Choice of court agreements

Resolution of the Higher Commercial Court of Ukraine, dated September 15, 2015, case No. 911/539/15. Available at http://reyestr.court.gov.ua/Review/50706939

The lower courts ascertained that the plaintiff in this case had filed the action against the defendant on the ground of the right of subrogation under the contract of cession, dated March 03, 2014. The plaintiff is a legal entity under the laws of the Czech Republic and is registered in the Register of commercial entitles of the Municipal Court in Prague.

Since one of the parties is a foreign entity, this case within the meaning of the Ukrainian Law On International Private Law shall be defined as the case with a foreign element.

The Ukrainian Law On International Private Law sets forth grounds, which specify when Ukrainian courts have jurisdiction over a case with a foreign element. The Ukrainian Code of Commercial Dispute Resolution Procedure contains general provisions on jurisdiction; the provisions on jurisdiction set forth by the Ukrainian Law On International Private Law shall be regarded as special ones (lex specialis).

Based on Article 76 of the Ukrainian Law On International Private Law Ukrainian courts may try cases with a foreign element if parties have expressly specified in their agreement that Ukrainian courts have jurisdiction over a case with a foreign element. In case the dispute is subject to the exclusive jurisdiction, parties to the litigation have no right to choose jurisdiction (Article 77 of the Ukrainian Law On International Private Law).

The said provision of the Ukrainian Law On International Private Law is not exhaustive since the mentioned Article lists other situations when Ukrainian courts may try cases with a foreign element, but such situations are subordinated to the provisions on choice of jurisdiction. Therefore, the rest of the listed situations shall be considered only in absence of any agreement on choice of court.

Thus, the Ukrainian Law On International Private Law entitles parties to an agreement to choose a court, which will try a case with the foreign element, in other words, to conclude a so-called prorogation agreement. Such an agreement not only confirms that the selected court has jurisdiction, but also eliminates the possibility of resolving the dispute by a court of another state.

The lower courts ascertained that the parties had not chosen Ukrainian courts for resolving disputes related to carrying out the agreement between them. Instead, in paragraph 19.1 of the agreement the parties had agreed that Dutch law should govern the agreement and that anticipated disputes should be subject to the exclusive jurisdiction of the District Court of Amsterdam.

The arguments provided in the appeal with reference to the provisions of the Treaty on Legal Assistance in Civil Cases between Ukraine and the Czech Republic should be refuted because in accordance with Article 514 of the Ukrainian Civil Code a new creditor shall obtain rights of the assignor to the extent and under the conditions that existed at the time of the transfer of these rights, unless otherwise provided by an agreement or law. The fact that the plaintiff, as a new creditor, is registered in the Czech Republic does not alter the provisions of the primary agreement, in particular, Dutch law should govern the agreement and that anticipated disputes should be subject to the exclusive jurisdiction of the District Court of Amsterdam.

Thus, the lower courts have come to the right conclusion that Ukrainian courts might not try the dispute and, therefore, they legally terminated the proceedings.

Resolution of the Higher Commercial Court of Ukraine, dated April 11, 2016, case No. 914/4114/15. Available at http://reyestr.court.gov.ua/Review/57169450

In the action the plaintiff stated that the action was filed against the defendant on the ground of the right of subrogation under the contract of cession covering grant of loans under the Framework agreement, dated 09.07.2007.

Clause 9.1 of the Framework Agreement sets forth that the Agreement shall be governed by Icelandic law. Any dispute arising in connection with carrying out the Agreement shall be subject to the jurisdiction of the District Court of Reykjavik.

In accordance with Article 76 of the Ukrainian Law On International Private Law Ukrainian courts may try cases with a foreign element if parties have expressly specified in their agreement that Ukrainian courts have jurisdiction over a case with a foreign element, except as provided for in Article 77 of this Law.

However, as noted above, clause 9.1 of the Framework Agreement, dated 09.07.2007, provides that any dispute arising in connection with carrying out the Agreement shall be subject to the jurisdiction of the District Court of Reykjavik, Iceland, and therefore, the lower court reached the correct conclusion that the dispute might not be tried by Ukrainian courts.

Resolution of the Higher Commercial Court of Ukraine, dated April 27, 2016, case No. 907/606/15. Available at http://reyestr.court.gov.ua/Review/57463960

Thus, the failure to carry out the contract in the territory of Ukraine because of the fault of the party who is the defendant in this case and is registered in Ukraine as a legal entity, eventually became the basis for the plaintiff to submit the action to the the Commercial Court of the Transcarpathian Region.

Taking into account the above mentioned and the fact that section XII of the Ukrainian Law On International Private Law does not prohibit Ukrainian state courts from trying cases with a foreign element in case of existence of a prorogation agreement in favor of a foreign state court !!!, the Higher Commercial Court of Ukraine has concluded that the dispute may be heard by commercial courts of Ukraine under paragraphs 2, 7 of part 1 of Article 76 of the Ukrainian Law On International Private Law.

As regards the change of jurisdiction because of the reference to clause 10.3 of the Contract in which the parties specified that in case of a failure to settle a dispute the dispute must be resolved by the court in the place of location of the seller who, according to the court records, is registered in Hungary, the Court of Cassations notes that clause 10.3 of the Contract does not specify what court exactly should resolve the dispute and does not contain provisions which prohibit submitting the dispute to other competent court. Thus, the Contract does not contain provisions about exclusive jurisdiction of a relevant court of the mentioned country to the extent which could allow to refer to the prevailing nature the agreement on jurisdiction within the meaning of paragraph 1 of part 1 of Article 76 of the Ukrainian Law On International Private Law.

The mentioned Contract neither contains provisions on submitting the said dispute to international arbitration bodies, and, therefore, there are no grounds to apply relevant rules on international commercial arbitration.

Resolution of the Higher Commercial Court of Ukraine, dated January 25, 2012, case No. 5020-6/115. Available at http://reyestr.court.gov.ua/Review/21209375

The court of appeals terminated the proceedings because the Sevastopol City Commercial Court had no jurisdiction over the dispute.

The lower courts found that the agreement between the parties stipulates that disputes that may arise in connection with the agreement shall be resolved by either the Maritime Arbitration Commission at the Ukrainian Chamber of Commerce and Industry in Kyiv or by the Sevastopol City Commercial Court.

The court of appeals erred in terminating the proceedings.

Ruling of the Theodosia City Court of the Autonomous Republic of Crimea (UKRAINE), dated June 20, 2011, case No. 2-1884/11/0121. Available at http://reyestr.court.gov.ua/Review/16983370

In accordance with Article 4 of the Agreement between the Government of Ukraine and the Republic of Moldova on Employment and Social Protection of Ukrainian and Moldovan citizens, who work outside of their countries, employment shall be formalized by concluding a contract between an employee and employer under the laws of the country where the employer is located.

Article 21 of the Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters sets forth that courts of the Contracting Parties may also resolve disputes if there is a written agreement between the parties to submit such disputes to these courts.

In accordance with paragraph 6.1 of the Contract disputes shall be submitted to the Arbitration Court of the Republic of Moldova.

In view of that the court decided to terminate the proceedings.