Public order in the shadow of judicial statistics is an uncontrollable risk
In modern law, there is a presumption of validity of an arbitral award. This is the so-called “gold standard” enshrined in the New York Convention of 1958, which states that recognition and enforcement of arbitral awards is the rule and refusal is the exception.
However, the effectiveness of this supranational mechanism is sometimes hampered by national law enforcement, in particular by such an evaluative concept as “public policy“.
Leading expert Gary Bourne in his fundamental works emphasizes that the public policy clause (Article V(2)(b) of the Convention) should be applied only in exceptional circumstances when the enforcement of a decision violates “fundamental principles of morality and justice“.
However, in developing jurisdictions, this concept is often used as a tool of judicial protectionism, turning into a “black hole” in which legitimate expectations of investors disappear.
To understand where Ukraine is on this map, let’s try to audit judicial statistics, the results of which show that the state not only does not control this process, it does not see it.
Statistical blindness
In December 2025, the State Judicial Administration of Ukraine (SJA) officially announced that Ukraine does not keep separate statistical records of the grounds for refusing to enforce international arbitral awards.
The data sets we have obtained (reporting forms No. 1-mzs, No. 2-azs and archival forms No. 2-C for 2014-2024) record only “gross” indicators, namely the number of applications filed, the number of cases considered, and balances. In these forms, the column “reason for refusal” simply does not exist.
This creates a “black box” effect. Therefore, it is impossible to empirically confirm or refute the hypothesis that the Ukrainian jurisdiction is friendly to arbitration. In general, investors do not see a difference between a “technical” refusal (for example, due to lack of proper notice to a party) and a “political” refusal (application of the public policy doctrine to protect a state-owned enterprise from paying its debt).
Global context
This situation is contrary to modern global approaches to legal certainty.
Lucas Mistelis, Professor at Queen Mary University of London, notes that it is not so much the “law on the books”that is critical for business as the predictability of the “law in action“.
The lack of verified data on the application of public order is an indicator of increased risk for foreign investors. As another researcher, Nikos Lavranos, notes, if a jurisdiction cannot demonstrate a transparent “success rate” of enforcement, the investor automatically puts the maximum risk premium in the cost of capital.
Ukrainian reality, between form and substance
An analysis of the SJA’s reporting forms shows that the methodology is outdated and focused on the Soviet approach of “judge burden” rather than on a qualitative analysis of justice.
In 2017, when the consideration of applications for recognition of foreign arbitral awards was transferred to the appellate courts as the court of first instance, these cases in the reports (form 2-асс) dissolved into the general array of civil proceedings.
In practice, this means that a court can refuse to enforce an award worth hundreds of millions of dollars, citing that the recovery “threatens the economic security of Ukraine“, which is an overly broad interpretation of public policy – and this case will remain in the statistics as just “one pending application“, without any marker of a dangerous trend.
Court practice
The analysis of court practice shows a complex transformation of approaches. For the most part, the courts declare their commitment to the pro-arbitration approach, noting that “reference to a violation of public order may be made only in cases where the enforcement of the decision is incompatible with the foundations of the state’s legal order“.
However, in cases involving strategic enterprises, there is a trend towards protectionism and a deviation from the liberal pro-arbitration approach to the formation of a defense mechanism in times of war.
In cases No. 824/241/2018 and No. 824/183/19, the Supreme Court refused to enforce the award of the Stockholm Arbitration against the Odesa Port Plant, based on the fact that the bankruptcy of a strategic enterprise and the potential transfer of funds to sanctioned persons violates public order and economic security of the state. The court explicitly pointed to the “priority of public interests over private interests” in such cases.
In another case No. 824/22/19, the court recognized that the arbitration’s interference with the NBU’s regulatory activities and the obligation to change the currency regulation regime was contrary to public policy.
In case No. 824/178/19, the court refused to enforce the award of the Emergency Arbitrator, as it effectively suspended the enforcement of another national court decision that had entered into force, which was considered a violation of the principle of legal certainty (Article 129 of the Constitution).
In its legal opinion in case No. 519/15/17, the Supreme Court emphasizes that the courts are obliged to check whether the recognition and enforcement of the arbitral award will lead to a violation of public policy of Ukraine.
The warning about violation of public order as a ground for refusal to grant permission to enforce an international commercial arbitration award is a kind of mechanism that establishes the priority of public interests over private ones, protects the public order of the state from any negative impact on it, which is also set out in the decision of the Supreme Court of 06 October 2022 in case No. 824/10/22.
In most cases, when deciding to refuse to recognize and enforce an arbitral award on the grounds of contravention of the public policy of Ukraine, the courts proceed from the fact that the obligation to enforce the award is imposed on the state-owned company, and the actual recipient of claims, payments and income as a result of the enforcement of the arbitral award in Ukraine will be the sanctioned person (Resolution of the Supreme Court of 08.06.2021 No. 824/241/2018, Resolution of the Supreme Court of 25.11.2021 No. 824/183/19).
The courts also recognize that it is incompatible with the public order of Ukraine to impose direct obligations on a public authority of Ukraine by an arbitral award. In particular, the court recognized that interference in the activities of the National Bank of Ukraine and the assignment of powers to it that are not inherent in its powers is inconsistent with the public policy of Ukraine.(Ruling of the Kyiv Court of Appeal dated 05.07.2019 and Resolution of the Supreme Court dated 07.09.2023 in case No. 824/22/19).
In the case, the Supreme Court agreed with the Kyiv Court of Appeal, which found that the recognition and enforcement of the arbitral award contradicts the public policy of Ukraine, in particular the provisions of Article 129 of the Constitution of Ukraine on the binding nature of court decisions, since the recognition and enforcement of the award of the Emergency Arbitrator jeopardizes the rule of law and legal certainty, preventing the state from enforcing another arbitral award, the enforcement of which was authorized by a decision of a Ukrainian court, which
The Ukrainian court practice indicates a gradual development of the practice of applying the public policy clause as a ground for refusing to recognize and enforce arbitral awards. According to the Supreme Court, intervention on the grounds of public policy is limited to situations where
- enforcement of the award would lead to unacceptable consequences for the public interest;
- the arbitral award imposes direct obligations on Ukrainian public authorities, which goes beyond the permissible influence of private arbitration on the public sphere;
- the recognition and enforcement of the award threatens the principle of binding nature of court decisions and legal certainty.
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Current practice shows that national courts tend to interpret public policy freely, extending it to protect the purely domestic economic interests of the state. Without proper statistical monitoring, this practice becomes uncontrollable.
As Judge Burrow noted in Richardson v. Mellish (1824), public policy is “a waywardhorse, and once you get on it, you never know where it will take you.”
The Ukrainian state, by failing to keep proper statistical records, has effectively let go of the reins of this horse. Declarations of a pro-arbitration climate are not enough to remedy the situation.
Therefore, it is necessary to amend the SJA Order No. 325 and the Classifier of Case Categories by introducing mandatory coding of the grounds for refusal to grant equity.
The transition to data accounting for “data-driven justice” will demonstrate to investors that Ukraine is part of the civilized legal world, not terra incognita, where arbitral awards are crushed by the wall of unknown “public policy”.
