THE COURT OF ARBITRATION AND REAL ESTATE

The Supreme economic court of Ukraine in its ruling of June 6, 2012 in case No. 5023/2442/11 came to the conclusion that in fact arbitration tribunals may consider disputes that are not currently under their jurisdiction, namely, disputes relating to immovable property, including land.

The basis for this conclusion was that the arbitration agreement in the form of an arbitration clause in a contract was concluded before the introduction of the restrictions specified in article 6 of the Law of Ukraine "On arbitration courts", and anyone not previously been challenged, and there is no definition of arbitration court about refusal in consideration of the case.

Although, in my opinion, this conclusion is a bit absurd SECU – based on the analogy of the abolition of Contracting jurisdiction under which the parties can negotiate the dispute in a specific court. And after the introduction of the standards in force, the courts, despite the existence of previously signed treaties reservations about contractual jurisdiction, denied the parties in open proceedings.

Due to the fact that the majority of mortgage and credit contracts were signed before 31.03.2009 (date of entry into force of the law of Ukraine "On amendments to some legislative acts of Ukraine concerning activity of the arbitration courts and enforcement of arbitral awards"), the banks have the opportunity to consider the arbitration courts of the disputes connected with the foreclosure of the mortgaged property under such contracts.

For customers of the Bank, in arrears, there was a big possibility to lose the ownership right to a mortgaged property by the arbitral award.

One of the advantages for financial institutions may be noted the opportunity to consider a lawsuit to foreclose on the mortgage in the arbitration court. However, not always using the opportunity, the financial institution will be able to achieve quick and effective results. As shown, although arbitration consideration and much faster however to the final decision can be quite difficult. This is due to the possibility of challenge to the arbitration clause itself, the decision of the arbitration court ruling on issuing a writ of execution based on the decision of the arbitral Tribunal, etc.

At the same time that for financial institutions is a plus for the borrower to be less, and Vice versa.

If the desire of the Bank to consider the dispute arising from the foreclosure on the mortgage in the arbitration court, the client remains two ways - or to challenge the arbitration clause, or to achieve in arbitration court definition about the jurisdiction of the dispute.

In addition, under the current legislation the courts are required to stop production on the issuance of a writ of execution based on the decision of the arbitral Tribunal, whilst there is a dispute on the invalidity of the arbitral award.

It is worth noting that still in the courts has not developed a consensus regarding the jurisdiction of the arbitration courts of disputes associated with the protection of the rights of consumers, including consumers of services of the Bank (credit Union). In this context, can also be challenged arbitration awards relating to consumer credit contracts.

Besides, the decision on foreclosure often does not solve the issue of repayment of debt to a financial institution, and a new tool this also does not contribute.

Before the crisis, an arbitration clause is used only a number of large banks. In the period of crisis, quite a large number of banks began to include arbitration clause in new contracts and contract restructuring.

However, in connection with the uneven enforcement of legislation concerning consumer protection, the General decline of lending and conclusion of new contracts and the denial of paying customers from signing contracts containing arbitration clause, the number of such contracts is significantly reduced.

From his experience I can point to a number of banks that use arbitration clause for quite a long time, it is primarily Ukrsotsbank , Alfa-Bank and Praveks Bank. Recently, after the acquisition of the Italians excluded from the contracts arbitration clause.

Today, an arbitration clause is are found in most contracts, the Delta-Bank, Swedbank, Universal Bank, Forum Bank, Erste Bank, platinum Bank and others.

The amount of disputes on which decisions of arbitration courts vary from a few thousand to several million hryvnia, although most of the amounts in disputes considered by the arbitration courts, according to my information, does not exceed 100 000 UAH.

The object of the data of the disputes in 99% of cases is the recovery of arrears in the loan agreement.

Despite this new ability to consider disputes about the foreclosure on the mortgage in the arbitration court, I would still recommend to sit at the negotiating table - both borrowers and financial institutions, and to seek a joint way out of the situation, not shifting the responsibility on each other.

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