The war in Ukraine has been ongoing since 2014 when tensions between the Ukrainian government and pro-Russian separatists with the Russian government in the Eastern region escalated. The conflict has caused significant losses to the country’s economy, and its effects have extended to different sectors. One area that has not been spared from the war’s impact is arbitration. Ukraine’s safety situation and geopolitical status have influenced arbitration procedures in the country. See Russia-Ukraine conflict – Global Arbitration Review This blog post will explore the effects of the war on arbitration and suggest some potential solutions.
The Effect of the War on Arbitration
The war in Ukraine has had numerous effects on arbitration within the country. One major effect is that it has led to limited access to justice. The safety concerns in the country, particularly in the Eastern region, have prompted many businesses and investors to seek arbitration outside Ukraine. This is due to an uncertainty of the safety of goods and personnel that are affiliated with the arbitration proceedings. This has resulted in a reluctance on the part of foreign investors and businesses to engage in arbitration with Ukrainian entities, further stifling the country’s economy.
Secondly, the war in Ukraine has resulted in the loss of confidence in the Ukrainian judicial system. With the country split politically and ongoing conflict with the Russian government, the judicial system isn’t able to work properly and thus, unfortunately, investors are losing or already lost confidence on the judicial system in Ukraine. This lack of confidence in the judicial system has led to increased demands for international arbitration, which is widely perceived as being less tied to local political factors and influence.
Thirdly, the insecurities associating Ukraine’s status as a sovereign state can make it challenging to enforce arbitration awards in Ukraine. This creates problems for businesses that are involved in disputes in Ukraine. The weak enforcement of awards results in a lack of credibility in the dispute resolution process, which in turn affects investment in the country.
So what can be done to mitigate these challenges? One potential solution is for parties to agree to conduct their arbitration in a neutral location outside of Ukraine. This can help to avoid some of the security concerns and can also help to ensure enforceability of any awards that are issued. Additionally, parties could explore the use of virtual or online hearings, which can help to reduce the need for in-person travel and can also be conducted more quickly than traditional hearings.
Another solution would be to engage in outreach campaigns, after the war is over. Ukrainian lawyers could work together with the government and counterparts in other countries to promote Ukraine as a reliable location for conducting arbitration. They could highlight the country’s strong legal system with a robust legal framework that allows for fair arbitration procedures.
The ongoing war in Ukraine has had significant effects on the country, with the arbitration sector not having been spared. The war has resulted in limited access to justice, loss of confidence in the local judicial system, and weak enforcement of awards. However, as discussed, several solutions can be implemented to mitigate these effects. By positioning Ukraine as a hub for arbitration dispute resolution and engaging in outreach campaigns with foreign entities, Ukraine can reverse the negative effects of the ongoing war. For more information on our practice in international arbitration, visit International Arbitration Attorney – Transnational Matters