of 7 December 2016).

The dispute

On 24 November 2006 CJSC "Peter-Service", a Russian company, and PrJSC "Telesystemy Ukrainy" signed Contract No. 409/06. Under it Peter-Service granted a non-exclusive, non-transferable licence to use software supporting the debtor's mobile network in Ukraine. Clause 17.5 of the contract referred disputes to proceedings under the arbitration rules of the German Institution of Arbitration (DIS), Berlin, before three arbitrators seated in Düsseldorf. A DIS tribunal issued a final award on 22 December 2013 ordering Telesystemy Ukrainy to pay USD 116,358.68 and EUR 18,171.65. In March 2015 Peter-Service applied in Kyiv for leave to enforce the award. The debtor raised four objections: the clause did not name the arbitral body, so the tribunal and procedure did not match the parties' agreement (Article V(1)(d)); the applicant's taxpayer number differed from that of the party named in the award; and enforcement would breach Ukrainian public policy and threaten Ukraine's interests, because the applicant's Russian taxes fund Russia's aggression against Ukraine.

Key holdings

1. The Court of Appeal set aside the first refusal of 14 April 2016, which had relied on a typing error in the translation. A notarised translation of the award was on file. The Court sent the matter back for the first-instance court to establish whether the arbitral procedure complied with the parties' agreement. Court of Appeal ruling, 20 July 2016, pp. 3–4
2. Clause 17.5 of Contract No. 409/06 is a valid agreement to arbitrate under the DIS rules. The tribunal was formed under §§ 12 and 17 of the DIS Rules 98: Marcel Barth was named by the claimant, Dmitry Marenkov was appointed by the DIS appointing committee for the respondent, and Peter Kraft was jointly designated as chair by the two arbitrators. The debtor never objected to the formation of the tribunal or challenged any arbitrator, so the Article V(1)(d) objection fails. Supreme Court ruling, pp. 4–6
3. Courts must check public policy under Article V(2) of their own motion. Public policy can be invoked only where enforcement is incompatible with the foundations of the State's legal order. The applicant's status as a company of the Russian Federation, recognised in Ukraine as an aggressor State, is no ground for non-performance of contractual obligations. The debtor offered no evidence that enforcement threatens Ukraine's national security or economy, and the events since February–March 2014 did not affect the parties' private-law relationship. Supreme Court ruling, pp. 4–5
4. An unjustified refusal to enforce would block the award. It would also interfere with the award creditor's property right under Article 1 of Protocol No. 1 to the European Convention on Human Rights; the Court cited Stran Greek Refineries and Stratis Andreadis v. Greece. Supreme Court ruling, p. 5
5. The applicant is the party named in the award. The contract shows a legal address at 14 Gorokhovaya St. and a postal address at 36 Shpalernaya St., St Petersburg. The identifier of a Russian legal entity is its OGRN (No. 1027809251744), not its taxpayer number. Supreme Court ruling, p. 6
6. The District Court held that PACE Resolutions No. 2132 and No. 2133 of 12 October 2016 were no ground to refuse enforcement. It granted the application in full and ordered a writ of execution for UAH 3,036,658.75 and UAH 509,041.17. District Court ruling, 7 December 2016, pp. 6–7

Procedural history

1. 24 November 2006Contract No. 409/06 (software licence) concluded, with a DIS arbitration clause in clause 17.5.
2. 22 December 2013DIS final award in case DIS-SV-CB-1119/11 orders Telesystemy Ukrainy to pay USD 116,358.68 and EUR 18,171.65.
3. March 2015Peter-Service applies to the Dniprovskyi District Court of Kyiv for leave to enforce the award.
4. 14 April 2016The District Court refuses the application.
5. 20 July 2016The Court of Appeal of Kyiv sets aside the refusal and remits the matter for a new hearing.
6. 7 December 2016The District Court grants recognition and enforcement and orders a writ of execution.
7. 22 February 2017The Court of Appeal of Kyiv upholds the District Court ruling.
8. 16 March 2017The High Specialised Court of Ukraine for Civil and Criminal Cases opens cassation proceedings on the debtor's appeal; in May 2018 the case is transferred to the Supreme Court.
9. 26 September 2018The Supreme Court dismisses the cassation appeal and leaves the lower rulings unchanged; its ruling is final.

Tribunal, counsel and experts

Decided by

• V. A. Strilchuk Judge, Supreme Court of Ukraine (presiding)
• V. O. Kuznetsov Judge, Supreme Court of Ukraine
• S. O. Pohribnyi Judge, Supreme Court of Ukraine
• O. V. Stupak Judge, Supreme Court of Ukraine (rapporteur)
• H. I. Usyk Judge, Supreme Court of Ukraine
• N. Ye. Arapina Judge, Dniprovskyi District Court of Kyiv
• A. M. Stryzheus Judge, Court of Appeal of Kyiv (rapporteur)
• N. O. Antonenko Judge, Court of Appeal of Kyiv
• O. I. Shkorina Judge, Court of Appeal of Kyiv
• Peter Kraft President, DIS Arbitral Tribunal (underlying award) — chosen by the co-arbitrators
• Marcel Barth Co-arbitrator, DIS Arbitral Tribunal (underlying award) — appointed by the claimant
• Dmitry Marenkov Co-arbitrator, DIS Arbitral Tribunal (underlying award) — appointed by the institution (appointed by the DIS appointing committee for the respondent)

For the respondent

O. M. Skrytskyi

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Keywords

• New York Convention
• recognition and enforcement
• Article V(1)(d)
• composition of arbitral tribunal
• public policy
• Article V(2)
• DIS
• German Institution of Arbitration
• Düsseldorf
• aggressor state
• Russia–Ukraine conflict
• PACE resolutions
• Protocol No. 1 ECHR
• software licence
• mobile telecommunications
• party identity
• Ukraine

Summary generated with AI from the published documents — refer to the award for the authoritative text.