Signing foreign economic agreements

1. Abstract of foreign economic agreements (contracts) and preconditions for the drawing thereof.

According to current legislation of Ukraine, a foreign economic agreement (contract) is an agreement of substantive issues between/amongst two or more entities conducting foreign economic activities with their foreign counterparts, directed at establishment, change or termination of their reciprocal rights and obligations while conducting foreign economic activities.

Potential parties to a contract must have the necessary legal competence and, moreover, shall meet all other requirements for parties involved in the contract according to the legislation of Ukraine and/or the place of its drawing. Representatives of parties must be duly authorized for signing the contract; such powers can emerge from a power of attorney, constituency acts, agreements, and other grounds in accordance with legislation.

It should be noted that under the provisions of current Ukrainian legislation to the signing of a foreign economic agreement, unless otherwise provided in exceptional cases according to the legislation of Ukraine foreign economic activity entities are not required permission by any state authorities, departments, or higher organizations for signing foreign economic agreements.

2. Choice-of-Law to foreign economic agreements.

At the time of entering foreign economic agreements the parties involved are free in a Choice-of-Law provision applicable to their relations.

Choice-of-Law by parties to the contract must be specified or stipulated in the contract, addendum(s) thereof, choice-of-law agreement etc, or shall be originated from actions of parties to the contract, conditions thereof or circumstances of a case, considered in their aggregate. The Choice-of-law provision can designate the jurisdiction whose law will govern an agreement as a whole or a separate part thereof. Parties to a contract are entitled to change Choice-of-Law at any time by mutual agreement.

At the time of specifying Choice-of-Law the parties to a foreign economic agreement must understand that the application of law of a foreign country embraces all the norms which regulate corresponding legal relations.

At the time of determining conditions of foreign economic agreements, parties are entitled to apply well-known international practices and recommendations of international institutions and organizations, unless prohibited by the legislation of Ukraine.

3. Foreign economic agreements conditions.

Foreign economic activity entities are entitled to enter any kinds of foreign economic agreements, except for those which are directly and exclusively prohibited by the legislation of Ukraine.

As a rule a foreign economic agreement include the following: 1) a title, number, date, and place of contraction thereof; 2) a preamble; 3) subjects of an agreement (contract); 4) quantity and quality of goods (scope of work and services); 5) basic conditions for the supply of goods(acceptance and ownership of the works or services); 6) price and total value of an agreement (contract); 7) payment conditions; 8) conditions for acceptance of goods (works, services); 9) packaging and labelling; 10) force majeure circumstances; 11) sanctions and reclamations; 12) juridical dispute resolution; 13) location (residence location), parties’ post and payment details.

Should languages of parties to a foreign economic agreement (contract) be different, thus, as a rule, a text of agreement shall be performed in two languages in parallel. Bilingual contracts arise from a need of parties to correctly understand all provisions of a contract. Applying contract bilingualism parties should designate a version of a contract which would have precedence.

4. Procedure for dispute resolution, arising out of foreign economic agreements, and enforcement of court judgments.

At the time of entering foreign economic agreements, parties shall designate an arbitration body should disputes arise.

The authority which parties most frequently designate for dispute resolution is the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (hereinafter referred to as ‘the ICAC at the UCCI’). In order for parties to be able to refer to the ICAC at the UCCI for dispute resolution, they need to enter into a corresponding arbitration agreement or to incorporate into their contract an arbitration clause thereof.

Awards of the ICAC at the UCCI are final and binding on parties involved and failure of compliance shall lead to its execution by force at the location of the debtor according to the United Nations Convention on recognition and enforcement of foreign arbitral awards.

It should be noted that parties may refer to commercial courts of Ukraine, unless otherwise provided by an agreement or the law. Judgments, rulings, and resolutions which come into effect are binding on the territory of Ukraine and shall be executed in the manner prescribed by the Law of Ukraine on Execution Procedure. Enforcement of commercial courts judgments shall be conducted on the basis of an issued order of execution, which constitutes an enforcement document.

It must be noted that, should an arbitral award be issued by a foreign court regardless of the country of issuance thereof, such an award shall be recognized in Ukraine as binding and subject to enforcement once a written petition is submitted to the competent court. A party which relies on a foreign court arbitral award or submits a petition on enforcement thereof, shall be required to submit to the court of Ukraine an original of the duly certified arbitral award, or a duly certified copy thereof, and, moreover, an original of the arbitral agreement or a duly certified copy thereof. If an arbitral award is set forth in a foreign language, a party shall be required to submit a duly certified translation into Ukrainian or Russian of such documents.

Publication date: 15/01/2012

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