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Ukraine: Supreme Court expands means of interpretation of contracts

20/ 04/ 2018
  On 18 April 2018 the Supreme Court of Ukraine issued a resolution in case 753/11000/14-ц (the “Decision”) in which it endorsed the principle of contra proferentem (the “Principle”) as a supplementary method of interpreting contracts under Ukrainian law. The Principle provides that any ambiguities in contractual provisions shall be interpreted against the party who drafted them./br The Supreme Court stated that the Principle shall be applied when the general rules of contract interpretation envisaged by Article 213 of the Civil Code of Ukraine are exhausted. In particular, the Supreme Court clarified that adverse interpretation under the Principle will apply to cases where a party (i) drafted the ambiguous provision of the contract or (ii) inserted a standard provision drafted by a third party into the contract. Further, the Principle will also apply to cases where there is proof that a party used its “dominant bargaining power to have the ambiguous provision included in the contract. This Decision represents a serious change in approach of the Ukrainian courts in regards to dealing with contractual interpretation, as the history of how a contract was drafted will now become an important factor in disputes as to its interpretation. Since opinions of the Supreme Court must be taken into account by lower Ukrainian courts when dealing with the application of the same legal rules, we expect that the Principle will now be routinely applied by lower courts in disputes relating to contract interpretation. Source: Resolution of the Supreme Court of Ukraine dated 18 April 2018 in case 753/11000/14-ц. Authors: Olexander Martinenko, Senior Partner, olexander.martinenko@cms-cmno.com Vladyslav Kurylko, Associate, vladyslav.kurylko@cms-cmno.com

On 18 April 2018 the Supreme Court of Ukraine issued a resolution in case 753/11000/14-ц (the “Decision”) in which it endorsed the principle of contra proferentem (the “Principle”) as a supplementary method of interpreting contracts under Ukrainian law. The Principle provides that any ambiguities in contractual provisions shall be interpreted against the party who drafted them./br

The Supreme Court stated that the Principle shall be applied when the general rules of contract interpretation envisaged by Article 213 of the Civil Code of Ukraine are exhausted.

In particular, the Supreme Court clarified that adverse interpretation under the Principle will apply to cases where a party (i) drafted the ambiguous provision of the contract or (ii) inserted a standard provision drafted by a third party into the contract. Further, the Principle will also apply to cases where there is proof that a party used its “dominant” bargaining power to have the ambiguous provision included in the contract.

This Decision represents a serious change in approach of the Ukrainian courts in regards to dealing with contractual interpretation, as the history of how a contract was drafted will now become an important factor in disputes as to its interpretation.

Since opinions of the Supreme Court must be taken into account by lower Ukrainian courts when dealing with the application of the same legal rules, we expect that the Principle will now be routinely applied by lower courts in disputes relating to contract interpretation.

Source: Resolution of the Supreme Court of Ukraine dated 18 April 2018 in case 753/11000/14-ц.

Authors:

Olexander Martinenko, Senior Partner, olexander.martinenko@cms-cmno.com

Vladyslav Kurylko, Associate, vladyslav.kurylko@cms-cmno.com

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