Pelagia AS v. Laran-07 LLC

At a glance

Parties

Pelagia AS (Norway) v. Laran-07 LLC (Ukraine)

Case no.

Supreme Court of Ukraine case No. 796/41/2018, proceedings No. 61-38673av18

Court

Supreme Court of Ukraine (Verkhovnyi Sud), First Judicial Chamber of the Civil Cassation Court

Underlying award(s)

Final award of the Arbitration Institute of the Oslo Chamber of Commerce, 7 December 2017, case No. 98/17

Forum and rules

Recognition and enforcement proceedings in Ukraine under the New York Convention, Article 478 of the Civil Procedure Code of Ukraine and Article 36 of the Law of Ukraine on International Commercial Arbitration

Treaty

New York Convention 1958 (Articles II and V)

Court

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

Sector

Commercial suretyship

Outcome

Appeal dismissed. The Kyiv Court of Appeal's ruling of 21 May 2018 recognising the Oslo award and granting leave to enforce it in Ukraine was upheld.

Amount

Award enforced: USD 3,109,704.00 plus 3% annual interest on listed instalments (USD 130,263.83 as at 14 February 2018), and NOK 1,313,468.00 and EUR 10,000.00 for legal services, costs and other expenses.

The dispute

On 24 December 2010 Pelagia AS (creditor) and Laran-07 LLC (surety) signed a surety agreement. Article 9 of the agreement contains an arbitration clause. Handwritten corrections in that clause refer disputes to arbitration in Oslo, Norway, while the typed text named the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry in Kyiv. The Arbitration Institute of the Oslo Chamber of Commerce ordered Laran-07 to pay under the surety agreement. Laran-07 did not pay, and Pelagia applied for recognition and enforcement of the award in Ukraine. Laran-07 argued that Pelagia had made the handwritten corrections on its own after signing, so the composition of the tribunal and the procedure did not match the parties' agreement. It also argued that the clause misnamed the arbitral institution, that enforcement would breach Ukrainian public policy, and that its suretyship had ended because Pelagia missed the six-month time limit in Article 559 of the Civil Code.

Key holdings

1. Under Article II of the New York Convention, an arbitration clause is valid whether it is handwritten or typed, provided it is in writing. p. 4
2. Laran-07 did not prove that the handwritten corrections to Article 9 were made after signing. Both parties' originals were authentic and contained the corrections, with the signature of a Clion Group employee and Laran-07's 'Agreed' stamp. Laran-07 produced no original without the corrections. Earlier documents, including a 2013 legal opinion and a 2012 letter from the Norwegian export credit agency, also referred to Oslo arbitration. The objection under Article V(1)(d) therefore failed. p. 4
3. The clause named a non-existent 'International Commercial Arbitration Court at the Chamber of Commerce and Industry of Oslo'. No other similar institution exists in Oslo, so this inaccuracy leaves no doubt that the parties meant the Arbitration Institute of the Oslo Chamber of Commerce. It does not invalidate the clause. p. 4
4. Public policy means the fundamental principles on which the State's legal order rests. Laran-07 offered no evidence that the award was incompatible with those principles, so the public policy objection failed. The Court may not review the merits of the dispute. pp. 4–5
5. Refusing enforcement would interfere with Pelagia's property right in the sums awarded, under Article 1 of Protocol No. 1 to the European Convention on Human Rights. The Court cited the ECtHR judgment in Stran Greek Refineries and Stratis Andreadis v. Greece (21 November 1994). The appeal was dismissed, and the decision is final and not subject to appeal. p. 5

Procedural history

1. 24 December 2010Pelagia AS and Laran-07 LLC sign the surety agreement containing the arbitration clause (Article 9).
2. 19 May 2017The arbitral tribunal formed by the Oslo Chamber of Commerce rejects Laran-07's objection to jurisdiction.
3. 7 December 2017Final award in case No. 98/17 orders Laran-07 to pay USD 3,109,704.00 plus interest, and legal costs.
4. February 2018Pelagia applies for recognition and enforcement of the award in Ukraine.
5. 21 May 2018The Kyiv Court of Appeal, sitting as court of first instance, grants recognition and leave to enforce, and issues a writ of execution.
6. July 2018Laran-07 appeals to the Supreme Court; Pelagia files its response on 31 July 2018.
7. 14 February 2019The Supreme Court dismisses the appeal and upholds the ruling of 21 May 2018.

Tribunal, counsel and experts

Decided by

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

For the claimant

M. Yu. Kliuchkovskyi · O. Yu. Volkov

For the respondent

O. M. Malinevskyi · D. V. Tylipskyi · Yu. M. Krasko · V. Yu. Rykov · M. O. Kuzmenko

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Keywords

• New York Convention
• recognition and enforcement
• Ukraine
• Article V(1)(d)
• Article II
• written form
• handwritten amendments
• arbitration clause validity
• misnamed arbitral institution
• pathological arbitration clause
• Oslo Chamber of Commerce
• public policy
• surety agreement
• Article 1 Protocol No. 1 ECHR
• burden of proof
• Norway

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