International scientific e-journal

ΛΌГOΣ. ONLINE

8 (April, 2020)

e-ISSN: 2663-4139
КВ №20521-13361Р

LAW

UDC 341.63:347.711(477)

EOI 10.11232/2663-4139.08.18

INACCURACIES IN THE ARBITRATION AGREEMENT

Valeriia SHULIAK

Master of Law, Law Faculty

Taras Shevchenko National University of Kyiv

 

UKRAINE


Abstract. The present article is aiming at defining «pathological» arbitration clause in international commercial arbitration. The scientific approaches of the Ukrainian scientists are outlined herein. Inaccuracies in the arbitration agreement are analysed. The key court cases described in the present article.

Keywords: arbitration agreement; institutional rules; arbitration; recognition and enforcement of arbitral awards; court rulings; defectiveness of arbitration agreement; pathological arbitration clause; defective arbitration clauses.

Formation of the problem. As a rule, the valid and enforceable arbitration clause and arbitration agreement address the issues of the seat of arbitration, substantive law, institutional rules applicable to the dispute and other terms. However, drafting errors in the specification of the institutional arbitration and applicable rules may lead to the unenforceability of the arbitration clauses or arbitration agreements. The Ukrainian court practice will be analysed for the purposes of this article.

Analysis of research and publications. The legal issues of the "pathological" and “defective” arbitration clauses are not developed by the Ukrainian legal community. The main scientists, who researched the issue of the pathological and defective arbitration agreements and clauses are O. Perepelytska, V. Pogoretsky, G. Prusenko, L. Vinokurov, Z. Litvinenko and others.

The aim of the article. The article aims at the exploring the various deficiencies of the arbitration agreement, specifically incorrect reference to the institutional arbitral tribunal and their effect on the enforceability of the arbitration clause and arbitration agreement. Moreover, different types of the defective arbitration clauses and agreements will be explored in this article as well as the Ukrainian courts’ practice in relation to the above mentioned issues. 

Presenting main material. According to Article 7 of the Law of Ukraine “On international Commercial Arbitration”, arbitration agreement is an agreement between the parties to submit to arbitration all or some disputes which arose or may arise between them in respect with any particular legal relations, whether contractual or not. The arbitration agreement may be concluded in the form of arbitration clause in the contract or in the form of a separate written agreement. The Parties to the arbitration voluntary refuse to settle a dispute in the state courts and choose the institutional arbitration or ad hoc arbitration as an alternative dispute resolution. Therefore, it is extremely important to avoid unsuccessful and ambiguous wording that would make it impossible to establish the will of the parties to the agreement when concluding an arbitration clause and a separate arbitration agreement.

The expression “pathological clauses” was used for the first time by Frederic Eisemann in his work “La clause d’arbitrage pathologique” in 1974 [1]. This term refers to arbitration agreements or arbitration clauses containing defective elements and impeding the arbitration process.

Vinokurova L. defines the “pathological clauses” as arbitration clauses with significant defects, since: "a fuzzy, vague, unclear formulation of the arbitration agreement does not allow to establish the true intentions of the parties to the arbitration mechanism of dispute settlement, which usually entails recognition of the arbitration [2]."

Chernykh Y. distinguishes the concepts of "defective" and "pathological" arbitration clause. She claims that defective arbitration clause is the arbitration clause, the will of the parties can be established, despite some inaccurate formulation, while the pathological arbitration clause contains deficiencies that make it impossible or extremely difficult to enforce an arbitration clause, establish the parties' will to submit the dispute to arbitration (internal contradictions, ambiguities, references to a non-existent institution, lack of key information) The researcher offers a general definition of "problematic arbitration clauses" for "defective" and "pathological" arbitration clauses [3].

The special attention should be given to the Ukrainian courts’ practice as to the validity of the arbitration clauses and agreements and in order to outline the key effect of the defective and pathological arbitration clauses. It should be noted that before the judicial reform in Ukraine, Ukrainian courts refused to enforce the arbitral awards if the arbitration clause contains even minor inaccuracies. For instance, in case no. 06/26/114/2011 the court refused to enforce the arbitral award, given that the arbitration clause does not clearly specify the dispute resolution body. According to the arbitration clause, the dispute has to be finally settled and resolved by the international arbitral tribunal at the claimant’s location [4]. The court could not elaborate on the appropriate forum for dispute resolution; therefore, the arbitration clause is considered to be pathological. In another case no. 910/21362/16, the Kyiv Court of Appeal concluded that the arbitration clause is not valid even though the Vienna International Arbitral Centre confirmed its jurisdiction despite the inaccuracies in the title of the arbitration institution [5]. Thus, the court refused to accept the confirmation from the arbitral tribunal that it has the power to settle the dispute.

After the judicial reform in Ukraine, the courts adopted pro-arbitral approach as to the validity of the arbitration clauses. Thus, in case no. 911/2427/17 the court analyses the following arbitration clause: “all disputes arising out of or in connection with the contract, in the event of the parties failing to reach a compromise, shall be referred to the international commercial arbitration tribunal for consideration and final settlement at the location of the claimant.” It was further concluded considering the subject composition, the court found that the autonomy of the parties' will to resolve the dispute in the International Commercial Arbitration Court at the Chamber of Commerce and Industry of Ukraine (Kyiv) meets the requirements of the law and is valid [6].

However, Ukrainian courts do not find in case of any inaccuracies that the arbitration clause is valid and not defective. For instance, according to case no. 906/493/16 the Supreme Court concluded that the parties’ intent to resolve dispute in Arbitration Court of International Commerce and Industry does not mean that the parties want to settle the dispute in the International Commercial Arbitration Court at the Chamber of Commerce and Industry of Ukraine [7]. Therefore, the arbitration clause which empowers the Arbitration Court of International Commerce and Industry is "pathological" arbitration clause.

Conclusions. A pathological arbitration clause can be defined as an arbitration clause, formulated in such a way as to make it impossible or extremely difficult to enforce the arbitration clause. Ukrainian courts’ practice outlines the key approaches as to the validity of the arbitration clauses in case of the ambiguous wording of the title of the arbitration institution and provide a guidelines for the parties as to the pathological arbitration clauses.


REFERENCES:

 

  • Прусенко Г. Є. (2013) Поняття «патологічного» арбітражного застереження у міжнародному комерційному арбітражі. Часопис Київського університету права, 2013/1, 392-395. Вилучено з: http://nbuv.gov.ua/UJRN/Chkup_2013_1_94

  • Юрах В. М. (2018) Визначення та історичний розвиток патологічних застережень як виду арбітражних застережень. Наукові записки. Серія: право, Випуск 4, с. 186-190. Вилучено з: http://nbuv.gov.ua/UJRN/snslnnp_2018_4_38

  • Черних Ю. (2013) Дефектні та патологічні арбітражні застереження як каталізатор неетичного у міжнародному комерційному арбітражі. «Вирішення спорів за кавою»: обговорення питань професійної етики в арбітражі. Матеріали заходу Асоціації правників України та Української Арбітражної Асоціації. Вилучено з: https://uba.ua/documents/doc/chernykh.pdf

  • Постанова Вищого Господарського Суду України від 6 липня 2011 р. у справі № 06/26/114/2011. Вилучено з:  http://reyestr.court.gov.ua/Review/16871069

  • Постанова Київського апеляційного господарського суду від 7 червня 2017 р. у справі № 910/21362/16. Вилучено з:  http://reyestr.court.gov.ua/Review/67098031

  • Ухвала Господарського суду міста Києва від 16 квітня 2018 року у справі № 911/2427/17. Вилучено з:  http://reyestr.court.gov.ua/Review/73472523

  • Постанова Великої Палати Верховного Суду від 28 серпня 2018 року у справі № 906/493/16. Вилучено з:  http://reyestr.court.gov.ua/Review/78977571


НЕТОЧНОСТІ В АРБІТРАЖНІЙ УГОДІ

ШУЛЯК В.,
Магістр права, юридичний факультет
Київський національний університет імені Тараса Шевченка
УКРАЇНА

Анотація.
Ця стаття спрямована на визначення «патологічного» арбітражного застереження в міжнародному комерційному арбітражі. Тут викладено наукові підходи українських вчених щодо досліджуваного питання. Проаналізовано неточності в арбітражній угоді. Основні судові справи, описані в цій статті.


Ключові слова: арбітражна угода; інституційні правила; арбітраж; визнання і примусове виконання арбітражної угоди; дефективна арбітражна угода; патологічне арбітражне застереження; дефективне арбітражне застереження.

© Шуляк В., 2020

© Shuliak V., 2020

 

This work is licensed under a Creative Commons Attribution 4.0 International License.

PUBLISHED : 23.04.2020