Recent Developments concerning Dispute Resolution of Shareholder Agreements in Ukraine: For Better or for Worse? - SIAR 2008-3

Timur Bondaryev, Senior partner, attorney-at-law at Arzinger, Ukraine, heads the Real Estate and Construction Group, practices in the fields of litigation and arbitration, mergers and acquisitions, joint ventures, real estate, commercial and corporate law. Mr. Bondaryev has been involved in a significant number of major Ukrainian business transactions. The author is a lecturer at the Law Faculty of Kyiv-Mohyla University (Ukraine), co-chair of the Real Estate Committee of American Chamber of Commerce (Ukraine), and a standing lecturer of Austrian Chamber of Commerce on Ukrainian legislation issues.

Markian Malskyy, Associate, attorney-at-law at Arzinger, Ukraine, practices in the fields of litigation and arbitration, real estate, commercial and corporate law. Mr. Malskyy obtained his LL.M. in International Commercial Arbitration from Stockholm University and the Master of International Law and Economics (MILE) degree from the World Trade Institute, Bern.

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Originally from: Stockholm International Arbitration Review

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RECENT DEVELOPMENTS CONCERNING DISPUTE RESOLUTION OF SHAREHOLDER AGREEMENTS IN UKRAINE: FOR BETTER OR FOR WORSE?

Timur Bondaryev & Markian Malskyy

I. Introduction

The shareholder (stockholder) agreement is a steadily-developing mechanism designed to supplement legal relations among the owners of a business, in particular among the shareholders of a corporation. Although these relations are already regulated to a large extent by the constituent documents of a corporation, as well as by the mandatory provisions of Ukrainian corporate legislation, shareholders often seek to regulate their relationship in more detail and introduce tailor-made provisions that supplement, to the extent permitted, mandatory law. The main reason for the existence of any shareholder agreement is the desire of the parties, inter socios, to specifically regulate any outstanding issues of mutual concern.

This article deals with current dispute related issues regarding the application, validity and enforceability of shareholder agreements in Ukraine. It places a particular emphasis on recent developments in Ukrainian jurisprudence, as affected by “Recommendations” given to Ukrainian courts by the Presidium of the Highest Commercial Court of Ukraine, which gave rise to extensive discussions in legal circles both in Ukraine and abroad. Although Ukrainian legislation provides a complete set of choice of law rules, as well as a special law on international private law the Highest Commercial Court of Ukraine has ignored their existence, not even referring to them in the issued Recommendations. While, logically, the reasoning of any court must be based on existing legislation and court practice, the Recommendations are written in a rather different style. With no references to legal acts and with only limited arguments and analysis in support of its conclusions, the Highest Commercial Court of Ukraine has acted in a manner that is unusual for a court of a developed country.