Moston Properties Limited v. PJSC “Ukrgasvydobuvannia”

At a glance

Parties

Moston Properties Limited (England) v. PJSC "Ukrgasvydobuvannia" (Ukraine), later JSC "Ukrgasvydobuvannia" as its legal successor

Case no.

No. 761/41709/17 (Kyiv Court of Appeal No. 22-ц/824/166/2018; Supreme Court No. 61-47280св18)

Court

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

Underlying award(s)

Final award of 22 September 2017, LCIA Arbitration No. 153184, sole arbitrator Dmytro Yevsieiev, seat London

Forum and rules

Recognition and enforcement under the New York Convention 1958 (Articles II, IV, V), Ukrainian Law on International Commercial Arbitration and Civil Procedure Code, Articles 474–482

Treaty

Arbitration clause (clause 14) of Contract No. UGV11083/11-15 of 29 May 2015; New York Convention

Court

District Court: Judge I.O. Makarenko. Court of Appeal: M.M. Panchenko (reporting judge), V.M. Voloshyna, T.A. Sliusar. Supreme Court: V.A. Strilchuk (presiding), S.O. Karpenko, V.O. Kuznietsov (reporting judge), A.S. Oliinyk, O.V. Stupak

Sector

Equipment supply

Outcome

Enforcement of the LCIA award in Ukraine was granted in part (5 April 2018), upheld on appeal (21 November 2018) and upheld by the Supreme Court (17 April 2019).

Amount

Enforced: principal of USD 2,436,243.50 (UAH 63,975,754.31 at the 5 April 2018 rate); 3% simple annual interest from 1 October 2015 until payment; arbitration costs of GBP 97,415.02 (UAH 3,585,846.88); court fee of UAH 800. The claimant's request for interest fixed at USD 152,582.26 as of 1 November 2017 was refused.

The dispute

Moston Properties Limited and PJSC Ukrgasvydobuvannia signed foreign-trade Contract No. UGV11083/11-15 of 29 May 2015 for the supply of equipment. Clause 14.2 provided for LCIA arbitration in London before one arbitrator, in English, under Ukrainian substantive law. On 22 September 2017 a sole arbitrator, Dmytro Yevsieiev, issued a final award (LCIA Arbitration No. 153184) ordering Ukrgasvydobuvannia to pay USD 2,436,243.50, 3% simple annual interest from 1 October 2015 and GBP 97,415.02 in costs. Ukrgasvydobuvannia did not pay, and Moston applied to the Kyiv courts for recognition and enforcement. The debtor raised several objections. It argued that the contract was a scheme to take its funds and so breached Ukrainian public policy; the Specialised Anti-Corruption Prosecutor had sued to invalidate the contract (case No. 910/22646/17). It also argued that translations were defective, that Moston's lawyer lacked authority, that there was no separate arbitration agreement, that its deputy chairman lacked authority to agree to arbitration, that a partial grant was not allowed, and that the open-ended interest award could not be enforced.

Key holdings

1. The District Court refused to stay the case pending the prosecutor's suit to invalidate the contract. The debtor had shown no application to set aside the award, and Article 477(7) of the Civil Procedure Code allows a stay only in that case. District Court ruling, p. 2
2. The District Court granted enforcement in the terms of the award's operative part: principal, 3% annual interest from 1 October 2015 until payment, and GBP 97,415.02 in costs. It rejected the public policy defence because the debtor gave no evidence that the contract breached Ukrainian public policy. District Court ruling, pp. 3–4
3. Russian translations of the arbitration agreement and the power of attorney were acceptable. The application was filed on 15 November 2017, when Article 35(2) of the Law on International Commercial Arbitration allowed Ukrainian or Russian. The Ukrainian-only rule in Article 476(4)(6) of the Civil Procedure Code took effect only on 15 December 2017. Lawyer Sidielnikov's authority was proven by his legal services agreement. Court of Appeal, pp. 3–4
4. The law does not require a separate arbitration agreement. Clause 14 of the contract is a valid written arbitration clause. Court of Appeal, p. 4; Supreme Court, p. 4
5. The public policy defence failed. The dispute rested on the parties' contract, so Ukrainian public policy was not engaged. Public policy can be invoked only where enforcement is incompatible with the foundations of the State's legal order. The Supreme Court added that courts must examine public policy of their own motion (ex officio). It found that the debtor produced no admissible evidence of a breach. Court of Appeal, p. 5; Supreme Court, pp. 4–5
6. A partial grant is not prohibited. Enforcing the 3% simple interest "until full payment" exactly as the award words it does not change the award. An enforcement officer's later calculation of the interest does not exceed the court's powers or breach public policy. The Supreme Court relied on the Grand Chamber ruling of 15 May 2018 in case No. 759/16206/14-ц. Court of Appeal, pp. 5–6; Supreme Court, p. 6
7. The Supreme Court rejected the remaining objections. The debtor gave no evidence that its deputy chairman, V.O. Shlenchak, lacked authority under power of attorney No. 2-2d of 19 December 2014 to agree to arbitration. The District Court's composition was proper because no proceedings had been opened before the file was sent to the Court of Appeal and returned. The Supreme Court upheld both lower decisions, and its ruling is final. Supreme Court, pp. 4, 6–7

Procedural history

1. 22 September 2017LCIA final award (Arbitration No. 153184) issued in favour of Moston Properties.
2. 15 November 2017Moston applies to the Shevchenkivskyi District Court of Kyiv for recognition and enforcement.
3. 12 January 2018The District Court sends the application to the appellate court; the Kyiv City Court of Appeal returns it for first-instance consideration on 9 February 2018.
4. 5 April 2018The District Court grants the application in part and issues a writ of execution.
5. 21 November 2018The Kyiv Court of Appeal dismisses Ukrgasvydobuvannia's appeal.
6. 30 November 2018The Supreme Court opens cassation proceedings on JSC Ukrgasvydobuvannia's appeal.
7. 17 April 2019The Supreme Court dismisses the cassation appeal and upholds both lower decisions; its ruling is final.

Tribunal, counsel and experts

Decided by

• I.O. Makarenko Judge, Shevchenkivskyi District Court of Kyiv
• M.M. Panchenko Judge, Kyiv Court of Appeal (reporting judge)
• V.M. Voloshyna Judge, Kyiv Court of Appeal
• T.A. Sliusar Judge, Kyiv Court of Appeal
• V.A. Strilchuk Judge, Supreme Court of Ukraine (presiding)
• S.O. Karpenko Judge, Supreme Court of Ukraine
• V.O. Kuznietsov Judge, Supreme Court of Ukraine (reporting judge)
• A.S. Oliinyk Judge, Supreme Court of Ukraine
• O.V. Stupak Judge, Supreme Court of Ukraine
• Dmytro Yevsieiev Sole arbitrator (LCIA arbitrator; the award itself is not among the published documents)

For the claimant

Artem Viktorovych Sidielnikov · O.S. Perepylynska

For the respondent

Oleksandr Vadymovych Sobko

Run a conflict check on these names →

Keywords

• New York Convention
• recognition and enforcement
• Ukraine
• LCIA
• public policy
• Article V(2)(b)
• Article IV translation requirement
• Russian translation
• arbitration clause
• authority to sign arbitration agreement
• partial enforcement
• post-award interest
• enforcement officer calculation of interest
• Ukrgasvydobuvannia
• Anti-Corruption Prosecutor
• equipment supply contract
• stay of enforcement proceedings

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