How to collect a debt from a Ukrainian company?

If you are a foreign company that has agreed with a Ukrainian company, and the latter does not fulfill its obligations (does not supply paid goods and does not return funds). What to do and where to turn in such a situation? The answer seems obvious - it is necessary to go to court. But to which? 

The answer seems obvious - you need to go to court. But to which?

Since this is a foreign economic agreement, there may be several scenarios:

1. The agreement does not contain any provisions on the jurisdiction of the dispute.

2. The agreement contains an arbitration clause, and an arbitral tribunal shall consider the dispute.

3. 3. In the contract, the parties have chosen a specific court to decide the dispute.

Let's briefly consider each of these options.

National court. Suppose the parties have not determined which court should consider the dispute. In that case, the non-resident may apply to the Ukrainian court according to the rules of jurisdiction set out in the Commercial Procedural Code of Ukraine. This right is provided by Art. 7 of the Code. Of course, a non-resident may have difficulties with national law when considering a dispute. Still, such a decision will be the easiest to implement, as it will not be necessary to obtain other judgments on the recognition of such a decision in Ukraine.

Arbitration. If the parties have included an arbitration clause in the contract, they will have to apply to the previously agreed-upon arbitration. Exceptions are cases where the arbitration clause, for example, is incorrect or there is no such court that the parties have indicated. In this case, the arbitrational tribunal may not accept the case for consideration. If this has already happened, we return to scenario 1, and a state court can consider the dispute.

Third country court. After you have managed to deal with the court, which is the subject of the dispute, it is necessary to file a lawsuit to justify the existence of grounds for recovery of the debt, confirm its size, and so on. In general, everything is typical litigation, with specific features, depending on applicable law. This should also be noted. If you do not know the rules of law governing the dispute, we advise you to involve local lawyers who will help anticipate all risks and give practical advice on the debate. 

Then directly the court proceedings. After you have managed to deal with the court to which the dispute is pending, it is necessary to file a lawsuit in which to substantiate the existence of grounds for debt collection, confirm its amount, etc. In general, everything is the same as in an ordinary legal dispute, with certain peculiarities, depending on the law that is subject to application. You should also pay attention to this. In case you are not familiar with the legal rules governing the dispute, we advise you to engage local lawyers who will help you predict all the risks in advance and give you practical advice on how to resolve the dispute.

After the court decision is received, we move on to the last, perhaps the most crucial stage - the implementation of the decision. 

Suppose the case was heard in a Ukrainian court. In that case, it is necessary to wait until the decision enters into force and transfer it for enforcement to a public or private executor. Suppose you have received a decision from arbitration or a foreign court. In that case, you will first need to apply to the Ukrainian court to recognize and obtain permission to enforce such a decision. And then, the procedure is the same as with the findings of national courts. The court issues a writ of execution, then passes it to the executor.

Together with the writ of execution, the relevant application and other documents provided by the law "On Enforcement Proceedings" are submitted to the executor. The statement shall specify the details of the debt collector to which the funds received from the debtor should be transferred. 

After that, the executor opens debt collection proceedings, seizes bank accounts, property (if any), and performs other actions aimed at debt collection.