NPJSC Lukon v. PrJSC Ilyich Iron and Steel Works

At a glance

Parties

Non-Public Joint-Stock Company Lukon (Russian Federation) v. Private Joint-Stock Company Illich Iron and Steel Works of Mariupol (Ukraine)

Case no.

Supreme Court of Ukraine, case No. 796/92/2018, proceedings No. 61-40263ав18

Court

Supreme Court of Ukraine, Civil Cassation Court, First Judicial Chamber

Underlying award(s)

Award of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC at the UCCI) of 21 November 2017, case No. 202у/2017

Treaty

New York Convention 1958, Article V; contract No. 3277 of 14 November 2013, clause 9.4 (arbitration clause)

Court

Judges A. S. Oliinyk (presiding, judge-rapporteur), V. O. Kuznietsov, H. I. Usyk

Sector

Industrial equipment supply; steel

Outcome

Appeal dismissed. The Supreme Court upheld the Kyiv Court of Appeal's ruling of 30 May 2018, which recognised the award and granted leave to enforce it.

Amount

Award enforced: RUB 2,107,100.00 debt for equipment, RUB 153,396.88 penalty, RUB 178,555.08 three per cent annual interest, RUB 185,000.00 legal costs and RUB 181,927.33 arbitration fee, a total of RUB 2,805,979.29.

The dispute

Lukon, a Russian company, agreed under contract No. 3277 of 14 November 2013 to supply equipment to the Ukrainian steel producer Illich Iron and Steel Works of Mariupol. The buyer did not pay for the equipment delivered. The contract chose Ukrainian substantive law and the CISG, and referred disputes to the ICAC at the Ukrainian Chamber of Commerce and Industry in Kyiv, before a sole arbitrator, with Russian as the language of the proceedings. On 21 November 2017 the ICAC ordered the buyer to pay RUB 2,805,979.29. Lukon then applied to the Kyiv Court of Appeal for recognition and leave to enforce the award. The court granted the application. The buyer appealed to the Supreme Court. It argued that enforcement would breach Ukrainian public policy and would help finance the occupying State. It also argued that the application was defective because no enforcement document was attached to it.

Key holdings

1. The public policy defence fails. The contract is governed by Ukrainian law, and resolving the dispute under Ukrainian law does not affect Ukraine's public policy. The public policy reservation exists mainly to exclude the application of foreign private law. p. 4
2. Public policy can be invoked only where enforcement is incompatible with the foundations of the State's legal order. The events in Ukraine since February–March 2014, and the recognition of the Russian Federation as an aggressor State, did not affect the private-law relationship between the parties under the contract or the obligations arising from it. p. 4
3. The application did not have to include an enforcement document. Article 476 of the Civil Procedure Code, which sets out the form and content of the application, contains no such requirement. p. 4
4. The party resisting enforcement bears the burden of proving a ground for refusal. The debtor proved none of the grounds under Article V of the New York Convention, Article 478 of the Civil Procedure Code or Article 36 of the Law on International Commercial Arbitration. The appeal was dismissed and the ruling of 30 May 2018 upheld. The judgment is final. pp. 3–4

Procedural history

1. 14 November 2013Lukon (then a closed joint-stock company) and the buyer conclude supply contract No. 3277.
2. 21 November 2017The ICAC at the UCCI issues its award in case No. 202у/2017, ordering the buyer to pay RUB 2,805,979.29.
3. 29 March 2018Lukon applies to the Kyiv Court of Appeal, sitting as first-instance court, for recognition and leave to enforce the award.
4. 30 May 2018The Kyiv Court of Appeal grants the application and orders a writ of execution.
5. July 2018The buyer appeals to the Supreme Court. Appeal proceedings are opened on 25 July 2018.
6. 9 October 2018The buyer pays the amount awarded. State enforcement proceedings are closed on 10 October 2018.
7. 22 November 2018The Supreme Court dismisses the appeal and upholds the ruling of 30 May 2018.

Tribunal, counsel and experts

Decided by

• A. S. Oliinyk Judge, Supreme Court of Ukraine (presiding judge and judge-rapporteur)
• V. O. Kuznietsov Judge, Supreme Court of Ukraine
• H. I. Usyk Judge, Supreme Court of Ukraine

For the claimant

Yaroslava Ihorivna Lysunets

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Keywords

• recognition and enforcement
• New York Convention Article V
• public policy
• aggressor State
• Russian Federation
• Ukraine
• ICAC at the Ukrainian Chamber of Commerce and Industry
• Illich Iron and Steel Works
• Mariupol
• equipment supply
• CISG
• burden of proof
• Article 478 Civil Procedure Code
• Law on International Commercial Arbitration Article 36
• Article 476 Civil Procedure Code

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