Communicated on 10 October 2017
FOURTH SECTION
Application no. 11161/08
MONT BLANC TRADING LTD AND ANTARES TITANIUM TRADING LTD and ANTARES TITANIUM TRADING LTD
against Ukraine
lodged on 15 February 2008
STATEMENT OF FACTS
The applicant companies are privately owned Mauritian and British commercial companies, Mont Blanc Trading Ltd, registered in Port Louis (“MBT”, the first applicant company) and Antares Titanium Trading Ltd, registered in London (“ATT”, the second applicant company). They are represented before the Court by Mr P. Landolt, a lawyer practising in Geneva.
A. The circumstances of the case
The facts of the case, as submitted by the applicants, may be summarised as follows.
On 2 December 2003 MBT, ATT and Antares International Company LLC (“Antares”) entered into a complex set of agreements for the manufacture and sale of titanium products. The parties agreed to use international arbitration as a method of settling disputes.
1. Proceedings before the London Court of International Arbitration
On 18 November 2004 MBT and ATT instituted proceedings in the London Court of International Arbitration (“the LCIA”) against Antares, seeking an award for breach of contract. In particular, they claimed that Antares had failed to comply with its contractual obligations concerning the production and exclusive sale of titanium products.
On 22 December 2004 by email and on 4 February 2005 by letter, Antares objected to the LCIA having jurisdiction, referring to an additional contract dated 8 April 2004 (“the disputed contract”), which amended the arbitration clause contained in the agreements of 2 December 2003 and shifted jurisdiction from the LCIA to the Ukrainian commercial courts.
On 10 March 2005 the sole arbitrator dealing with the case ordered Antares to produce a copy of the disputed contract before 8 April 2005.
On 20 April 2005 Antares sent submissions concerning the LCIA’s lack of jurisdiction to hear the case, attaching a photocopy of the disputed contract.
On 5 May 2005 the sole arbitrator appointed an expert, seeking his advice on the authenticity of the disputed contract, and ordering Antares to deliver the original document to the expert by 27 May 2005.
Antares never delivered the original document to the expert, who on 22 July 2005 issued his report, concluding that there was strong evidence that the representatives of ATT and MBT had not signed the original document.
On 12 September 2005 the sole arbitrator acknowledged his jurisdiction to consider the case and issued an arbitral award ordering Antares to pay MBT the amount of 4,006,961.17 United States dollars (USD) in compensation, in addition to legal and other costs and the costs of arbitration.
2. Proceedings before the Ukrainian commercial courts
In February 2005 Antares lodged a claim against MBT and ATT with the Kyiv Commercial Court, seeking compensation for alleged non‑performance of the disputed contract dated 8 April 2004.
On 22 August 2005 the Kyiv Commercial Court, having considered the case in the absence of ATT and MBT, ordered that ATT and MBT each pay Antares the amount of USD 685,794.53 in compensation, on the basis of the disputed contract.
On 27 January 2006 MBT received the statement of claim and the ruling dated 14 February 2005.
On 30 June 2006 ATT and MBT lodged an appeal against the decision of the first-instance court, asking it to restore the time-limit for filing an appeal, quash the above decision, and close the proceedings, as there was the arbitral decision on the matter and the parties had never agreed upon the jurisdiction of the Ukrainian courts.
On 17 August 2006 the Kyiv Commercial Court of Appeal issued a ruling restoring the time-limit for filing an appeal.
On 27 October 2006 the Kyiv Commercial Court of Appeal, having considered the case in the absence of ATT and MBT, upheld the decision of the first-instance court. In particular, the court dismissed the argument that the sole arbitrator had established that the disputed contract was invalid, referring to a decision of the Pecherskyy District Court of Kyiv dated 12 October 2006 that dismissed an application for leave to enforce the arbitral award.
ATT and MBT appealed in cassation, asking the Higher Commercial Court of Ukraine to quash the above decisions and close the proceedings.
On 27 February 2007 the Higher Commercial Court of Ukraine quashed the above decisions and closed the proceedings, referring to the findings of the sole arbitrator on the invalidity of the disputed contract and to the Ukrainian courts’ lack of jurisdiction to hear the dispute, as the applicant companies did not have ties with Ukraine.
Antares filed a cassation appeal with the Supreme Court of Ukraine.
On 17 April 2007 the Supreme Court of Ukraine quashed the decision of the Higher Commercial Court of Ukraine, referring to the conclusion of the lower courts that the disputed contract amended the arbitration clause and gave the Ukrainian courts jurisdiction rather than the LCIA. The court also inferred that, since the arbitral decision had been rendered after the Ukrainian commercial courts had opened the proceedings, it was for the Ukrainian courts to consider the case.
On 26 June 2007 the Higher Commercial Court of Ukraine referred to the findings of the Supreme Court on the issue of jurisdiction and upheld the decision of the appellate and first-instance courts.
On 23 August 2007 the Supreme Court of Ukraine refused to open cassation proceedings.
3. Civil proceedings for enforcement of the LCIA decision
On 7 July 2006 MBT lodged an application with the Pecherskyy District Court of Kyiv, seeking leave to enforce the arbitral decision awarding compensation.
On 12 October 2006 the Pecherskyy District Court of Kyiv refused the application on the basis that Antares had not been properly informed of the arbitration or of the date and time of the hearing, and on the basis that on 22 August 2005 the Kyiv Commercial Court had rendered a final decision in the case in relation to the same dispute.
MBT appealed against the above decision.
On 11 June 2007 the Kyiv Court of Appeal found that Antares had been duly informed of the arbitral proceedings, however, it refused to enforce the arbitral decision on two grounds. Firstly, because the Ukrainian courts had exclusive jurisdiction to consider the dispute, and secondly, because either the national courts had already considered the case and issued a final decision, or the ongoing proceedings before the Ukrainian courts had commenced prior to the international arbitration proceedings. The appellate court referred to the decision of the Supreme Court of Ukraine dated 17 April 2007 confirming the jurisdiction of the Ukrainian courts. However, the same decision did not contain the term “exclusive”.
MBT lodged a cassation appeal against the decision of the Kyiv Court of Appeal.
On 5 October 2007 the Supreme Court of Ukraine upheld the decision of the appellate court.
B. Relevant international law
The relevant provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards read as follows:
Article II
“... 3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.”
Article V
“1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:
(a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or
(c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or
(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:
(a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or
(b) The recognition or enforcement of the award would be contrary to the public policy of that country.”
C. Relevant domestic law
The relevant provisions of the Code of Commercial Procedure of 6 November 1991, as worded at the material time, read as follows:
Article 62. Refusal to accept a statement of claim
“A judge shall refuse to accept a statement of claim if:
... 2) a similar action between the same parties in relation to the same subject matter and on the same grounds is ongoing before a court or other competent body with jurisdiction to consider the commercial dispute, or a decision exists rendered by that [court or] body in relation to the subject matter of the dispute.”
Article 80. Closing proceedings
“The commercial court shall close the proceedings in the case, if:
... 2) a decision exists rendered by a commercial court or other body with jurisdiction in the case between the same parties in relation to the same subject matter and based on the same grounds.
... 5) the parties concluded an agreement submitting the dispute for settlement by an arbitral tribunal.”
Article 390. Conditions for recognition and enforcement of a foreign court decision subject to enforcement
“A foreign court decision shall be recognised and enforced in Ukraine, provided that recognition and enforcement are permitted under international treaties ratified by the Verkhovna Rada of Ukraine, or on the basis of the reciprocity principle under an ad hoc agreement with a foreign country whose court decisions shall be enforced in Ukraine.”
Article 396. Grounds for refusing an application for enforcement of a foreign court decision
“1. An application for enforcement of a foreign court decision shall not be allowed in the cases set out in the international agreements ratified by the Verkhovna Rada of Ukraine.
2. If the international agreements ratified by the Verkhovna Rada of Ukraine do not provide for the following events, an application may be dismissed:
1) if the decision of a foreign court has not yet become binding in accordance with the law of the state where it was rendered;
2) if the party against whom the decision was made was unable to present his case as a result of not being properly informed of the proceedings; and
3) if a decision was issued in the case, and the subject matter of [the case] falls under the exclusive jurisdiction of the courts or other competent bodies of Ukraine;
4) if there is a decision of a Ukrainian court in the case between the same parties, in relation to the same subject matter and on the same grounds, or if litigation involving the same parties is ongoing in Ukrainian courts, in relation to the same subject matter and based on the same grounds, which was initiated prior to the proceedings in a foreign state.
5) if a time-limit for enforcing a foreign decision provided for in [both] the international agreements ratified by the Verkhovna Rada and this law has expired;
6) if, under the laws of Ukraine, the subject matter of the dispute shall not be adjudicated upon by a court;
7) if the recognition or enforcement of the decision would pose a threat to the interests of Ukraine;
8) in other circumstances as provided for in the laws of Ukraine.”
COMPLAINTS
The first applicant company complains under Article 6 of the Convention regarding the unfairness of the proceedings before the civil courts, denouncing in particular the lack of reasoning in their decisions.
Both applicant companies complain under Article 6 of the Convention regarding a violation of their right to a fair trial in the context of the proceedings before the commercial courts. In particular, they assert that the commercial courts had no jurisdiction to consider their case, and complain that they were not informed about the commercial proceedings or the dates of the hearings before the first and second-instance courts, and that the courts’ decisions were not duly reasoned.
Under Article 1 of Protocol No. 1 to the Convention, both applicant companies complain about the non-enforcement of the arbitral award of 12 September 2005.
QUESTIONS TO THE PARTIES
1. Before the commercial courts, was there a violation of the applicant companies’ right to a fair trial under Article 6 of the Convention, in particular as concerns their allegations that:
‑ the commercial courts had no jurisdiction to consider their case;
‑ they were not informed about the commercial proceedings or the dates of the hearings before the first and second-instance courts;
‑ the courts’ decisions were not duly reasoned?
2.
(a) What were the reasons for the non-enforcement of the arbitral award, in view of Article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards? Does the reference of the civil appellate court to “exclusive jurisdiction” (“виключна компетенція суду”) as mentioned in Article 396 § 3 of the Ukrainian Code of Civil Procedure mean that it found that the dispute in question could not be submitted for arbitration? Does Article V of the above-mentioned Convention contain an exhaustive list of grounds for the non-enforcement of arbitral awards? Are the conditions for the enforcement of foreign arbitral awards set out in Article 396 of the Ukrainian Code of Civil Procedure more stringent than those set out in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and do they contain additional conditions? Does Article V of the above Convention take precedence over Article 396 of the Code of Civil Procedure?
(b) Considering in particular the answers to the questions in 2(a) above, has the first applicant company’s right to a reasoned judgment under Article 6 of the Convention been violated?
3. Considering in particular the answers to the questions in 2(a) above, have the applicant companies’ rights under Article 1 of Protocol No. 1 been violated in respect of the non-enforcement of the arbitral award of 12 September 2005?
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