A Broader Path to Arbitration: Understanding Changes to Ukraine’s International Arbitration Law

Against the backdrop of Ukraine’s efforts to modernise its dispute resolution framework and prepare the legal environment for the large-scale investment needed for post-war reconstruction, Ukraine has taken another step towards reforming its arbitration legislation. On 28 April 2026, the Verkhovna Rada of Ukraine passed Draft Law No. 12141, introducing amendments to the Law of Ukraine “On International Commercial Arbitration” (the ICA Law) and related legislation. Following the President’s signature, the amendments entered into force in May 2026 under Law No. 4856-IX (the Law). 

According to the explanatory note accompanying the Law, the reform is intended to strengthen the role of arbitration in Ukraine as a means of resolving disputes, align aspects of Ukraine’s arbitration framework more closely with internationally recognised standards and position the country as a seat for investor-State dispute resolution. More broadly, the reform forms part of Ukraine’s efforts to attract investment for the reconstruction of its economy and infrastructure. The significance of those efforts is underscored by the substantial funding required for Ukraine’s recovery and development, estimated at USD 750 billion through 2032 under the Ukraine Recovery Plan.

In this blog post, we look at the main changes introduced by the Law and consider their potential implications for the future development of arbitration in Ukraine. 

The expanded concept of an international dispute

Ukrainian law maintains separate regimes for “international” and “domestic” arbitrations seated in Ukraine. International arbitration is governed by the ICA Law and benefits from a legal framework that largely follows the UNCITRAL Model Law on International Commercial Arbitration (the UNCITRAL Model Law). Domestic arbitration, by contrast, is available to Ukrainian parties as an alternative to state court proceedings and is governed by a separate legislative framework.

The Law amended Article 1(2) of the ICA Law, which defines the categories of disputes that may be referred to “international” commercial arbitration. Previously, disputes fell within the scope of the ICA Law if at least one party had its place of business outside Ukraine or if the dispute involved an enterprise with foreign investment, an international association or organisation, or a bond issue administrator. As a result, Ukrainian parties wishing to submit their disputes to international commercial arbitration and benefit from the ICA Law’s framework were often unable to do so unless they could bring their disputes within one of these categories, leading in some cases to the use of complex workarounds. 

Aligning with the “internationality” test in Article 1(3) of the UNCITRAL Model Law, the Law expands the categories of disputes that may be submitted to international arbitration. These categories now also encompass disputes where (i) the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country, or (ii) one of the following places is situated outside the State where the parties have their places of business: 

• the place of arbitration designated in, or determined pursuant to, the arbitration agreement;
• any place where a substantial part of the obligations arising from the relevant contractual or other civil-law relationships is to be performed; or
• the place most closely connected to the subject matter of the dispute.

The amendments thus remove the previous limitations faced by Ukrainian parties and bring within the ICA Law’s scope disputes that previously fell outside its reach. For example, a dispute arising under a contract between two Ukrainian entities, where the services are performed and received exclusively outside Ukraine – a common arrangement in the IT sector – may now qualify as an international dispute for the purposes of the ICA Law, and therefore be capable of being referred to international commercial arbitration. Importantly, the amendments concerning the expanded scope of arbitrable disputes apply retroactively to arbitration agreements concluded before the Law entered into force. 

By adopting the UNCITRAL Model Law’s approach, the reform seeks to enhance legal certainty and predictability for parties. More broadly, the reforms also seek to promote Ukraine as a seat of arbitration. To that end, the Law directs the government of Ukraine to recommend that State-owned enterprises and public bodies include arbitration clauses providing for arbitration before Ukrainian arbitral institutions in their foreign economic agreements. This is intended to reduce representation costs and better protect the interests of such entities in the event of a dispute. Similar recommendations are envisaged for contracts implementing public-private partnership projects, in relation to which arbitration clauses providing for dispute resolution before Ukrainian arbitral institutions should also be considered.

A refined framework for arbitrator appointments and challenges

Further changes were introduced to Article 6 of the ICA Law, which governs the exercise of certain “fallback” functions in Ukraine-seated arbitrations relating to the appointment and challenge of arbitrators, as well as the termination of an arbitrator’s mandate. These powers include, for example, making appointments where the parties have not agreed on an appointment procedure and are unable to agree on a candidate (Article 11(3) of the ICA Law), and deciding challenges to arbitrators upon the party’s request (Article 13(3) of the ICA Law).

Previously, these functions were performed by the President of the Ukrainian Chamber of Commerce and Industry (the UCCI). The Law now distinguishes between ad hoc and institutional arbitrations. In ad hoc arbitrations, the President of the UCCI retains these powers. In institutional arbitrations, however, the relevant functions are to be performed by the authority designated under the applicable institutional rules. 

For parties, this should provide greater clarity from the outset of the proceedings and reduce the risk of uncertainty over which authority is competent to resolve arbitrator appointment and challenge issues.

Extending the ICA Law to investor-State disputes

The most significant, and perhaps most debated, novelty introduced by the Law is the extension of the ICA Law’s scope to investor-State arbitration. The explanatory note expressly links these changes with the anticipated influx of foreign investment needed for Ukraine’s reconstruction and the resulting increase in investment disputes.

The relevant amendments provide that disputes between an investor (or other participant in investment activity) and a State (or an intergovernmental organisation) in connection with investment activity carried out in Ukraine or another State may also be referred to international commercial arbitration (Article 1(2) of the ICA Law). The reform thus creates a legislative basis for investor-State arbitrations to be seated in Ukraine, including disputes involving Ukraine and, potentially, disputes involving other States where Ukraine is selected as the seat of arbitration. 

The Law specifies that such disputes may be referred to arbitration on the basis of an international treaty, Ukrainian legislation or an agreement between the parties. In this regard, it is notable that the Law directs the government to consider the International Commercial Arbitration Court (the ICAC) at the UCCI as one of the available forums for investor-State dispute settlement when negotiating new and renegotiating existing bilateral investment treaties and free trade agreements.

These developments place the ICAC, Ukraine’s principal arbitral institution, firmly in the spotlight. According to the latest published statistics, the institution handles a substantial caseload, with more than 300 cases registered in 2025. Notably, 90.5% of cases heard in 2025 were resolved within six months from the date of the arbitral tribunal’s formation, underscoring the efficiency of its proceedings. At the same time, fewer than 1% of ICAC awards are set aside on average, reflecting the generally pro-arbitration approach of Ukrainian courts. 

Whether these factors will influence parties’ decisions to select the ICAC to administer their disputes remains to be seen. However, as investors increasingly seek dispute resolution mechanisms that are more accessible, flexible and cost-effective than traditional investor-State arbitration forums, the ICAC may emerge as an alternative, particularly for lower-value investment disputes. 

Outlook

The reforms represent a significant step towards modernising Ukraine’s arbitration framework and increasing its visibility. At the same time, the amendments are unlikely to be sufficient on their own to establish Ukraine as a prominent arbitral seat, particularly for investor-State dispute settlement. Further legislative changes may be required, including amendments to the procedural codes and the adoption of specific provisions to ensure the effective operation of the new investor-State framework. Equally important will be the development of judicial expertise in a number of complex and specialised concepts with which domestic courts will increasingly need to engage. 

While the Law’s encouragement of arbitration before Ukrainian arbitral institutions may generate greater interest in Ukraine-seated proceedings, particularly before the ICAC, the extent to which foreign investors and other international parties will choose Ukraine as a seat of arbitration will depend on a range of factors, including the practical implementation of the reforms and the development of a supportive arbitration ecosystem. The reforms create a legal framework for investor-State arbitrations to be seated in Ukraine, but their longer-term impact on parties’ choice of arbitral seat remains to be seen.