Which Law Will Govern Your Contract with a Ukrainian Company under the New Civil Code?

Ukraine’s new Civil Code — draft law No. 15150, adopted at first reading on 28 April 2026 — will replace not only the current Civil Code but also the 2005 Law on Private International Law. The conflict rules move into Book 8 of the Code. For cross-border contracts with Ukrainian counterparties this is the most significant change in twenty years: it decides which law a Ukrainian court applies when the parties have not chosen one, and how predictable that answer is for the foreign party.

We have submitted proposals on the draft’s contract conflict rules for the second reading. Our benchmark is the Rome I Regulation, the framework most foreign partners of Ukrainian business already work with. This note explains what the draft says, what we propose, and what to build into contracts now.

• Party autonomy stays. Parties to a contract with a foreign element may choose the governing law, and the draft expressly allows the choice of non-state rules such as lex mercatoria.
• The default rule is hidden and loosely worded. Absent a choice, the law of the party effecting the characteristic performance applies, but the draft splits this rule between two articles and connects it to a registered address “or” a place of stay.
• Franchise and distribution go the “wrong” way. The draft points to the franchisor’s law and has no rule for distribution; Rome I points to the franchisee and the distributor.
• A chosen law can be displaced. Under the draft, if the contract is invalid under the chosen law, another law governs the whole contract.
• Ukrainian limitation rules reach every contract with a Ukrainian party. Claims that are not time-barred under Ukrainian law stay so even under a foreign governing law.
• Consumers and insured individuals. The draft still uses the 1980 Rome Convention test for consumer protection and applies the insurer’s law to policies bought by individuals.

None of this is in force: the 2005 Law on Private International Law applies until the new Code takes effect.

As today, parties may choose the governing law in the contract or later, for the whole contract or part of it (Article 1801 of the draft restates Article 5 of the current Law). The same limit applies: a choice is possible only where the relationship has a foreign element. Two Ukrainian companies contracting for performance in Ukraine cannot opt for English law.

The novelty is Article 1801(1): the parties may choose rules of a transnational character that do not belong to a national legal system, including lex mercatoria and general principles of law. The current Law has no such provision. For contracts that refer to the UNIDROIT Principles, this moves the reference closer to a true choice of law rather than a mere incorporation of terms.

Absent a choice, both the current Law and the draft apply the law of the party whose performance is characteristic: the seller in a sale, the service provider, the lender. The draft lists these parties in Article 1847, but the operative rule — that the law of that party’s country applies — sits in a different chapter, in Article 1826, alongside a second set of choice-of-law provisions. Two articles governing the same question invite argument about which one the court should apply.

We propose deleting Article 1826 and moving the rule into Article 1847, and correcting three further points.

Connecting factor. The draft refers to the party’s “seat (location) or place of stay” — two alternatives with no order of priority. For a company, “location” under Ukrainian law is the address in the Unified State Register, which may have little to do with where the company actually operates. We propose a single concept, habitual residence, defined as in Article 19 of Rome I: for a company, its place of central administration; for an individual acting in business, the principal place of business; where the contract is concluded through, or performed by, a branch or agency, the place of that establishment — all determined at the time the contract is concluded.

Franchise and distribution. The draft names the franchisor as the characteristic performer under a franchise agreement — and still calls the contract a “commercial concession”. Rome I does the opposite: a franchise contract is governed by the law of the franchisee’s habitual residence, a distribution contract by that of the distributor (Article 4(1)(e) and (f)), since they invest and operate in their own country. We propose the same rule. Ukrainian law does not name the distribution agreement as a contract type, so without a specific rule a court is likely to treat it as a sale and apply the supplier’s law. Our separate note covers franchising under the draft Code in detail.

Short holiday lets. Contracts concerning immovable property are governed by the law of the place where the property is situated. We propose the Rome I exception (Article 4(1)(d)) for tenancies for temporary private use of up to six months between parties habitually resident in the same country.

Drafting or reviewing a contract with a Ukrainian counterparty and unsure which law a Ukrainian court would apply? Send us the governing-law and dispute clauses — within one business day we will tell you whether they work together under Ukrainian conflict rules.

Article 1826(2) of the draft contains a rule found neither in the current Law nor in Rome I: if the contract “is invalid under the chosen law”, the law of the closest connection applies to it. In practice, a party unhappy with the contract gains an argument — establish invalidity under the chosen law, and the whole contract moves to another law. The parties’ choice would hold only as long as the contract is valid under it. We propose dropping the rule: the chosen law governs validity, as under Article 10(1) of Rome I.

Under Article 1848 of the draft, a consumer who contracts with a foreign seller is protected only on conditions taken from the 1980 Rome Convention: an offer or advertisement in the consumer’s country, the order received there, or a trip arranged by the seller. These conditions do not reflect distance selling. Rome I replaced them with the “directed activity” test: the consumer is protected by the law of his habitual residence if the professional pursues activities there or by any means directs them to that country (Article 6(1)). In Pammer and Hotel Alpenhof the Court of Justice held that mere accessibility of a website is not enough, and listed indicators such as language or currency other than those of the trader’s country, international dialling codes, advertising aimed at foreign customers, and a foreign top-level domain.

We propose adopting this test, and specifying that the consumer keeps the protection of provisions that cannot be derogated from by agreement — not of “mandatory norms” in general. For a foreign online seller targeting Ukrainian buyers the consequence is straightforward: a foreign governing law in the terms and conditions will not deprive the buyer of the protection of Ukrainian law.

Absent a choice, Article 1850 of the draft applies the law of the insurer’s country. Rome I does so only for large risks; individuals are protected by specific rules. We propose that where the policyholder contracts outside a business, a choice of law cannot deprive him of consumer protection, and absent a choice the law of his habitual residence applies — relevant in particular to health and life insurance sold by foreign insurers.

Article 1830(2) of the draft repeats Article 35(2) of the current Law: Ukrainian law determines which claims are not subject to limitation whenever at least one party is a Ukrainian national or legal entity. Even under English or German law, the Ukrainian list of claims that never become time-barred applies to every contract with a Ukrainian company. In form a conflict rule, in substance an overriding mandatory rule — but one that applies automatically, without any test of public interest, and only one way.

We propose deleting it or, if the legislature wishes to keep protection, limiting it to genuinely protective claims — personal injury and death, personal rights, return of bank deposits, insurance payments — applied through the general mechanism for overriding mandatory rules. While the rule stands, a foreign party should not assume that a limitation period under the chosen law covers claims listed in Article 268 of the Civil Code.

The draft defines the scope of the governing law twice (Articles 1827 and 1857) and, on form, refers to the article on powers of attorney. We propose keeping one article and correcting the cross-reference — technical, but it matters to a court.

On form: a foreign economic contract with a Ukrainian party must be concluded in the form required by Ukrainian law wherever it is signed (Article 31(3) of the current Law, Article 1825(4) of the draft). Today that means simple written or electronic form, and for exports of services also acceptance of an offer or payment of an invoice (Article 6 of the Law on Foreign Economic Activity). The consequences of non-compliance are governed by the law applicable to the contract.

Neither the current Law nor the draft has a conflict rule for trusts. A Ukrainian court dealing with assets held in a foreign trust is likely to assimilate it to a property-management contract — a structure with a single owner — and the beneficiary loses what the trust was set up to secure. We propose a rule modelled on Articles 6–8 of the Hague Trusts Convention 1985 (to which Ukraine is not a party): a trust is governed by the law chosen by the settlor, failing which by the law of the closest connection, without changing Ukrainian substantive law. This matters for investment structuring and estate planning involving Ukrainian assets.

First reading changes nothing in force: until the new Code takes effect, the 2005 Law applies. Some conclusions are useful already.

Choose the governing law expressly. A choice-of-law clause is the simplest way not to depend on how a court identifies the “characteristic performance” or the party’s “location”, or on which wording is finally adopted — and make sure it fits the arbitration or jurisdiction clause. Our checklist for contracts with foreign clients and our guide on how to check a Ukrainian company cover the rest of the contract.

Do not rely on the chosen limitation period for all claims: the Ukrainian list of claims not subject to limitation applies to every contract with a Ukrainian party.

If you sell online to consumers in Ukraine, assume they keep the protection of Ukrainian law.

Where a foreign court or tribunal must apply Ukrainian law, its content has to be established — and the conflict-of-laws points above become matters of proof. We provide independent legal opinions on Ukrainian law for foreign courts and arbitral tribunals and act as expert witnesses on Ukrainian law.

This note discusses a draft law that has passed first reading only; until the new Code enters into force, the 2005 Law on Private International Law applies. It is not advice on any particular contract. JVS Law advises on cross-border contracts, gives independent legal opinions on Ukrainian law and acts in international arbitration.