Amendments to the Law of Ukraine “On International Commercial Arbitration”: What Your Business Needs to Know

On 21 May 2026, major amendments to Ukraine’s Law “On International Commercial Arbitration” entered into force. A dispute may now qualify as international based on the seat of arbitration, the place of performance, or its connection with a foreign state – not just the parties’ location. In practice, this means even two Ukrainian companies may refer their dispute to international arbitration. The reform also opens the ICAC to investor-state disputes and revises the framework for appointing arbitrators – with retroactive effect on existing arbitration agreements. Our new Legal Alert breaks down what this means for your contracts.

On 21 May 2026, Law of Ukraine No. 4856-IX “On Amendments to Certain Laws of Ukraine Regarding the Expansion of the Jurisdiction of International Arbitration” (“Law No. 4856-IX”) entered into force.

Law No. 4856-IX amends several legislative acts, including the Law of Ukraine “On International Commercial Arbitration” (“ICA Law”). The reform significantly expands the categories of disputes that may be referred to international commercial arbitration, further aligns Ukrainian arbitration legislation with international standards reflected in the UNCITRAL framework, and clarifies several procedural aspects of arbitral proceedings.

1. New Criteria for Determining Whether a Dispute Is “International”

The key reform introduced by Law No. 4856-IX is a revised approach to determining the international character of an arbitral dispute — one of the fundamental thresholds for determining whether a dispute may, in principle, be submitted to international commercial arbitration.

Previously, the ICA Law relied on a single, relatively narrow criterion of internationality: a dispute qualified as international only if the place of business of at least one of the parties was outside Ukraine (or if one of the parties was a company with foreign investment).

In practice, this significantly limited the availability of international arbitration for cross-border projects involving exclusively Ukrainian parties.

The revised wording of Article 1(2) of the ICA Law shifts the focus from the parties’ identities alone to the nature and international characteristics of the dispute itself.

Under the amended framework, it is now sufficient that at least one of the following criteria is satisfied:

• Foreign party – the place of business of at least one of the parties to the dispute is located abroad at the time of conclusion of the arbitration agreement (this criterion remains unchanged from the previous version of the ICA Law);
• Place (seat) of arbitration – the seat of arbitration designated in the arbitration agreement is situated outside the state in which the parties maintain their places of business;
• Place of performance – a substantial part of the obligations arising out of contractual or other civil-law relationships is to be performed outside the state in which the parties maintain their places of business;
• Closest connection – the subject matter of the dispute is most closely connected with a foreign state;
• Express agreement – the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one state.

The revised framework substantially aligns the ICA Law with Article 1(3) of the UNCITRAL Model Law on International Commercial Arbitration (“UNCITRAL Model Law”). This removes a long-standing deviation from international arbitration standards that effectively restricted Ukrainian parties’ access to international commercial arbitration.

Importantly, the amended ICA Law expressly provides that the international character of a dispute must be assessed at the time the arbitration agreement is concluded by the “parties to the dispute”, rather than at the time the dispute arises or arbitration proceedings commence.

However, this wording is not entirely free of ambiguity and may itself generate future jurisdictional challenges. Specifically, the ICA Law provides that a dispute qualifies as international where “the place of business of at least one of the parties to the dispute at the time of conclusion of the arbitration agreement is located abroad”. This wording raises an interpretative issue because, in practice, the parties to a dispute and the parties to the arbitration agreement do not always coincide.

This distinction may become particularly relevant in situations involving succession, assignment of rights or substitution of a party under the underlying contract. In such circumstances, a literal application of the concept of “party to the dispute at the time of conclusion of the arbitration agreement” may cast doubt on the international nature of the dispute and potentially serve as a ground for objections to the jurisdiction of an arbitral tribunal. This inconsistency will likely require interpretation.

Taking into account the separability (autonomy) of the arbitration agreement, a more coherent approach would appear to assess “internationality” primarily by reference to the parties to the arbitration agreement (or their successors) rather than solely by reference to the parties to the dispute. This distinction is particularly important because a subsequent change of a party’s place of business, corporate reorganisation or transfer of assets after execution of the contract should not, in itself, affect the jurisdiction of the arbitral tribunal.

As a result, two Ukrainian companies may now submit disputes to international commercial arbitration, including where they choose a foreign seat of arbitration or where the contract is substantially performed abroad.

At the same time, particular attention should also be paid to the newly introduced “express agreement” criterion. The current wording of the ICA Law leaves room for interpretation as to the level of specificity required for such an “express agreement”. Moreover, in practice, the issue is likely to extend beyond the existence of an express agreement itself and raise the question whether such agreement must also demonstrate a sufficient objective connection with an international element.

Accordingly, one cannot exclude an approach under which the parties’ mere declaration that arbitration is “international” would not, by itself, be sufficient in the absence of an actual international nexus.

For example, where all material elements of the legal relationship remain domestic, i.e. the parties are located in Ukraine, the contract is performed in Ukraine, the seat of arbitration is also in Ukraine, and the dispute lacks any other objective foreign link, there is a risk that an arbitral tribunal may be critical of attempts to classify such dispute as international solely on the basis of an “express agreement” between the parties.

Accordingly, it remains an open question whether the “express agreement” criterion can operate as a self-standing basis for characterising as international those disputes that remain, in substance, purely domestic.

The Ukrainian wording of this provision therefore leaves a degree of interpretative flexibility and uncertainty as to which threshold will satisfy the requirement of constituting an “express agreement”.

2. Expanded Jurisdiction: Investor-State Disputes

Law No. 4856-IX provides for the resolution of investment disputes between an investor and a state (or an intergovernmental organisation) through international arbitration, including before the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (“ICAC”).

A dispute may be referred to arbitration on the basis of an international treaty, provisions of Ukrainian law or an arbitration agreement contained in a contract or another instrument.

In practical terms, Ukraine is positioning itself as a potential forum for resolving investment disputes not only between foreign investors and Ukraine, but also between foreign investors and third states.

The explanatory note to Law No. 4856-IX expressly links these amendments to Ukraine’s broader objective of attracting investment for post-war reconstruction.

Traditionally, investment disputes have been resolved before the International Centre for Settlement of Investment Disputes (“ICSID”) under the Washington Convention, to which Ukraine is a contracting state, or through institutional or ad hoc arbitration seated outside Ukraine.

At the same time, recent practice demonstrates an increasing interest among parties in identifying faster and more cost-efficient mechanisms for resolving investment disputes.

Against that background, arbitration seated in Ukraine, and in particular proceedings administered by the ICAC, may emerge as a viable alternative, especially for disputes involving comparatively lower claim values.

Accordingly, when structuring future investment projects, concession arrangements or public-private partnerships (PPPs), parties may consider including arbitration clauses in favour of the ICAC in Ukraine either as an alternative or as a complement to the ICSID mechanisms.

Importantly, the availability of this option also does not preclude recourse to other arbitral institutions or ad hoc arbitration in Ukraine, as the optimal dispute resolution mechanism will ultimately depend on the terms of the applicable bilateral investment treaty (“BIT”), investment agreement and the parties’ commercial objectives.

At the same time, alongside the term “investor”, the amended ICA Law also refers to “another participant in investment activity”, without defining this term for the purposes of international arbitration. To understand this term, reference should be made to the Law of Ukraine “On Investment Activity”.

Under that Law, an “investor” constitutes only one category of participants in investment activity, while the broader category also includes persons involved in implementing investments as contractors or acting under the authority or instructions of an investor. However, mere participation in the implementation of an investment project should not automatically result in qualification as “another participant in investment activity” for the purposes of international arbitration.

Otherwise, there would be a risk of excessively expanding arbitral jurisdiction and effectively transforming any dispute connected with the implementation of an investment project into an investment dispute.

For example, contractors, sub-contractors, equipment suppliers, consultants or project operators should not automatically be treated as participants in an investment dispute solely because they maintain a contractual or economic connection with the underlying investment project. Future jurisprudence will likely develop additional criteria for determining whether a person qualifies as “another participant in investment activity”, taking into account the nature and degree of participation in the investment, the scope of rights and obligations within the investment relationship, the existence of an independent legal interest in the investment, and importantly, the existence of a valid consent to submit the relevant category of disputes to arbitration.

For this reason, in practice, not every dispute arising from an investment project will automatically qualify as an investment dispute or fall within the jurisdiction of international arbitration.

3. New Framework for the Appointment of Arbitrators

The amended Article 6(1) of the ICA Law clarifies the powers regarding the appointment, challenge and replacement of arbitrators depending on the form of arbitration.

Previously, these functions (under Articles 11, 13 and 14 of the ICA Law) were performed by the President of the Ukrainian Chamber of Commerce and Industry for any international commercial arbitration seated in Ukraine.

Under the new framework:

• In ad hoc arbitration proceedings (constituted specifically for resolution of a particular dispute) – these functions remain vested in the President of the UCCI;
• In institutional arbitration proceedings (administered by a permanent arbitral institution) – the relevant functions shall be performed by the authority designated under the applicable arbitration rules of that institution.

This amendment means that where parties have chosen institutional arbitration, for example, proceedings administered by the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC), or by a foreign arbitral institution with the seat of arbitration in Ukraine, issues relating to appointment, challenge or replacement of arbitrators should now be determined in accordance with the institution’s rules rather than through intervention of the President of the UCCI. For example, if a dispute is conducted under the ICC Arbitration Rules with its seat in Kyiv, arbitrator appointment procedures should be governed by the ICC Rules.

4. Cabinet of Ministers’ Recommendations for State-Owned Enterprises

The final provisions of Law No. 4856-IX contain a number of instructions addressed to the Cabinet of Ministers of Ukraine that may have practical implications for Ukrainian state-owned enterprises and their counterparties.

First, when negotiating new bilateral investment treaties and renegotiating existing treaties, as well as free trade agreements containing investment-related rules, the Ukrainian government is recommended to consider the ICAC in Ukraine as one of the available dispute resolution options for investor-state disputes.

Second, Ukrainian state-owned enterprises and entities operating under the authority of Ukrainian central and other executive authorities are recommended to include arbitration clauses in favour of Ukrainian permanent arbitral institutions in foreign economic agreements to reduce representation and dispute resolution costs.

A similar recommendation is formulated in relation to agreements concluded within public-private partnership (PPP) structures.

Although these provisions are not mandatory, they may influence negotiations and allocation of bargaining power in transactions involving Ukrainian public-sector counterparties.

5. Retroactive Application

Law No. 4856-IX expressly provides that the amended provisions governing the criteria of internationality apply to legal relationships that arose before Law No. 4856-IX entered into force.

This may have a material impact on the existing contractual relationships and arbitration agreements.

In particular, the reform creates new opportunities for parties seeking access to international commercial arbitration under contracts concluded prior to the entry into force of Law No. 4856-IX.

At the same time, retroactive application of the new rules should be approached with caution.

Such application appears justified and legally sustainable only to the extent that it does not alter the scope of the parties’ original consent to arbitration but merely affects the procedural framework governing implementation of that consent.

The amendments to the ICA Law represent another step toward strengthening Ukraine’s pro-arbitration legal framework and enhancing predictability, procedural efficiency and investment attractiveness.

Businesses should consider:

• reviewing existing arbitration clauses to assess compliance with the updated internationality criteria;
• evaluating whether Ukrainian arbitral institutions should be incorporated into future dispute resolution mechanisms;
• in investment projects, considering both the ICAC and Ukraine as a potential seat of arbitration.