The following news article was produced in a partnership between Ukraine Rebuild Newswire and top 10 global law firm CMS. More information is available here.
As foreign investors are expected to sign multi-billion-euro contracts for the rebuilding of Ukraine in coming years, local courts are already grappling with conflicts between international and local law governing contract standards.
The results suggest the country is moving toward greater acceptance of international standards, but foreign investors will need to pay strict attention to details such as contract language, evidence, and procedural alignment.
An analysis by top 10 global law firm CMS of recent Ukrainian cases suggests that courts are increasingly recognizing the validity of International Federation of Consulting Engineers (FIDIC) contract standards, particularly when tied to donor financing, but enforceability still depends on precise drafting and accordance with domestic legal procedures.
EBRD, EIB financing
"Contracts based on FIDIC standards are still uncommon in Ukraine, but they have been used in some large infrastructure projects started before the full-scale Russian invasion," said Mykhaylo Soroka, counsel at CMS Ukraine, who was involved in the research.
"A look at the rare cases where disputes arose involving these standards shows the challenges, and opportunities, investors face when adopting international contract standards in a developing legal market," he said.
The legal wrangling over FIDIC standards has touched on a metro construction project financed by the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB), as well as road construction by Turkish construction giant Onur Group and reconstruction of the M-05 Kyiv–Odesa highway by Onur Taahut.
Road building, VAT, non-payment
In the first case CMS looked at, the Supreme Court upheld the use of FIDIC-based price adjustment clauses in a contract financed by the EBRD and EIB, rejecting a €11 million reimbursement demand from Ukraine’s State Audit Service. The court ruled that international agreements ratified by law could override conflicting domestic cost regulations.
In the second case, the Supreme Court confirmed that road construction contracts using FIDIC templates qualified as long-term agreements under Ukrainian tax law, meaning VAT was due only upon final acceptance—not after each interim payment. The ruling annulled tax penalties imposed by the State Tax Service.
In the third case, a dispute over force majeure termination and non-payment under a FIDIC contract is now before the Supreme Court. Lower courts split over whether the case should be resolved in Ukrainian courts or under ICC arbitration rules, highlighting the importance of clear dispute resolution clauses.
For more information on regulations in Ukraine’s construction sector, contact: Natalia Kushniruk Natalia.Kushniruk@cms-cmno.com or Mykhaylo Soroka Mykhaylo.Soroka@cms-cmno.com.
