Reachcom Limited v. Not specified “Industrial Union of Donbass”, PJSC “Alchevskyi Metalurhiinyi Kombinat”

At a glance

Parties

Reachcom Limited (Cyprus) v. Corporation "Industrial Union of Donbass" and PJSC "Alchevsk Iron and Steel Works" (Alchevskyi Metalurhiinyi Kombinat)

Case no.

Supreme Court of Ukraine case No. 415/2376/15-ц (proceeding No. 61-4134св18); Court of Appeal of Luhansk Region proceeding No. 22ц/782/692/17

Forum and rules

Ukrainian courts; recognition and enforcement of a foreign arbitral award under the New York Convention and the 2004 Civil Procedure Code of Ukraine

Court

Court of Appeal of Luhansk Region (N.V. Stakhova, presiding; N.M. Avalian; Yu.P. Lozko); Supreme Court, Second Judicial Chamber of the Civil Cassation Court (V.A. Strilchuk, rapporteur; S.O. Karpenko; M.Yu. Titov)

Underlying award(s)

Award of the London International Arbitration Court of 30 April 2012, case No. 111798

Sector

Banking; loan finance

Outcome

Recognition and leave to enforce the award were granted by the Lysychansk City Court on 17 August 2017 and upheld on appeal (10 November 2017) and in cassation (30 May 2019).

Amount

Award: USD 47,900,000 debt, USD 9,354,792.90 interest, GBP 5,991.04 arbitration costs and GBP 271,498.87 legal costs. At the NBU rate of 17 August 2017 these were UAH 1,224,933,288, UAH 239,227,499.49, UAH 197,164.20 and UAH 8,934,985.73.

The dispute

Reachcom Limited, a Cypriot company, obtained an award of the London International Arbitration Court dated 30 April 2012 (case No. 111798). The award was made against Corporation "Industrial Union of Donbass", PJSC "Alchevsk Iron and Steel Works" and Reeferway Limited, jointly and severally. It ordered them to pay overdue debt under a Credit Line Agreement of 16 September 2005, with interest and costs. In April 2015 Reachcom applied to the Lysychansk City Court in Luhansk Region for recognition and leave to enforce the award in Ukraine against the two Ukrainian debtors. The debtors made three objections. First, they said the application had been filed in the wrong court. Second, they said that Reeferway Limited, a joint debtor, had not been joined, so the court had not checked whether Reeferway had already paid the award in whole or in part. Third, they said the first-instance ruling stated the time limit and procedure for appeal wrongly.

Key holdings

1. The application was filed in the right court. Where two debtors are registered in different places, the award creditor may choose to apply where either of them is located (Articles 392 and 113 of the Civil Procedure Code). Under an order of 12 August 2014, No. 1632-7, the Lysychansk City Court hears cases that belong to the Alchevsk City Court. The later change of the steelworks' registered address did not affect this. Court of Appeal, pp. 4–5
2. The argument that Reeferway Limited might already have paid was speculative. A letter of 26 January 2017 confirmed that, as of that date, none of the debtors had paid. The debtors offered no evidence of payment, and the burden of proving their objections was on them. Court of Appeal, p. 5
3. The New York Convention is binding on Ukraine and prevails over national legislation, except the Constitution. Ukrainian courts recognise foreign arbitral awards without reviewing whether they are correct on the merits. Supreme Court, pp. 2–4
4. Under Article 543 of the Civil Code, a creditor may demand performance of a joint and several obligation from any one debtor. Reeferway Limited did not need to be joined. The lower courts correctly found that the debtors had not proved any payment. Supreme Court, p. 4
5. The award had become binding and was rendered by a competent body. The time limit for seeking enforcement had not run out, and enforcement did not conflict with Ukraine's interests. The clerical error in the first-instance ruling about how to appeal did not breach any party's procedural rights and is no ground to set the ruling aside. The cassation appeal was dismissed and the Supreme Court's ruling is final. Supreme Court, pp. 4–5

Procedural history

1. 30 April 2012The London International Arbitration Court issues its award in case No. 111798 in favour of Reachcom Limited.
2. 16 April 2015Reachcom applies to the Lysychansk City Court for recognition and leave to enforce the award.
3. 20 August 2015The Lysychansk City Court grants the application. The Court of Appeal of Luhansk Region upholds that ruling on 29 October 2015.
4. 18 May 2016The High Specialized Court of Ukraine for Civil and Criminal Cases partly allows the debtors' cassation appeal, sets aside both rulings and sends the case back to the first-instance court.
5. 17 August 2017On rehearing, the Lysychansk City Court recognises the award and grants leave to enforce it.
6. 10 November 2017The Court of Appeal of Luhansk Region dismisses the debtors' appeals.
7. December 2017Industrial Union of Donbass files a cassation appeal. The case passes to the Supreme Court in January 2018, which opens cassation proceedings on 6 February 2018.
8. 30 May 2019The Supreme Court dismisses the cassation appeal and upholds the lower-court rulings.

Tribunal, counsel and experts

Decided by

• N.V. Stakhova Judge, Court of Appeal of Luhansk Region (presiding judge and rapporteur)
• N.M. Avalian Judge, Court of Appeal of Luhansk Region
• Yu.P. Lozko Judge, Court of Appeal of Luhansk Region
• V.A. Strilchuk Judge, Supreme Court of Ukraine (Civil Cassation Court) (judge-rapporteur)
• S.O. Karpenko Judge, Supreme Court of Ukraine (Civil Cassation Court)
• M.Yu. Titov Judge, Supreme Court of Ukraine (Civil Cassation Court)

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Keywords

• New York Convention
• recognition and enforcement
• foreign arbitral award
• Ukraine
• London International Arbitration Court
• credit line agreement
• joint and several liability
• Reeferway
• Alchevsk Iron and Steel Works
• Industrial Union of Donbass
• territorial jurisdiction
• Luhansk
• burden of proof
• no review of merits
• Article 543 Civil Code
• enforcement time limit

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