I COMMERCIAL OVERVIEW OF THE SHIPPING INDUSTRY

As a maritime country with access to the Black Sea and the Sea of Azov, Ukraine has one of the most extensive inland waterway systems in Europe. It connects sea ports with river ports and terminals along the Danube, Europe's longest river – which flows through 10 countries (not counting new private terminals and ports).

The Crimea Peninsula has been under Russian control since 20 February 2014 and Russia's annexation of the Autonomous Republic of Crimea is not recognised by Ukraine. As of 15 July 2014, all ports in the Autonomous Republic of Crimea have been closed and all vessels and their crews that violate the occupied territory regime would be held liable under Ukrainian law.

The maritime industry in Ukraine is made up of sea and river ports, and cargo terminals under various forms of ownership, all of which are developing rapidly and attracting investment by both Ukrainian and international financial groups. There are about 100 enterprises within the Ukrainian maritime industry, including shipbuilding, ship repair and research, development and design bureaus. Moreover, Ukraine is one of the five countries that supplies the most seafarers worldwide.

Shipbuilding and ship repair are undergoing a series of reforms. This sector of the Ukrainian economy is attempting to expand the development of inland infrastructure with the support of the government and private business.

An important aspect of the development of Ukraine's maritime sector is the adoption of the draft law 'On Concessions' (relating to sea and river port concession projects), which is the result of joint efforts by the Ukrainian Sea Ports Authority, the Ministry of Infrastructure of Ukraine and the European Bank for Reconstruction and Development. Two sea ports for concession projects have already been launched – Kherson Sea Port and Specialised Sea Port 'Olvia' – and other projects are now in progress.

Ukraine's sea ports processed approximately 135 million tonnes of cargo in 2018. Port Yuzhniy remains the port with the highest cargo turnover rating.

Cargo transfer by river has become more popular in Ukraine. In 2018, 9.9 million tonnes of cargo were carried on the Dnipro. In comparison to 2017, cargo turnover on Ukrainian rivers increased by 22.4 per cent.

Ukraine has the most profitable and competitive maritime market in the Black Sea region despite the low level of regulation by maritime administration, bureaucracy, corruption at all levels of government structure and the inefficient use of technology. The reform that is currently under way will support new opportunities for investors to create thriving businesses and build healthy economic relationships.

II GENERAL OVERVIEW OF THE LEGISLATIVE FRAMEWORK

The shipping industry is regulated by domestic law, the international conventions ratified by the Ukrainian parliament, international merchant and shipping customs, and other applicable law.

The regulations applicable to legal relationships are defined according to the provisions of the Ukrainian Law 'On international private law'.

If one party is a foreign entity, the parties in a legal relationship are entitled to specify the applicable law that is acceptable to all parties.

When no law is specified by the parties, the international agreements concluded by Ukraine and Ukrainian law provisions will define the applicable law.

The law that defines the status of a foreign legal entity in Ukraine is the local law of the jurisdiction where the legal entity is registered.

All entities must act according to the law that applies in the place where the action is carried out. Any act concerning immovable property must be carried out according to the law that applies in the location of the immovable property. The procedure for issuing a power of attorney and the subsequent legal consequences shall be regulated by the law applicable in the place of issue.

The law applicable to labour relations is the law applicable in the place of work.

International conventions that have been ratified by the parliament of Ukraine become an integral part of the Ukrainian legislation. Moreover, international conventions' provisions dominate all Ukrainian codes and laws.

Ukraine has ratified the following conventions:

  1. the International Regulations for Preventing Collisions at Sea 1972 (the COLREGs);
  2. the International Convention for the Prevention of Pollution from Ships (MARPOL);
  3. the International Convention on Maritime Search and Rescue 1992;
  4. the York-Antwerp Rules, taking into consideration the YAR 2016 edition;
  5. the International Convention Relating to the Arrest of Sea-Going Ships 1952 (the Brussels Convention);
  6. the Athens Convention on the Carriage of Passengers and their Luggage by Sea; and
  7. the 1989 Salvage Convention.

On 21 November 2018, Ukraine acceded to the 1988 Protocol relating to the International Convention on Load Lines.

The Maritime Labour Convention 2006 has not yet been ratified by Ukraine. When it is an integral part of employment contracts, the courts may utilise its provisions for decisions in employment disputes.

The domestic law regulating the shipping industry is made up of codes, laws and regulations issued by the Cabinet of the Ministry of Ukraine, and Orders issued by the Ministry of Infrastructure of Ukraine.

The main regulatory act is The Merchant Shipping Code of Ukraine. For commercial dealings, The Commercial Code of Ukraine and The Civil Code of Ukraine are applicable. The Commercial Procedure Code of Ukraine and The Civil Procedure Code of Ukraine are also used in deciding court cases.

The Customs Code of Ukraine and The Taxes Code of Ukraine are also used to regulate commercial activity.

The following laws and acts are the most relevant to the shipping industry:

  1. the Ukrainian Law 'On ports';
  2. the Ukrainian Law 'On international private law';
  3. the Ukrainian Law 'On foreign economic activity';
  4. the Ukrainian Law 'On environmental protection';
  5. 'The list of marine ports of Ukraine open to foreign vessels', approved by Decree No. 466–p of the Cabinet of the Ministry of Ukraine; and
  6. 'On port customs', approved by Order No. 316 of the Ministry of Infrastructure.

In addition, the Ukrainian merchant shipping market has many expectations about the project of the new Ukrainian Law 'On concessions'. It is believed that provisions of the new law shall bring the opportunity to transfer Ukrainian merchant shipping ports from state management to private business management.

III FORUM AND JURISDICTION

i Courts

There are no specialised maritime courts in Ukraine. Shipping disputes are decided by the relevant court, depending on its specialisation and the location of the dispute.

There are three main types of court: general, commercial and administrative.

General courts deal with civil and criminal cases under the Civil Procedure Code of Ukraine and the Criminal Procedure Court of Ukraine.

Commercial courts are competent when both parties are legal entities that are engaged in commercial activity. Proceedings at commercial courts are conducted according to the provisions of the Commercial Procedure Code of Ukraine.

The administrative courts are competent when one of the parties is a public entity of Ukraine, according to the Code of Administrative Procedure of Ukraine.

The courts are divided into different levels: courts of first instance, courts of appeal and the High Court.

The High Court is the court of the highest instance and consists of the Civil Court of Cassation, the Criminal Court of Cassation, the Commercial Court of Cassation, the Administrative Court of Cassation and the Great Chamber.

In addition, Ukraine recognises and enforces the decisions of the European Court of Human Rights.

Any Ukrainian court can rule on a shipping dispute. In general, a case is heard by the defendant's local court. In some cases (such as wages debts and moral damage remuneration), the claimant is entitled to turn to the local court of their place of residence.

Cases concerning vessels are heard at the court that is local to the port of registry or where the vessel is berthed.

The term 'maritime claim' is included in the Civil Procedural and Commercial Procedural Codes. The procedure for ship arrest is provided under the rules of claim security, before and after the presentation of the claim.

Once an application for ship arrest is approved, the court sets a term of 30 days within which the main claim must be heard in court.

Ukrainian procedural legislation also introduces the term 'electronic evidence'. Since 15 December 2017, parties in civil and commercial procedures have the right to present information to the court in any format, such as email, voicemail, databases, pictures, graphics that are available on memory cards and servers. A printed version of electronic evidence is defined as 'paper copy of electronic evidence'.

ii Arbitration and ADR

There are no obligatory procedures for arbitration or mediation in maritime cases.

Arbitration procedures are regulated by the Ukrainian Law 'On international commercial arbitration'.

Parties in a foreign commercial deal or foreign entities operating in Ukraine are entitled to have arbitration cases heard in Ukraine courts. All parties in the case shall agree the specific arbitration court. This decision is made by concluding an arbitration agreement and signing an arbitration clause.

The Maritime Arbitration Commission (MAC) at the Ukrainian Chamber of Commerce and Industry (UCCI) is the specialised institution for rulings on maritime disputes. It operates under the provisions of the Statute on the Maritime Arbitration Commission at the UCCI and the Rules of the Maritime Arbitration Commission at the UCCI.

The MAC settles disputes arising out of contractual or other civil law relationships in the merchant shipping sector regardless of whether (1) all parties are subject to the law of one jurisdiction (either Ukrainian or foreign), or (2) some parties are subject to Ukrainian law and others are subject to foreign laws. In particular, the MAC settles disputes arising out of the following:

  1. the affreightment of vessels, the carriage of goods by sea and the carriage of goods in mixed navigation (river–sea);
  2. the marine towage of vessels or other floating objects;
  3. marine insurance and reinsurance;
  4. the sale and purchase, mortgage and repair of seagoing vessels and other floating objects;
  5. the pilotage, escorting through ice, agency or other servicing of seagoing vessels, or vessels engaged in inland navigation insofar as the relevant operations are connected with the sailing of those vessels on sea routes;
  6. the use of vessels for scientific research, extraction of minerals, hydrotechnical or other related work;
  7. the salvage of seagoing vessels or vessels engaged in inland navigation;
  8. the raising of vessels and other property sunk in sea waters;
  9. a collision between seagoing vessels, or between vessels engaged in inland navigation and at sea, and damage caused by a vessel to port structures, navigational aids or other objects; and
  10. damage to fishing nets or other fishing gear, or injury sustained in the conduct of fishing at sea.

The MAC also settles disputes arising in connection with the sailing of seagoing vessels and vessels engaged in inland navigation on international rivers in the instances specified in this chapter, and disputes arising in connection with the transportation of the cargo of foreign countries by vessels engaged in inland navigation.

The procedures for court hearings and decisions and the amounts of fees are stipulated by statute and the rules of the arbitration court.

An arbitration court decision can be appealed to the local commercial court of appeal within 90 days of the decision being issued. The party to the case and any other person concerned in the case are entitled to appeal the decision.

The Commercial Procedure Code of Ukraine lists the following grounds for overruling a decision by the arbitration court:

  1. the case cannot be decided by an arbitration court;
  2. the decision concerns a matter not covered by the arbitration clause;
  3. the arbitration agreement or clause is invalid;
  4. the arbitrator or arbitrators are not authorised to issue the decision;
  5. the decision concerns the rights of a person or persons who are not party to the case.

Decisions by arbitration courts are enforced by the Commercial Court of Appeal.

A party can apply to the Commercial Court of Appeal for enforcement of a decision up to three years after the date of issuance of the decision. An application for enforcement of an arbitration court decision must be approved within 15 days of the date of receipt.

Article 355 of the Commercial Procedure Code of Ukraine states the list of grounds for refusing to enforce an arbitration court decision:

  1. the decision of the Commercial Court of Appeal cancelling the arbitration court's decision has come into force;
  2. the arbitration court's decision was in respect of a case that the arbitration court was not authorised to judge;
  3. the time limit for enforcing the arbitration court's decision has expired and cannot be extended;
  4. the arbitration court's decision concerns a matter not covered by the arbitration clause;
  5. the arbitration agreement or clause is invalid;
  6. the arbitrator or arbitrators are not authorised to make the decision;
  7. the arbitration court that heard the case refused to present the materials of the case to the Commercial Court of Appeal; or
  8. the arbitration court's decision concerns the rights of a person or persons who are not party of the case.

Mediation procedures have started to develop in the past few years.

A draft of the Ukrainian Law No. 3665 'On mediation' has been presented to the Committee of the Ukrainian parliament on the Legal Policy and Justitia for amendment.

A mediation programme piloted by the US Agency for International Development (USAID) was launched in the Commercial Court of Appeal for the Odessa region.

Anyone who needs the services of a mediator can apply to the Ukrainian Mediation Centre free of charge.

iii Enforcement of foreign judgments and arbitral awards

The procedures for enforcement of foreign judgments and arbitral awards are stipulated by Section IX of the Civil Procedure Code of Ukraine.

Enforcement of foreign rulings in any disputes (including maritime disputes) is dealt with by the general courts.

An application to enforce in Ukraine the judgment of a foreign court must be made within three years of the date of the judgment coming into force.

An application to enforce a foreign court judgment requiring periodic payments can be made up to the date of the final payment. A creditor must apply to the general court that is local to the place of the debtor's official residence or of the debtor's property.

The creditor must include with the application:

  1. a certified copy of the foreign judgment;
  2. a document certifying that the foreign judgment has come into force (if not stated in the text of the judgment);
  3. a document verifying that the debtor has been notified of the outcome of the case (when the debtor did not take part in the hearing);
  4. a document certifying the terms and means of enforcement (if applicable);
  5. a power of attorney (if applicable); and
  6. a certified translation of all the documents into Ukrainian (or other language as stated in the international agreement).

The court notifies the debtor of the filing of the application within five days of receipt thereof. The debtor then has one month to file an objection with the court.

The court is entitled to refuse to enforce a foreign judgment on the following grounds:

  1. the international agreement denies enforcement;
  2. the foreign judgment did not come into force;
  3. the debtor did not have an opportunity to participate in the case because no proper notification had been provided;
  4. the case must be decided exclusively by a Ukrainian court or other Ukrainian authority according to Ukrainian law;
  5. a case between the same parties and on the same grounds was initiated in Ukraine before initiation of the case in question in the jurisdiction of the judgment at issue;
  6. the terms of the judgment enforcement have not been met;
  7. the subject of the case cannot be decided by a Ukrainian court, according to Ukrainian law;
  8. enforcement of the judgment would endanger the interests of Ukraine; or
  9. a judgment concerning the same parties and the same grounds has already been enforced in Ukraine.

A foreign judgment that cannot be enforced shall be acknowledged as a judicial fact under the procedure defined by Section IX, Chapter 2 of the Civil Procedure Code of Ukraine.

An applicant for a foreign judgment enforcement procedure must conclude the application on receipt of acknowledgment and attach a certified copy of the foreign judgment, a document certifying that the foreign judgment has come into force (if this is not stated in the judgment text), a power of attorney (if applicable) and a certified translation into Ukrainian (or another language stated in the international agreement) of all the documents.

IV SHIPPING CONTRACTS

i Shipbuilding

There are a lot of shipbuilding companies in Ukraine, mostly concentrated in the Nikolaev and Kherson regions. Dealings concerning shipbuilding contracts and sale and purchase agreements are regulated by the Civil and Commercial Codes of Ukraine. Ukrainian law allows the parties to define the wording of obligations and rights, the means of fulfilment of the contract, and any other terms and conditions of purchase. The parties are entitled to conclude both preliminary agreements and additional agreements. As soon as an agreement is finalised, it is deemed to have been accepted by all parties. The parties also define the form of the agreement (whether in writing or certified by a notary). Title passes to the buyer when the ship is delivered in accordance with the acceptance protocol; however, the parties can opt for an alternative means for the ship's title to pass. By concluding the preliminary agreement, the purchaser has control of the shipbuilding process.

It is preferable for the parties to declare the amount of the bank guarantee provided by the shipyard during the construction period. Penalties for non-performance of the agreement may be included in the wording of the agreement. In the event of a shipyard's failure to fulfil any provision of the contract, the purchaser has the right to apply to court for reimbursement of costs.

On 13 March 2018, changes to the Customs Code of Ukraine were initiated with the aim of liberalising the shipbuilding market. According to the changes to Article 151 of the Customs Code, objects for shipbuilding and ship reconstruction shall be under customs control for up to 730 days. Therefore, the legislation changes have increased the term for the reconstruction customs regime, which is usually used for foreign vessels that proceed to Ukrainian shipyards for reconstruction.

The shipbuilding prospects in Ukraine are not great; however, some shipbuilding projects have been under way in Ukraine. In 2018, six vessels were built by Ukrainian enterprises and registered under the Ukrainian flag, and the Maritime engineering bureau located in Odessa prepared projects for 22 newbuild vessels in three countries.

ii Contracts of carriage

The carriage of goods is regulated by the Merchant Shipping Code of Ukraine, the Commercial Code, the Civil Code and the Law on Transport. Carriage of goods by both river and sea is regulated by the Budapest Convention on the Contract for the Carriage of Goods by Inland Waterways. Ukraine has not ratified the Hague Rules, the Hague-Visby Rules or the Hamburg Rules, and is not a party to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea. However, any provisions of, for example, the Hague Rules that are incorporated in bills of lading shall be obligatory for the parties thereto.

The are no laws specifically regulating transport by more than one mode or multimodal bills of lading. The Ukrainian Law 'On transport' is the main legislation regulating transport in general. The Merchant Shipping Code of Ukraine regulates the maritime transport sector. Contracts of carriage by maritime transport are regulated by Section V, Chapter 2 of the Merchant Shipping Code of Ukraine.

The bill of lading is the main document proving acceptance of a cargo for carriage. According to the Merchant Shipping Code of Ukraine, 'other written evidence' issued by the carrier may prove acceptance of the cargo for carriage.

The shipper is entitled to cancel the contract of carriage and return the cargo at any time by presenting all bills of lading issued for the shipper.

The carrier is obliged to prove the seaworthiness of the ship. Any agreements reducing the responsibility of the carrier regarding seaworthiness are invalid. The carrier can avoid responsibility by proving that he or she exercised due diligence in preparing the ship.

Cabotage is carried out by ships flying the Ukrainian flag or foreign ships that have the necessary permission from the Ministry of Infrastructure of Ukraine, as required by the Merchant Shipping Code of Ukraine. Permission to carry out cabotage is not included in the list of permission documents issued by the Ministry of Infrastructure of Ukraine. The Ministry responds to applications by shipowners with formal letters of permission.

A carrier may execute the right of lien at the port of arrival if the freight is not paid in time. The cargo shall be held by the carrier on the vessel or in the warehouse at the port of arrival. The carrier has the right of lien as long as he or she possesses the cargo. This is a natural right of the carrier and may not be stipulated in the charter party. The vessel, cargo or freight may be the lien when this is commensurate with the claim.

iii Cargo claims

The party whose rights have been violated has the right to claim for damages. Most cargo claims are heard by the commercial courts, which are authorised to decide a case between two or more legal entities. However, if one of the parties is a physical person, the commercial court is not authorised to hear the case. The claimant is entitled to apply to the court that is local to the place of registration of the defendant.

When the defendant is related to a legal entity, the claimant should apply to the court that is local to the place of registry of the relative. When the defendant is a foreign legal entity and does not have a place of registration in Ukraine, the claim shall be applied to the court at the place that is local to the defendant's property. If a carrier is the defendant, the case can only be heard by the court that is local to the carrier's location.

Cases concerning the arrest of a vessel in respect of a maritime claim can only be heard at the court that is local to the port where the vessel was registered or is currently located.

The parties to the case are entitled to draw up an arbitration agreement or sign an arbitration clause. The commercial court assumes the validity of any arbitration agreement or clause, unless proven otherwise.

The charter party terms may be incorporated into the bill of lading when the charter party is identified on it. Demise clauses and identity-of-carrier clauses are not recognised or binding.

iv Limitation of liability

Limitation of liability is regulated generally by the Merchant Shipping Code of Ukraine and the Commercial Code.

The general time limit is three years. This may be extended by written agreement of the parties involved. The claim limit as stated by law cannot be shortened by the written agreement.

The court or arbitral tribunal cannot extend the time limits. A party that exceeds the time limit may apply to the court for an extension. If the court can verify that the time limit was missed on reasonable grounds, it will approve the extension.

If the cargo value is not declared in the bill of lading, the carrier's liability for damaged or lost cargo shall be limited to 666.67 units of account or 2 units of account per kilogram of the gross mass of the cargo, whichever is the greater.

Claims arising from marine casualties caused by the pilot are covered by an emergency pilotage fund, which corresponds to 10 per cent of all pilot charges received in the preceding year.

The liability of a nuclear vessel operator in respect of nuclear damage is limited by the provisions for limitation funds set out in Article 324 of the Merchant Shipping Code.

A carrier's liability in respect of a claim resulting from death or injury of a passenger is limited to 175,000 special drawing rights.

In respect of damaged or missing luggage, a carrier's liability is limited to 1,800 special drawing rights per item per passenger.

V REMEDIES

i Ship arrest

Ukraine ratified the 1952 Brussels Convention on 16 May 2012. Despite that, it was not until the end of 2017 that new versions of the Civil Procedure Code of Ukraine and the Commercial Procedure Code of Ukraine, which, among other things, regulate ship arrests in maritime claims, were adopted by the national legislative system.

The general practice used for ship arrests has become more stable. Changes to the procedural legislation have sped up the ship arrest procedure.

Parties have the right to apply for arrest of a vessel at its scheduled port of destination in Ukraine. At the time of applying for registration, the vessel may be outside Ukrainian territory.

An application for arrest in respect of a maritime claim must contain:

  1. a description of the maritime claim;
  2. grounds for the need to arrest the ship; and
  3. evidence to prove that the vessel is registered in Ukraine or stands in the territorial waters of Ukraine or plans to move into the territorial waters of Ukraine.

Arrest of a sister ship is possible in Ukraine but the practice is rare. An application for such an arrest is decided within two days of receipt. The court is entitled to request counter-security from the party applying for an arrest to cover possible loss. The type and amount of the counter-security is defined by the court considering the case. Ukrainian courts recognise bank guarantees as an appropriate form of counter-security.

A defendant is entitled to claim reimbursement of costs and for damages resulting from a wrongful arrest.

ii Court orders for sale of a vessel

The judicial sale of an arrested vessel may be initiated by:

  1. the claimant who suffered damage or injury in direct connection with the operation of the vessel;
  2. the creditor;
  3. a crew member;
  4. local port authorities; or
  5. the salvor.

The judicial sale of the vessel shall be public and accessible. The initiator of the judicial sale must issue a written notice to every party concerned within 30 days. The relevant parties to the judicial sale of a vessel are (1) the registered owner of the vessel, (2) the local authority in the country of registration of the vessel, and (3) all holders of the vessel's encumbrances issued to the bearer and that have not been issued to bearer.

The written notice shall inform the parties concerned of the time and place of the judicial sale. When it is uncertain whether all concerned parties are known, a public announcement shall be made in the central state newspaper.

Generally, the right to ownership of the vessel arises from the moment of its registration in the State Register of Vessels. According to the procedure for the judicial sale of a vessel, the new owner of a vessel that has been forcibly sold will not be able to register it unless the previous owner has filed an application for removal of the vessel from the State Register. If this has not been done, the new ownership right to the vessel will not officially arise, in contradiction of Part 5, Article 12 of the International Convention on Maritime Liens and Mortgages of 1993, which came into force in Ukraine on 4 January 2003.

VI REGULATION

i Safety

The Ukraine acceded to the International Convention for the Safety of Life at Sea, 1974.

The safety regime for maritime transport is regulated by the Decree of the safety control system for sea and river transport stipulated by the Order of the Ministry of Transport of Ukraine No. 904, dated 20 November 2003.

The Decree on security was concluded in line with the standards of the ISM Code, IMO Assembly Resolution A.847(20), IMO Assembly Resolution A.884(21), IMO Assembly Resolution A.851(20), IMO Assembly Resolution A.852(20) and IMO Assembly Resolution A.912(22).

The administrators of maritime ports are authorised to control safety within the territory of a maritime port. The harbour master provides security over the territorial waters and the waters of the maritime port. The safety regime in Ukraine has no distinctive features that differ from international standards.

Anyone engaged in international shipping that plans to enter the territorial waters of Ukraine should be mindful that in the event of any violation of safety standards, the vessel concerned will be detained by the harbour master.

ii Port state control

The State Service for Marine and River Transport of Ukraine (Maritime Administration) is a central executive body whose activities are directed and coordinated by the government of Ukraine through the Minister of Infrastructure, and which implements state policy in the areas of sea and river transport, merchant shipping, navigation on inland waterways, navigational and hydrographic navigation facilities, as well as in the field of safety in sea and river transport (except for the safety of navigation of ships in the fishing industry).

The Maritime Administration only started to function in August 2018. However, the position of the institution is not concrete. Ukrainian legislation still contains controversial provisions that create a conflict of powers between the Maritime Administration, Harbour Masters and the Ukrainian Sea Ports Authority.

The Maritime Administration has obtained the following authorities:

  1. to provide fulfilment of obligations arising from Ukraine's membership in international organisations, whose activities are related to sea and river transport, commercial shipping, navigation on inland waterways, navigational and hydrographic navigation facilities;
  2. the implementation of state supervision (control) for safety at sea and river transport, for merchant shipping, navigation on inland waterways, navigational and hydrographic provision of navigation (except for fishing vessels of the fleet of the fishing industry); and
  3. to carry out the supervision of the state of sea routes, the operation of the services of regulating the movement of ships and pilotage, etc.

iii Registration and classification

An application for registration must include the following documents:

  1. State Shipping Registry of Ukraine questionnaire;
  2. a copy of the document confirming ownership;
  3. a copy of the tonnage certificate;
  4. a copy of the certificate of seaworthiness or classification survey certificate;
  5. (for a passenger vessel) a copy of the passenger certificate;
  6. a copy of the manning certificate;
  7. a copy of the civil liability insurance policy (or other similar document) held by the shipowner against damage from oil pollution under the international treaties to which Ukraine is a signatory;
  8. a temporary certificate of the right to sail under the Ukrainian flag (if any);
  9. a document confirming the vessel's encumbrances or the absence thereof;
  10. a copy of a document of identification of the shipowner; and
  11. a document that confirms cancellation of the previous registration.

In addition, information about the vessel's function, documents of identification and photographs of the vessel shall be presented. Temporary registration in a bareboat charter requires additional documents, such as a copy of the charter party, written approval from the shipowner and the mortgagee's approval (if applicable). The documentary copies must be certified by a notary or other authorised entity.

iv Environmental regulation

The relevant legislation is the Ukrainian Law 'On environmental protection' and MARPOL.

The State Ecological Inspection of the North-West Region of the Black Sea and the State Ecological Inspection of the Azov Sea were liquidated in 2018. The Ukrainian government initiated the enactment of a new environmental institution on the sea, the State of Azov Maritime Ecological Inspection.

Ecological inspectors take measurements of polluting liquids near a ship. If there is sufficient evidence of pollution, the inspector is authorised to board the ship for inspection. A ship's master's refusal to allow an inspector on board or to carry out an inspection constitutes an administrative offence.

The ecological inspector is authorised to address the following administrative offences and violations:

  1. violation of another person's right to a secure environment;
  2. violation of ecological standards;
  3. providing false information about the environmental status of the vessel;
  4. violation of demands for environmental security;
  5. pollution;
  6. ignoring orders from public authorities regarding environmental security;
  7. refusal to provide authentic information regarding the environmental state of the vessel and pollution; and
  8. humiliation of the honour and dignity of an ecological inspector.

If a source of pollution is detected, the ecological inspector will calculate the damage incurred. The shipowner is then issued with a claim, signed by the relevant Ecological Inspection, requesting compensation for the damage with an out-of-court settlement. If the shipowner refuses to pay the stated settlement amount, Ecological Inspection can initiate detention or arrest of the ship.

The practice of arrest removal is positive. The fines imposed by the Ecological Inspection may be appealed through the administrative court of Ukraine.

v Collisions, salvage and wrecks

Ukraine is a party to the International Convention on Civil Liability for Oil Pollution Damage (the CLC Convention) as of 4 July 2002 and became a party to the International Convention on Salvage, 1989 on 22 March 2017.

Ukraine is also a party to the Agreement on Cooperation of the Black Sea Countries in Search and Rescue at the Black Sea, which was ratified on 28 November 2002. The Agreement regulates the procedure for carrying out joint salvage operations.

The law of the flag will regulate the reimbursement for damage or loss caused by the collision of vessels of the same flag in inland waters and territorial waters, which does not involve any third parties. If one party to the collision violated the COLREGs, that party will be liable for all damage suffered by other parties.

If a collision results from a force majeure or when the cause of a collision is unknown, the parties cover any loss or damage suffered at their own cost. If one or more parties involved in a collision are in violation of the COLREGs, each party will be liable to an amount equivalent to its guilt or in equal parts. All parties are liable for death or injury suffered by a third party in a collision.

vi Passengers' rights

Ukraine acceded to the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea on the 15 July 1994.

Any passenger transportation agreements limiting passenger rights are assumed to be invalid.

Passenger insurance must be provided for the duration of the passenger transportation agreement. The insurance premium is included in the cost of the ticket. A passenger is entitled to cancel the passenger transportation agreement at any time before the journey start. In this case, the passenger receives the money paid for passage and luggage transportation.

vii Seafarers' rights

The Maritime Labour Convention has not been ratified by Ukraine. The status of Ukrainian seafarers is defined by the Merchant Shipping Code of Ukraine, the Code of the Labour Laws of Ukraine and the Ukrainian Law 'On payment of wages'.

The status of the crewing agency is stipulated by the 'licence demands to provide the commercial activity of mediation in employment abroad'.

The provisions of the Maritime Labour Convention are applicable to Ukrainian seafarers in the event that the country of the vessel's flag has ratified the Convention.

Ukrainian seafarers are entitled to turn to the Ukrainian courts for protection of their rights. Under Ukrainian employment law, a seafarer may claim the full amount of wages due, remuneration for any period of non-payment of wages, and compensation for any personal injury.

A seafarer's relatives (not only the next of kin) are entitled to claim compensation in the event of the death of a seafarer and for any moral damage suffered by seafarers.

VII OUTLOOK

The Ukrainian merchant shipping market is full of prospects and opportunities equally for big international companies and for local players. Ukraine is known as a country with huge export capacities. Grain, iron, corn and oil make up the largest exports of the country. Now, the Ukrainian authorities, as well as local specialists, are open to Western partnership suggestions and international investments. The Ukrainian infrastructure is being renovated with the aim of welcoming new businesses. On 13 March 2018, the government announced that Kherson merchant shipping state port and the state enterprise Olvia are ready for concession project proposals.


Footnotes

1 Evgeniy Sukachev is the senior partner, Anastasiya Sukacheva is a partner and Irina Dolya is an associate at Black Sea Law Company Ltd.