The Civil Court of Cassation of the Supreme Court in its decision dated 21 December 2023 in case No. 824/83/23 (proceedings No. 61-15524ав23) confirmed the principle of limited interference of national courts in arbitral awards when considering applications for their setting aside, which is generally recognized in pro-arbitration jurisdictions, and is provided in Ukrainian law. 

The Supreme Court states that a national court cannot assess the accuracy of the application of substantive law by the arbitral tribunal, the court should only investigate whether there are grounds provided by law for setting aside the award. Otherwise, it would be an abuse of power by the national court. The Supreme Court also noted that the finality of arbitral awards in international commercial arbitration had to be respected, except in extraordinary circumstances (Recommendations of the International Law Association on Public Policy, adopted in New Delhi in 2002).

The Supreme Court rejected the arguments of the claim of appeal that the Arbitral Tribunal had violated the basic principles of justice, such as: competitive process, equality of the parties, lack of reasoning and reasonableness of the parties’ arguments, citing the violation of Article 6 of the Convention on a Fair Trial by the arbitral tribunal.

Referring to all the arguments, the Supreme Court noted that, being an alternative method of dispute resolution based on voluntary agreement of the parties, international commercial arbitration does not function in the realities of a formalized judicial approach to dispute resolution applicable to the national court system, and is a more flexible, efficient and adaptive tool. Said interpretation of the principles of arbitration lays out the pro-arbitration approach of national courts to setting aside arbitral awards. The same was applied to the arguments of the claim of appeal regarding the failure of the arbitral tribunal to take into account (taking into account in part) the evidence provided by the applicant, or to give this evidence an incorrect assessment, in the applicant’s opinion. 

Any assessment by a national court of the circumstances of the arbitration dispute, the completeness and relevance of the evidence provided by the parties, etc. would mean unlawful judicial interference prohibited by Article 5 of the Law of Ukraine “On International Commercial Arbitration” and is a violation of the principle of legal certainty of a court decision. At the same time, the Supreme Court pointed out that the basic principles and rules of evidence in arbitration proceedings are set out in Article 52 of the ICAC Rules, which were not violated by the arbitral tribunal, given the high level of discretion of the arbitral tribunal in accepting, considering and evaluating evidence.

That is, international standards of evidence in commercial arbitration provide for the obligation of arbitrators to ensure competitiveness in terms of the right to submit evidence, the right of the other party to examine, the right to participate in hearings, and do not provide an opportunity for the parties to oppose the arbitral tribunal in its evaluation of evidence and application of law.

The Supreme Court emphasized that the reservation on violation of public order as a ground for setting aside an arbitral award is a mechanism that establishes the priority of public interests over private ones and protects public relations from negative impacts on them. In other words, the legal concept of public policy exists to protect the state from foreign arbitral awards that violate the fundamental principles of fairness and justice in force in the state.

With the legal position framed in this ruling, the Supreme Court has made a significant contribution to the establishment of Ukraine as a pro-arbitration jurisdiction.

The full text of the resolution of the Supreme Court dated December 21, 2023 in case No. 824/83/23 (proceedings No. 61-15524ав23) is available here.