BIANCOMARMO v TECHNOSERVICE-BUDMATERIALY: Ukrainian Court Rejects Challenge to ICAC Award
⚖️ BIANCOMARMO S.R.L. v TECHNOSERVICE-BUDMATERIALY LLC
📂 Case Details
Case Title: BIANCOMARMO S.R.L. v Technoservice-Budmaterialy LLC
Case No.: 824/48/26
Proceedings No.: 22-ск/824/18/2026
Court: Kyiv Court of Appeal
Date: 18 June 2026
Case Category: International Commercial Arbitration
Subject Matter: Setting Aside of Arbitral Awards
Sub-Subject: Validity of Arbitration Agreement / Sham Transaction / Public Policy
Arbitral Institution: International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC)
ICAC Case No.: 115/2025
ICAC Award Date: 30 December 2025
Award Amount: EUR 145,040.82 + USD 3,500 in legal costs
The case concerned an application by Italian company BIANCOMARMO S.R.L. to set aside an ICAC award rendered in favour of Ukrainian company Technoservice-Budmaterialy LLC.
Background of the Dispute
The dispute arose from Contract No. 133 dated 4 August 2023, under which BIANCOMARMO S.R.L. agreed to sell and Technoservice-Budmaterialy LLC agreed to purchase goods specified in the contract.
Following a dispute concerning performance of the contract, the Ukrainian company commenced arbitration before ICAC. On 30 December 2025, ICAC partially upheld the claim and ordered BIANCOMARMO to pay EUR 145,040.82, together with USD 3,500 in legal costs.
BIANCOMARMO subsequently applied to the Kyiv Court of Appeal to set aside the award.
Its principal argument was that Contract No. 133 was a sham transaction (удаваний правочин) intended to conceal the parties' actual legal relationship concerning the sale of marble. According to BIANCOMARMO, because the underlying contract was invalid, the arbitration clause contained within it was also invalid and ICAC therefore lacked jurisdiction over the dispute.
BIANCOMARMO additionally argued that the award violated Ukrainian public policy, alleging that ICAC had failed properly to examine the purported sham nature of the transaction and had therefore disregarded fundamental principles of Ukrainian civil law.
The Court’s Decision
The Kyiv Court of Appeal refused to set aside the ICAC award.
The Court emphasised that the grounds for setting aside an international commercial arbitration award are exhaustive. A Ukrainian court considering a set-aside application cannot review the arbitral award on the merits. The burden of establishing one of the statutory grounds for annulment rests with the party challenging the award.
The Court rejected BIANCOMARMO's central proposition that characterising the underlying contract as a sham transaction would automatically make the contract—and consequently its arbitration clause—invalid.
Under Article 235 of the Civil Code of Ukraine, a sham transaction is one concluded to conceal another transaction actually intended by the parties. The legal consequence is not automatically the invalidity of the transaction. Rather, the parties' relationship is governed by the rules applicable to the transaction they actually intended to conclude.
The Court therefore found that sham character and invalidity are distinct legal concepts.
Sham Contract Does Not Automatically Invalidate the Arbitration Clause
This was the central legal issue in the decision.
BIANCOMARMO argued that if Contract No. 133 was a sham transaction, the arbitration clause contained in that contract necessarily fell with it.
The Court rejected that reasoning.
It held that a finding that a transaction is sham does not, by itself, mean that the transaction is void—and still less that the arbitration agreement contained within it automatically becomes invalid. A party relying on Article 235 must identify the different transaction that the parties allegedly intended to conceal.
In this case, according to the Court, BIANCOMARMO's arguments essentially suggested that the parties had entered into the same type of sale contract but on different terms. That did not establish the existence of another type of transaction concealed by the written contract.
The Court accordingly concluded that BIANCOMARMO's argument concerning the invalidity of the arbitration agreement was based on an incorrect understanding of Ukrainian law on sham transactions.
Jurisdictional Objections Must Be Raised in Arbitration
The decision contains another significant point concerning challenges to arbitral jurisdiction.
Contract No. 133 contained a written arbitration clause providing that disputes arising between the parties would be referred to ICAC in Kyiv under its Rules and Ukrainian substantive law.
The Court noted that Ukrainian arbitration law permits the arbitral tribunal to determine its own jurisdiction, including objections concerning the existence or validity of the arbitration agreement.
Such an objection should generally be raised no later than the submission of the statement of defence.
However, during the arbitration, neither party argued that ICAC lacked jurisdiction. BIANCOMARMO also expressly confirmed the parties' agreement on the appointment of the sole arbitrator.
The Court referred in this context to the waiver rule under Article 4 of the Ukrainian International Commercial Arbitration Act and Article V of the European Convention on International Commercial Arbitration.
The decision therefore reinforces the practical importance of raising jurisdictional objections during the arbitration itself, rather than attempting to introduce them for the first time in subsequent court proceedings.
Public Policy Argument Rejected
BIANCOMARMO also sought to characterise ICAC's treatment of the underlying contract as a violation of Ukrainian public policy.
The Court rejected this argument.
It explained that public policy concerns the fundamental principles underlying the Ukrainian legal order. According to the Court, BIANCOMARMO's arguments in substance amounted to disagreement with ICAC's application of substantive law, assessment of evidence and conclusions concerning the contract.
Reviewing those matters would effectively require the state court to reconsider the merits of the arbitral dispute, which is not permitted in set-aside proceedings.
Why This Decision Matters
The decision addresses three recurring issues in challenges to arbitral awards in Ukraine.
First, an allegation that the underlying contract is a sham transaction does not automatically invalidate the arbitration agreement. The legal consequences of Article 235 of the Civil Code must be distinguished from the rules governing invalid transactions.
Second, parties should raise objections to arbitral jurisdiction at the appropriate stage of the arbitration. Participating in the proceedings without timely challenging jurisdiction may substantially affect the ability to rely on that objection later.
Third, public policy is not a mechanism for merits review. Disagreement with an arbitral tribunal's interpretation of substantive law or assessment of evidence does not, without more, establish a public-policy ground for setting aside an award.
Lions Lawyers’ Analysis
This decision is particularly significant because the Court separated three concepts that parties challenging arbitral awards sometimes attempt to combine: the validity of the underlying contract, the validity of the arbitration agreement, and the correctness of the tribunal's determination of the merits.
The Court's treatment of Article 235 of the Civil Code is especially noteworthy. Even assuming that a transaction could be characterised as sham, this does not automatically establish its nullity. Ukrainian law instead requires identification of the transaction that the parties actually intended and application of the legal regime governing that transaction.
That reasoning significantly weakened BIANCOMARMO's attempt to move from an alleged defect in the underlying commercial transaction directly to invalidity of the arbitration clause.
The jurisdictional history was equally important. BIANCOMARMO had participated in the arbitration without challenging ICAC's jurisdiction and had confirmed the appointment of the sole arbitrator. The subsequent attempt to contest jurisdiction therefore encountered the procedural principles requiring jurisdictional objections to be raised during the arbitral proceedings.
Finally, the decision confirms the limited function of Ukrainian courts in set-aside proceedings. The court's task is to determine whether one of the exhaustive statutory grounds for annulment has been established—not to conduct a second examination of the contractual dispute decided by the tribunal.
The Kyiv Court of Appeal ultimately found none of the statutory grounds established and refused BIANCOMARMO's application to set aside the ICAC award. The order may be appealed to the Supreme Court within 30 days.
Lions Lawyers advises Ukrainian and international clients on international arbitration, challenges to arbitral awards, recognition and enforcement proceedings, and cross-border disputes involving Ukraine.