As Ukraine grapples with geopolitical upheaval and economic uncertainty, private dispute-resolution mechanisms have emerged as vital alternatives to an overburdened court system. Kinstellar Partner Olexander Martinenko and Managing Associate Danylo Volkovetskyi explore recent legislative reforms, market fragmentation, wartime influences on institutional uptake, and the shifting preferences of businesses and state enterprises toward arbitration and mediation.
CEELM: How would you characterize the development of ADR in Ukraine over the past few years? Has there been a noticeable shift in how it’s viewed or used?
Martinenko: At its core, ADR encompasses any dispute-resolution mechanism that lacks two fundamental attributes: universal due process and binding finality. Arbitration, which satisfies both criteria, now stands alongside state courts as a fully-fledged alternative forum. Whereas public courts offer adjudication by government-appointed judges, arbitration provides private adjudication before a panel chosen by the parties. In practice, there is no substantive difference between a final arbitral award and a state-court judgment – both are equally enforceable with the sole distinction lying in the composition of the decision-makers.
In Ukraine, arbitration is governed by two principal statutes: the Law on International Commercial Arbitration and the Law on Domestic Arbitration. The international framework has been modernized, approaching, though not quite matching, the benchmarks set by France or Germany, and today supports robust private dispute resolution. By contrast, domestic arbitration remains underutilized despite a sound legal foundation. The proliferation of multiple domestic arbitration centers has fragmented the market, and there is a perception that certain panels act as “pocket courts,” issuing biased decisions. Moreover, unlike many jurisdictions, Ukraine imposes a limited roster of arbitrators, which can undermine predictability and efficiency. Although proposals to align with international norms have been tabled, none have yet been adopted.
Since the outbreak of full-scale war in 2022, we’ve seen a significant shift: state-owned and state-controlled enterprises have begun to submit disputes to Western arbitral bodies such as the ICC in Paris and the LCIA in London, a practice that was rare before. Mediation has also received official recognition, with Ukraine having acceded to the Singapore Convention, but uptake remains low, as parties continue to perceive mediation as insufficiently conclusive and therefore default to courts or arbitration.
Volkovetskyi: Our focus in Ukraine is overwhelmingly on commercial arbitration, since mediation has not yet matured for widespread contractual use. Over the past few years, arbitration’s popularity has increased for two main reasons: legislative enhancements to the procedural codes and growing commercial awareness of arbitration clauses. At the same time, Supreme Court jurisprudence has become decidedly pro-arbitration: roughly every six months, the court issues new clarifications endorsing arbitration, which further strengthens parties’ confidence in choosing this forum.
Notably, state-owned companies now routinely include arbitration clauses in their agreements, generating a significant share of the country’s arbitration caseload.
CEELM: What are the biggest advantages of ADR for clients in your jurisdiction?
Volkovetskyi: First of all, expertise and independence. Then, of course, the freedom to choose the procedural timetable and instruments. Speaking about the Ukrainian ICAC, the overall timing to resolve the dispute can be less than in national courts.
Martinenko: Danylo correctly highlights arbitration’s flexibility and speed. That said, some international arbitrations can extend beyond the duration of expedited Ukrainian court proceedings, which in certain instances resolve disputes remarkably quickly. For example, a case in a fast-track Ukrainian court may conclude much sooner than a typical Italian court proceeding, outlining clearly that ‘faster’ is relative to the chosen forum.
From a side-note perspective, and going beyond procedural autonomy, arbitration awards benefit from the near-universal enforcement regime established by the 1958 New York Convention, to which over 170 countries, including Ukraine, are parties. While Ukrainian court judgments are increasingly recognized under the 1971 Hague Convention and EU reciprocity instruments, arbitral awards enjoy a broader cross-border guarantee, enabling swift recognition with limited grounds for refusal. Moreover, arbitration proceedings are conducted in private, shielding sensitive commercial data from public scrutiny. This privacy preserves corporate confidentiality while also preventing reputational risks that can accompany high-profile litigation. Together, these features reinforce arbitration’s appeal as a reliable, discreet mechanism for resolving complex international and domestic disputes, particularly where public exposure could compromise strategic negotiations or client relationships.
CEELM: What types of disputes tend to benefit most from ADR, and why?
Volkovetskyi: Arbitration offers the greatest value in complex commercial contract disputes and corporate shareholder conflicts – situations where specialized expertise and confidentiality are particularly important.
CEELM: Are there any recurring challenges you see when advising clients on ADR options?
Martinenko: Once parties agree to an arbitration clause, proceedings generally progress without institutional obstacles. Challenges tend to stem from the underlying commercial relationships rather than procedural law. In multifaceted disputes involving parallel arbitrations, conflicting awards can emerge, forcing parties to invest considerable time and resources in consolidation or annulment proceedings, efforts that detract from resolving the substantive issues.
Moreover, despite Ukraine’s well-crafted arbitration statutes, market fragmentation and inconsistent arbitrator rosters can undermine confidence in domestic institutions. Many domestic arbitration centers rely on loosely defined lists of “recommended” arbitrators, leaving parties uncertain whether these rosters are open, closed, or mandatory. Practitioners report that the obligation to choose from such open-ended lists, often populated by arbitrators from Seoul to Stockholm, creates procedural inefficiencies and unexpected disqualifications. In one high-profile attempt to appoint a globally recognized arbitrator, our firm was unable to secure a nomination, demonstrating how opaque selection processes can thwart party autonomy. Until clear, limited appointments are mandated, these institutional anomalies will remain a significant deterrent to domestic arbitration uptake.
CEELM: In your experience, how do businesses or individuals usually respond to the idea of mediation or arbitration? Is there still hesitation, or has trust in ADR grown?
Volkovetskyi: Commercial arbitration remains the predominant form of ADR in Ukraine, seeing as how mediation isn’t yet widely used in contracts, as we have previously established. Growing legislative recognition of arbitration clauses, coupled with enhanced market awareness, has fueled increasing uptake among many businesses. State enterprises are now more willing to consent to cross-border arbitration, and favorable Supreme Court rulings issued roughly biannually continue to reinforce arbitration’s credibility and encourage its adoption.
CEELM: Looking ahead, what trends or developments do you see shaping the future of ADR in Ukraine?
Volkovetskyi: I expect international commercial arbitration to maintain its upward trajectory. Over the next few years, domestic arbitration should secure similar acceptance as businesses develop confidence in its integrity. Mediation, too, is poised for wider adoption once parties appreciate its cost-effective, conciliatory benefits. We will likely see more disputes involving state-owned enterprises submitted to arbitration, and investor-state arbitration may emerge as a key venue for war-damage recovery claims.
Martinenko: I share Danylo’s outlook. Accelerating legislative and institutional reforms during wartime is challenging, but history shows that leading arbitration regimes – France’s is an excellent example – have evolved gradually. We remain committed to patient, incremental improvements that will strengthen Ukraine’s ADR framework for the long term.
This article was originally published in Issue 12.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
