Shareholder Agreements in Ukraine: For Better or for Worse? - Chapter 8 - International Arbitration and Public Policy

Author(s):

Timur Bondaryev

Markian Malskyy

Page Count:

20 pages

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Published:

October, 2014

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Originally from International Arbitration and Public Policy

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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 important developments in

Ukrainian jurisprudence, as affected by “Recommendations 2007” given

to Ukrainian courts by the Presidium of the Highest Commercial Court

of Ukraine,1 and later amended in 2009,2 the “Resolution 2008” of the

Plenum of the Supreme Court of Ukraine,3 amendments to the Ukrainian

Commercial Procedural Code4 dealing with arbitrability of corporate

disputes, as well as recent court practice in the case of Double W,5

restarting the discussion on non-arbitrability of corporate disputes under

Ukrainian legislation.

Although Ukraine is not the only country where the arbitrability of

corporate disputes is questionable, in the case of Ukraine, as will be

explained below, the issue requires special attention.

Ukrainian legislation and the Ukrainian court system are still in the

early stages of development and are subject to constant changes and

transformations. Although case law does not constitute legal precedent in

its classical form in Ukraine, there is some form of practice unification

by the highest courts, i.e. the Highest Commercial Court of Ukraine and

the Supreme Court of Ukraine, which constitutes a valuable source for

lawyers. Such unification assists those who seek to determine how a

future court decision may be rendered. Further, it is clear that frequency

of changes to legislation means that decrees and recommendations issued

as part of the unification process are often not up to date. In addition, the

decrees and recommendations do not cover all the necessary elements of

specific cases.