Detailed and balanced dispute settlement mechanism within the framework of the Association Agreement with the EU gives Ukraine the possibility to prevent the consequences of a potentially negative outcome of the arbitration process or in a significant way to minimize them. First, formal consultations on the eve of the arbitration process – the last opportunity to resolve the dispute by negotiation. Despite the relatively short duration (up to 30 calendar days if you cannot agree about their continuation), article 317 of the Agreement also entitles the parties to continue to seek “mutually acceptable solution” for the entire period of the arbitration process. If it is found, the arbitration process terminates without a decision.
About this in his article for ZN.UA writes Nazar Bobitski, head of the economic Department of the Mission of Ukraine to the European Union (Brussels). According to him, at first glance inconspicuous, but very important nuance of the provisions of the Agreement pointed to by the experienced Ukrainian lawyers, the Agreement does not envisage automatism in the transition from the stage of consultation to the stage of the arbitration panel.
“It is important to use the Agreement the term “mutually acceptable solution” (mutually agreed solution). This term leaves considerable space for political agreements, the adoption of which allows you to settle the dispute without a formal decision of the arbitration panel with its rigid legal framework.
After the arbitration panel decision, the Agreement entitles the Respondent to offer “a reasonable period of time” (reasonable period of time for compliance) for its execution. In other words – a certain delay, subject to proper justification. Deferral options can be limited by another party that has the right to refer the matter to the arbitration panel, – said the expert. – And finally, in case of default the award (or in the absence of any information on its implementation), the defendant must offer the plaintiff a temporary compensation. Again, the Agreement gives the parties an opportunity to reach agreement on mutually acceptable contents of such compensation. Only in case of failure of the agreements the claimants, i.e. the EU, can refer to the already mentioned temporary freezing of customs preferences of the FTA on the import of goods from Ukraine”.