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EU Council Removes Barriers to Mutual Recognition of Court Decisions in Ukraine and the EU

EU Council Removes Barriers to Mutual Recognition of Court Decisions in Ukraine and the EU

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On April 24, 2023, the EU Council consented to applying the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the “Convention”) in relations with Ukraine.

Concluded in 2019, the Convention is an international treaty that commits contracting states to recognize and enforce judgments in civil or commercial matters that were handed down in other states that are parties thereto, but does not extend to revenue, customs or administrative matters.

The decision of EU Council will allow EU citizens and businesses to have rulings issued by a court in the EU recognized and enforced in Ukraine. In turn, it ensures that Ukrainian judgments are recognized and enforced in the EU. Ukraine ratified the Convention on July 1, 2022.

The Convention deals with the procedure for recognizing and enforcing judgments. For example, Article 6 stipulates that a judgment that ruled on rights in rem in immovable property will be recognized and enforced if and only if the property is situated in the State of origin. A judgment may also be enforced if, the defendant expressly consented to the jurisdiction of the court of origin in the course of the proceedings in which the judgment was given, or if the person against whom recognition or enforcement is sought is the person that brought the claim (other than a counterclaim) on which the judgment is based.

Article 9 of the Convention sets out that recognition or enforcement of a severable part of a judgment will be granted where recognition or enforcement of that part is applied for, or if only part of the judgment is capable of being recognized or enforced under the Convention.

Articles 11 and 12 of the Convention define the procedures for approval of judicial settlements and provide that they are to be enforced under the Convention in the same manner as judgments.

Article 15 of the Convention sets forth that the Convention does not prevent the recognition or enforcement of judgments under national law.It is possible, under Articles 17–19 of the Convention, for a State to make a declaration regarding application of the Convention. Specifically, a State may declare that it will not apply the Convention to judgments arising from proceedings to which any of the following is a party –

  1. that State, or a natural person acting for that State; or
  2. a government agency of that State, or a natural person acting for such a government agency.

Under Article 19 of the Convention, recognition or enforcement of a judgment given by a court of a State that made such declaration may be refused by the requested State, if the judgment arose from proceedings to which either the State that made the declaration or the requested State is a party, to the same extent as specified in the declaration.

We point out that EU Council Decision (EU) 2022/1206 of 12 July 2022, concerning the accession of the European Union to the Convention, provides for the recognition and enforcement of third-country judgments in the Union only where fundamental principles of EU law are respected. Thus, based on the decision of EU Council of 24 April 2023, there are no such fundamental obstacles in respect of Ukraine. This makes the Convention an important instrument in the trade and investment framework between the EU and Ukraine.

The Convention enters into force on 1 September 2023, so EU and Ukrainian businesses need to be mindful of the benefits this development will bring to the legal landscape.

For more detailed information about this development and the possible consequences of its entry into force for you and your business, please contact our corporate and commercial law specialists.

By Oleg V. Batyuk, Ukraine Managing Partner, Igor Davydenko, Partner, and Roman Mehedynyuk, Senior Associate, Dentons

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