On 26 January 2010, the Higher Commercial Court of Ukraine (HCC) made a final decision in proceedings initiated by International Port Services Limited (the claimaint) against the Odessa Trade Port (the Port), Sintez Oil and the Ministry of the Transportation and Communication of Ukraine (the Ministry).

The claimant challenged the validity of the addenda to two contracts for the servicing of oil tankers in the Odessa Sea Port. One of the contracts was concluded between the claimant and the Port, the other one between the claimaint, the Port and Sintez Oil. Both contracts contained arbitration clauses referring any disputes arising out of them, including as to their validity, to the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry. However, the claimant commenced proceedings in the Ukrainian Commercial Court.

The defendants (the Port, Sintez Oil and the Ministry) argued that the dispute was outside the jurisdiction of the Ukrainian Commercial Court as the relevant contracts provided for the resolution of disputes by arbitration. However, the Commercial Court rejected this argument, on the basis that, although it had been named a defendant in the statement of claim, the Ministry was not a party to the arbitration agreements. The court granted the relief sought by the claimant and declared the addenda null and void. On appeal, the HCC upheld the decision of the lower court.

It is unclear from the text of the judgments what the nature of the claims raised against the Ministry could have been, bearing in mind that it was not a party to either of the challenged contracts. In any event, the HCC’s decision appears to open up an opportunity for circumvention of arbitration agreements in disputes with Ukrainian counterparts. It is enough to name a party that is related in some way to the dispute as a co-defendant to bring the matter within the jurisdiction of the Ukrainian commercial courts.

Ruling no. 12/171-54/89-39/143.