USAID New Justice Program Presented the Results of Expert Assessment of Areas to Improve the Existing Commercial Dispute Resolution System in Ukraine

In support of the Ministry of Justice’s initiative and in cooperation with the Office of the National Investment Council, the USAID New Justice Program engaged experts to assess Ukraine’s existing commercial dispute resolution system and identify potential options for improvement.

Experts involved include Patricia Shaughnessy, Professor at Stockholm University, Former Vice President of the Arbitration Institute of the Stockholm Chamber of Commerce, Crina Baltag, Senior Lecturer at Stockholm University, Former Secretary-General of the Arbitration and Mediation Center of the American Chamber of Commerce in Brazil, and Aleš Zalar, co-chair of the European Center for Dispute Resolution, former Minister of Justice of the Republic of Slovenia analyzed the relevant Ukrainian legal framework and regulations, conducted thematic interviews with Ukrainian lawyers, collected the necessary statistical information and other data, and took into account international trends and best practices in this area. The key stakeholders – representatives of the judiciary, government, legal and business community took part in the discussion on improving the tools for resolving commercial disputes as a means of increasing investor confidence and reviving business activity.

Their conclusions and recommendation experts presented during the online presentation of the report.

Mark Ellingstad, Director of the Office of Democracy and Governance at the United States Agency for International Development (USAID) Regional Mission in Ukraine and Belarus, in his welcoming remarks said that a recent survey conducted by the European Business Association found that lack of trust in the judiciary was the number one obstacle to foreign investment in Ukraine.

“This reflects the need to strengthen the legal and judicial system to better protect investors and commercial activity in general by creating a more supportive legal and regulatory framework, including alternative dispute resolution mechanisms,” Mr. Ellingstad said. “That is why USAID is pleased to support the Ministry of Justice and National Investment Council in conducting this timely and important assessment of the underlying environment for commercial dispute resolution in Ukraine.”

He also emphasized that USAID looked forward to seeing continued progress in developing dispute resolution systems in line with the expectation of Ukrainians and international business community.

Deputy Minister of Justice of Ukraine Ivan Lishchyna stressed the urgency of this event, as business representatives and foreign investors mentioned the issues of commercial and administrative justice and judicial independence among the most significant problems. Mr. Lishchyna noted that the Ministry of Justice developed a preliminary concept for the reform of international commercial justice in Ukraine, which was submitted for expert evaluation.

“First we will discuss it in this circle, and then together with experts we will finalize and prepare the text of the concept for the general public,” said the Deputy Minister.

 

“The issue of fair, transparent and efficient judiciary is not a theoretical issue that only lawyers are interested in, but a practical one that directly affects the economic development of our state. After all, the protection of property rights and economic freedoms in courts is the foundation on which most of the world’s leading economies are built,” said Olga Magaletska, Head of the Office of the National Investment Council.

Ms. Magaletska noted that the USAID New Justice Program team and experts had done a tremendous and thorough job of preparing the report.

“International experience shows that arbitration is developing most strongly in jurisdictions with a high-quality judicial system. This is primarily due to the fact that the courts are empowered to make decisions in support of the arbitration process, – emphasized Head of the Office of the National Investment Council. “Therefore, we strongly support the USAID’s proposals regarding the establishment of a specialized court for international commercial disputes, which we believe will be a long-term and systematic solution for the business needs in quality justice in our country.”

During the online presentation of the report, the experts presented three potential options to improve the commercial dispute resolution system in Ukraine for the participants to discuss:

  • Opening a branch office of an existing international arbitration institution;
  • Establishing a new international arbitration institution;
  • Establishing a specialized commercial court (new high level specialized commercial court, specialized chambers and/or panels of judges in existing courts or introducing specialization of individual judges in existing courts).

The main conclusion of the assessment is stating the urgent need to improve the procedure for international commercial disputes resolution in Ukraine. The authors do not offer recommendations for the implementation of a particular option but provide an objective preliminary assessment of the options identifying potential benefits and obstacles for each of them. The implementation of any of these options requires a broad involvement of stakeholders and their commitment to long-term efforts.

The next steps include setting up an advisory body consisting of the key stakeholders’ representatives to advise the group responsible for further analysis and assessment, as well as developing and conducting a comprehensive, evidence-based stakeholder survey to determine their perceptions and needs for resolving commercial disputes. Additionally, public consultations are planned to determine the scope of the necessary reform and compatibility with international best practices in order to reach an agreement and find constructive solutions for further development and comprehensive analysis of the regulatory framework.

“Your views and recommendations on the presented analysis are very important for further progress in this evolutionary process,” said David Vaughn, the USAID New Justice Program Chief of Party, summarizing the discussion. “We look forward to continuing our dialogue with you and plan to take advantage of all modern approaches to alternative dispute resolution, including mediation and online dispute resolution.”