Israeli Court Revokes ICAC Arbitration Award!

Author:Mr Benjamin Leventhal
Profession:Gideon Fisher & Co.
 
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An Israeli court revoked ICAC arbitration awards obtained by the Ukrainian Ministry of Internal Affairs, and declared them unenforceable due to what it considered to be unjust arbitration procedures under Section 5 of the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards.

The Ukraine Ministry of Internal Affairs (Department of Material Provisions) had obtained an arbitration award in its favor in the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC), according to which an agreement signed with an Israeli supplier was declared void due to the unauthorized signature of the contract (by the Ukrainian Department of Material Provisions). Under a second consecutive arbitral award, the Ukrainian party was awarded restitution of over 1 million US$ paid to the Israeli supplier. This decision was also based upon the previous finding that the relevant agreement was void.

The Israeli supplier challenged the first arbitral award in the Ukrainian jurisdiction, and in each instance, was denied relief, including by the Ukrainian Supreme court. Then, the Ukrainian party applied to the Israeli District court for enforcement of the arbitral awards based on the New York Convention. The Israeli supplier, in response, submitted a response objecting to enforcement, as well as a separate motion to the Israeli court seeking to revoke the restitution arbitral award (that was the award the Ukrainian party required to enforce).

The Israeli court denied enforcement and held the arbitral awards were void. Specifically, the court made the following findings:

1. The appointment of the arbitration tribunal was not in accordance with the ICAC rules and was unjust, inter alia, because said tribunal was found to be biased in favor of the Ukrainian party.

2. The restriction upon one of the arbitrators to access arbitration documents, and improper influence placed upon one arbitrator, including via threats!

3. The witnesses for the Ukrainian party did not attend the arbitration proceedings for cross examinations or at all. In this regard it should be mentioned that the Israeli court so held, despite the fact the Israeli supplier did not attend the hearings, arguing it has no trust in the tribunal.

4. The failure to disclose to the Israeli party, arbitration documents and the failure to notify it of the arbitration institution fees.

5. The improper intervention by external figures to affect the tribunal's discretion....

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