Ukraine Maritime Law Guide

7/30/2019 Ukraine Maritime Law Guide

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2013

Published byGetting the Deal Through

in association with:Adepetun Caxton-Martins Agbor & Segun

Albors Galiano PortalesAli Budiardjo, Nugroho, Reksodiputro

Andrade Dias & AssociadosBatini Traverso & Associati (BT & Associati)

Bech-BruunChrysses Demetriades & Co LLC

Consolato del Mare ODe Castro & Robles

Dingli & Dingli Law FirmENS (Edward Nathan Sonnenbergs)

Garza Tello & AsociadosGuzmn Escobar & Asociados

Haridass Ho & PartnersHWL Ebsworth Lawyers

Ince & Co LLPInce & Co Middle East LLP

International Law Offices/Interlegal, UkraineJorquiera & Rozas Abogados

Joseph & PartnersK&L Gates LLP

Law Offices Carl Kincaid Mendes Vianna AdvogadosAssociados

Logos Legal ServicesMarine Legal Bureau

Matheson Ormsby PrenticeNorton Rose LLP

Okabe & YamaguchiSegelken & Suchopar

Simonsen Advokatfirma DASinghania & Co Solicitors & Advocates

Sokolov, Maslov and PartnersStraits Consulting Group

Suh & CoVan Steenderen Mainport Lawyers BV

Vukic & PartnersWatson Farley & Williams

Wintell & Co

Contributing editor: Jonathan Lux

Shipping

in 36 jurisdictions worldwide


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Australia Maurice J Thompson HWL Ebsworth Lawyers 3

Brazil Godofredo Mendes Vianna, Camila Mendes Vianna Cardoso and Lucas Leite Marques

Law Offices Carl Kincaid Mendes Vianna Advogados Associados 12

Chile Ricardo Rozas and Max Morgan Jorquiera & Rozas Abogados 21

China James Hu, Mervyn Chen and Lawrence Chen Wintell & Co 30

Clmbia Jos Vicente Guzmn and Javier Franco-ZrateGuzmn Escobar & Asociados 40

Cratia Gordan Stankovic and Maja Dotlic Vukic & Partners 46

Cyprus Michael McBride, Yiannis Christodoulou and Michael Papadopoulos

Chrysses Demetriades & Co LLC 53

Denmark Johannes Grove Nielsen and Camilla Sgaard Madsen Bech-Bruun 59

England & Wales Jonathan Lux, Reema Shour, Richard Hugg and Catherine Earnshaw

Ince & Co LLP 66

Estnia Indra Kaunis and Taavi Rihvk Consolato del Mare O 79

France Christine Ezcutari Norton Rose LLP 86

Germany Kathrin Janka Riehmer Segelken & Suchopar 93Iceland Einar Baldvin Axelsson Logos Legal Services 100

India Krishan G Singhania, S N Verma, B Dimri and Olav Albuquerque

Singhania & Co Solicitors & Advocates 108

Indnesia M Husseyn Umar and Sahat AM Siahaan Ali Budiardjo, Nugroho, Reksodiputro 115

Ireland Helen Noble and Ruth McKeon Matheson Ormsby Prentice 120

Italy Alberto Batini Batini Traverso & Associati (BT & Associati) 128

Japan Shuji Yamaguchi Okabe & Yamaguchi 135

Krea Dong-Hee Suh Suh & Co 141

Latvia Edward Kuznetsov Marine Legal Bureau 148

Malaysia Primila Edward and Jeremy JosephStraits Consulting Group/Joseph & Partners 154

Malta Kevin F Dingli and Suzanne Shaw Dingli & Dingli Law Firm 160

Mexic Enrique Garza, Fernando Escamilla and Anais Vivanco Garza Tello & Asociados 169

Netherlands Arnold J van Steenderen, Marieke G van den Dool and Charlotte J van Steenderen

Van Steenderen MainportLawyers BV 175

Nigeria Funke Agbor and Chisa Uba Adepetun Caxton-Martins Agbor & Segun 187

Nrway Lars Musus Simonsen Advokatfirma DA 194

Panama Gabriel R Sosa, Eduardo A Real and Alberto Lopez Tom De Castro & Robles 201

Prtugal Mateus Andrade Dias Andrade Dias & Associados 207

Russia Mikhail Sokolov, Anna Arkhipova and Sergey Seliverstov

Sokolov, Maslov and Partners 219Singapre Ajaib Haridass, Thomas Tan, V Hariharan and Eddy Teng

Haridass Ho & Partners 226

Suth Africa Tony Norton, Mike Tucker and Kate Pitman

ENS (Edward Nathan Sonnenbergs) 235

Spain Eduardo Albors, Javier Portales and Alfonso de Ochoa Albors Galiano Portales 243

Thailand Alan Polivnick and Tossaporn Sumpiputtanadacha Watson Farley & Williams 253

Ukraine Arthur Nitsevych and Nikolay Melnykov

International Law Offices/Interlegal, Ukraine 260

United Arab Emirates Graham Crane, Jacqueline Wright and Anna Fomina

Ince & Co Middle East LLP 268

United States Jeffrey S King, Robert M Kritzman and Jorge RomeroK&L Gates LLP 274Quick Reference Tables 281

Shipping 2013

Contributing editor:

Jonathan Lux

Ince & Co

Business development managersAlan LeeGeorge IngledewRobyn HetheringtonDan White

Marketing assistantsZosia DemkowiczMegan Friedman

Marketing manager subscriptionsRachel [email protected]

Assistant editorAdam Myers

Editorial assistantLydia Gerges

Senior production editorJonathan Cowie

Chief subeditorJonathan Allen

SubeditorsAnna AndreoliCharlotte Stretch

Editor-in-chiefCallum Campbell

PublisherRichard Davey

Shipping 2013

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CoNTENTS


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Ukraine ittol Lw Offcs/itlgl, U

260 Getting the Deal Through Shipping 2013

UkraineArthur Nitsevych and Nikolay Melnykov

International Law Offices/Interlegal, Ukraine

Newbuilding contracts

1 When does title in the ship pass from the shipbuilder to the

shipowner? Can the parties agree to change when title will pass?

Title in the ship passes from the shipbuilder to the shipowner at themoment of delivery in accordance with the general rule. Another time

for the title to pass can be provided for in the contract between theparties. The legal delivery of the vessel is determined by the certificateof acceptance. Parties can agree that title in the ship belongs to theshipowner from the very beginning of ship construction. If theshipowners evasion to accept the work performed caused changesin the deadline for the work acceptance, it shall be considered thattitle in the ship was transferred to the shipowners as of the date whensuch transfer should have taken place.

2 What formalities need to be complied with for the refund guarantee to

be valid?

The refund guarantee is not widely practised in Ukraine due to the

high level of formalities stipulated by the local legislation and theweakness of the banking system. It is a huge problem for Ukrainianbanks, shipowners and shipbuilders and they try to solve thisproblem using diverse instruments. At the same time there is no legalprohibition to issue the valid refund guarantee.

3 Are there any remedies available in local courts to compel delivery of

the vessel when the yard refuses to do so?

The shipbuilding contract is an agreement for the construction ofthe res (vessel) and transfer of the work results to the shipowner. Itcreates the substantive base for the shipowner to make a claim in thelocal court to compel delivery of the res when the yard refuses to doso. The yard has to repair the damages.

4 Where the vessel is defective and damage results, would a claim lie

in product liability against the shipbuilder at the suit of the shipowner;

a purchaser from the original shipowner; or a third party that has

sustained damage?

Where the vessel is defective, the shipbuilder bears liability at thesuit of the original shipowner or customer (party to the shipbuildingcontract). Product liability may be placed by the purchaser on the selleror on the shipbuilder, despite the latter not being a party to the salescontract. The vessel is a source of increased danger; therefore, the partythat has sustained damage has the right to indemnification against theshipowner or other person in possession of the vessel. In accordance

with the general rule, the party that has sustained damage has the rightto indemnification against the wrongdoer. That is why the shipownerwho uses or operates a defective vessel sui juris, for example, bareboatcharterer, bears a product liability as well.

Ship registration and mortgages

5 What vessels are eligible for registration under the flag of your

country? Is it possible to register vessels under construction under

the flag of your country?

Right of sailing under the state flag of Ukraine belongs to any ship

that is under state ownership of Ukraine, or is the property of acitizen of Ukraine or a legal entity of Ukraine established solely byUkrainian owners, or the vessel being in possession of such personon bareboat charter terms. Thus, if a non-resident has a share inthe property (in the vessel), this vessel cannot be registered in theUkrainian Ship Registry, which is exclusively national.

Passenger vessels, tankers, ships intended for transportation ofhazardous cargo, towboats irrespective of propulsion engines poweror gross tonnage; self-propelled vessels with propulsion engines witha power of AE 550 kilowatt; and other vessels of gross tonnage AE80 conventional units are eligible for registration under the flag ofUkraine. Cutters, lifeboats and other vessels that belong to someother vessel and oars that are less than two and half metres long

cannot fly the flag of Ukraine.It is impossible to register vessels under construction under the

flag of Ukraine.

6 What are the requirements for company formation?

According to the law, all business companies are legal entities endowedwith separate property; governed by their corporate documents, asapproved by their participants; and conducting business under theirown unique name. Official registration is an obligatory conditionto establishing a business company. Most business companies arecreated as LLCs and PLCs. If the owner is a foreign legal entity, anextract from the trade, bank or court register must be produced tocertify registration of the investor in the country of origin. Also, a

company charter and a power of attorney (proxy) demonstratingthe individual who will represent the company in Ukraine withreferences to the opening of a legal entity are recommended. It takesabout 10 days to incorporate a company, but all filings are made overapproximately one month.

7 Is dual registration and flagging out possible and what is the

procedure?

In Ukraine, parallel in or out registration is possible under thebareboat charter for the term of its validity, under the condition thatthe foreign states legislation allows the vessel to enter more than oneregister. Other conditions of registration in the Ukrainian ship registry

(for example, no foreign party in the shipowners company) must beobserved. A copy of the bareboat charter party, the written consentof the shipowner and a written consent for the parallel registrationfrom the competent body of the state of foreign registration of avessel are to be presented.


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www.gettingthedealthrough.com 261

Ittiol Lw Offics/Itlgl, Ui UkraIne

8 Who maintains the register of mortgages and what information does it

contain?

The State Registry of Encumbrances of Movables is maintainedby the Ministry of Justice of Ukraine. This register contains thefollowing information: detailsaboutthemortgageeandthemortgagors; groundsoforiginoftheencumbranceanditscontent; descriptionoftheobjectofmortgage; informationaboutlimitationoftherightofthedebtortodispose

of the object; detailsoftheregistrar;and thedateofthestateregistration.

Although the vessel can be treated as immovable property inUkraine, a maritime mortgage is registered in the State Registry ofEncumbrances of Movables. Data on registered mortgages are sentto the harbour master of the port of registration.

Limitation of liability

9 What limitation regime applies? What claims can be limited? Which

parties can limit their liability?

The shipowner shall be liable for his obligations to his property towhich an action for recovery may be brought in accordance with thelaw. The liability of a shipowner shall be limited in regard to claimsarising from: deathorinjurytohealthofapersononboardthevesselorloss

of or damage to property located on board the vessel; and inflictingdamageorlossestopersonsorpropertynotlocated

on board the vessel, in connection with sailing or operation ofthe vessel. If such damage is inflicted by the person not found onboard the vessel, the shipowner may limit liability.

The liability of the carrier and the stevedore can be limited as well.

10 What is the procedure for establishing limitation?

If there is a claim brought to the court or arbitration and thedefendant intends to limit liability, the defendant has the right (notthe obligation) to establish a liability limitation fund. In fact, suchpractice is absent in Ukraine. The defendant is obliged to presentother security for the claim by the order of the court. Thus, it is notnecessary to plead limitation when setting up a liability limitationfund. The limitation fund is calculated according to the scaleestablished by the Merchant Shipping Code of Ukraine. Its amountdepends upon the vessels capacity.

11 In what circumstances can the limit be broken?

The shipowners liability shall not be limited if it is proven that damagewas the result of actions made deliberately or presumptuously by theowner personally. A limitation of liability shall not be applied to thefollowing claims: salvageorgeneralaverage; crewmembersandotheremployeesoftheshipowner; wreckremoval; damagesfrompollution;and nucleardamage.

This does not mean impossibility of limitation of liability for suchclaims at all. There are some special rules of limitation of liability for

some of them in particular cases, but the general rules of limitation ofliability are inapplicable to such claims. Such a complicated structureof liability limitation institution is a big problem of the contemporarymaritime law.

Port state control

12 Which body is the port state control agency? Under what authority

does it operate?

The port state control agency is a division of the Office of the HarbourMaster. The harbour master is a subordinate to the GovernmentalMarine and River Transport Service, which is in turn a subordinateto the Ministry of Infrastructure of Ukraine.

13 What sanctions may the port state control inspector impose?

The port state control imposes the following sanctions: nottopermitleavingtheport;and toprohibittheuseofvesselsandperformingworksthatthreaten

life and health of people until the violations are eliminated, etc.

14 What is the appeal process against detention orders or fines?

The order of appeal against administrative penalties or other sanctionsimposed by the port state control authorities can be divided intotwo main branches: administrative and court trial. Administrative

procedure envisages pleading to the harbour master and then to thedirector of the port. Local courts are an alternative.

Classification societies

15 Which are the approved classification societies?

The approved classification societies are: American Bureauof Shipping, US; Bureau Veritas, France; Det Norske VeritasClassification AS, Norway; Germanischer Lloyd, Germany; HellenicRegister of Shipping, Greece; Register of Shipping of Ukraine; andRussian Maritime Register of Shipping, the Russian Federation.

16 In what circumstances can a classification society be held liable, if at

all?

There are no circumstances in which a classification society is heldliable for damages in Ukrainian shipping and maritime law in practice.In theory there are some possibilities to impose responsibility uponclassification society, for example, for fraud.

Collision, salvage, wreck removal and pollution

17 Can the state or local authority order wreck removal?

A port, which is a public company subordinated to the Ministryof Infrastructure, in agreement with the interested state authorities,shall set an adequate term for wreck removal and its relevant order.If the owner intends to raise sunk property, he or she shall informthe nearest port thereof within one year of the said property sank. Ifthe owner does not execute the order to wreck removal, the sea portshall have the right to take all necessary measures for wreck removalif sunken property presents an immediate threat to shipping safety,human life or health or the environment. In cases when sunkenproperty presents an obstacle to merchant shipping, marine works,hydrotechnic or other works or a threat to human life or health or theenvironment, the property owner shall immediately notify the nearestport about the incident and, upon the ports demand, shall raise,remove or demolish said property in the term indicated by the port.

18 Which international conventions or protocols are in force in relation to

collision, salvage and pollution?

The following international conventions are in force in Ukraine:the International Convention for the Prevention of Pollution fromShips, 1973, as modified by the Protocol of 1978 (MARPOL 73/78),Protocol of 1997 to amend MARPOL 73/78, the International


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Convention on Maritime Search and Rescue, 1979 (SAR), and theInternational Rules of Preventing Collisions at Sea, 1972 (COLREG).The Convention for the Unification of Certain Rules of Law withrespect to Collisions between the Vessels, 1910 and the InternationalConvention of Salvage, 1989 are not in force in Ukraine.

19 Is there a mandatory local form of salvage agreement or is Lloyds

standard form of salvage agreement acceptable? Who may carry out

salvage operations?

There are recommended local forms of salvage agreement endorsed bythe Ministry of Infrastructure, Chamber of Commerce and Industryin Ukraine. The Lloyds standard form of salvage agreement andother standard forms of salvage agreement are acceptable. Salvageoperations may be carried out by a professional salvor and a rescuer,who is a volunteer. Usually the salvor is a shipmaster and other crewmembers. If the master of the ship in distress chooses one shipmasterfrom the alternatives, then this shipmaster is the main salvor, whomay enlist other shipmasters support in the rescue operation. Theassociate salvors must coordinate their activity with the main salvor.In Ukraine there is a public company, Maritime Accident SalvageService, subordinated to the Ministry of Infrastructure of Ukraine.

Ship arrest

20 Which international convention regarding the arrest of ships is in force

in your jurisdiction?

Ukraine has acceded to the International Convention for theUnification of Certain Rules Relating to the Arrest of Seagoing Ships(Brussels, 1952) in May 2012, but there is no special procedure forarresting a foreign ship which means that she is arrested rather likeany other property up to now.

21 In respect of what claims can a vessel be arrested? In what

circumstances may associated ships be arrested?

A Ukrainian vessel in respect whereof the maritime claim has arisenmay be arrested only on one of the following conditions: aclaimreferredtothecategoryofprivilegedclaims,particularly: claims arising out of labour relations, claims for reimbursing

damage inflicted by injury, other impairment of health ordeath;

claims arising out of nuclear damage and maritime envi-ronment pollution as well as elimination of said pollutionconsequences;

claims regarding port and channel dues; claims regarding salvage and payment of general average

contribution;

claims for reimbursement of losses resulting from collisionof vessels or from other sea casualty, or from damage to portfacilities and other property located in the port as well as tonavigational aids; and

claimsforreimbursementoflossesrelatedtocargoorbaggage; claimsbaseduponthevesselsregisteredmortgage; claimsreferringtotherightsofvesselownershiporpossession;

or claimsnotindicatedaboveandreferringtotheperson(entity)

which is the vessels owner by the moment of origination of saidclaim and is responsible under this claim by the moment of initia-tion of the procedure for the vessels arrest.

The vessels flag or law governing the claim does not make adifference. Associated ships may be arrested in certain cases, likeany other property of the defendant.

22 What is the test for wrongful arrest?

The person upon whose request the vessel has been arrested is liablefor any losses inflicted on vessels owner or bareboat charterer asa result of wrongful arrest of the vessel. A wrongful arrest it is anunjustified arrest or excessive security to a maritime claim.

23 Can a bunker supplier arrest a vessel in connection with a claim for

the price of bunkers supplied to that vessel pursuant to a contractwith the charterer, rather than with the owner, of that vessel?

It depends on the type of the charter. In the case of a voyage charteror time charter the liable party is the owner of the vessel, but in thecase of a bareboat charter the liable party is the charterer. If theclaim referring to the person that is the vessels owner by the momentof origination of said claim and is responsible on this claim by themoment of a procedure connected with vessels arrest a vessel canbe arrested. If charterer of the vessel on bareboat charter contractis liable on said claim and is the vessels charterer or her owner bythe moment of a procedure connected with her arrest vessel also canbe arrested.

24 Will the arresting party have to provide security and in what form and

amount?

The court or commercial court may, given the vessels arrest or itsprolongation, request the arresting party to provide security, theamount and conditions to be determined by the court. In practicethis happens very rarely in Ukraine, as it can be regarded as a denialof justice.

25 Who is responsible for the maintenance of the vessel while under

arrest?

The shipowner or the person who maintains the vessel in general isresponsible for the maintenance of the vessel under arrest.

26 Must the arresting party pursue the claim on its merits in the courts

of your country or is it possible to arrest simply to obtain security and

then pursue proceedings on the merits elsewhere?

The arresting party must pursue the claim on the merits in the courtsof Ukraine to arrest the vessel. There are no irresistible obstacles topursue proceedings on the merits elsewhere after obtaining security,as a general rule.

Judicial sale of vessels

27 Who can apply for judicial sale of an arrested vessel?

The following persons can apply for judicial sale of arrested vessels: crewman; salvor; pilot; portauthorities; anypersonwhosufferedpersonalinjuryoccurring,whetheron

land or on water, in direct connection with the operation of thevessel; and

anyotherperson,whosufferedtortarisingoutofphysicallossor damage caused by the operation of the vessel other than lossof or damage to cargo, containers and passengers effects carriedon the vessel.


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28 What is the procedure for initiating and conducting judicial sale of a

vessel? How long on average does it take for the judicial sale to be

concluded following an application for sale? What are the court costs

associated with the judicial sale? How are these costs calculated?

The creditor of the owner, demise charterer, manager or operatorof the vessel may initiate the forced sale of the vessel after judgmentlien for the plaintiff or arbitrators award. Prior to the forced sale ofa vessel, the competent authority shall ensure notice is provided to: theauthorityinchargeoftheregisterinthestateofregistration; allholdersofregisteredmortgages,hypothecsorchargeswhich

have not been issued to bearer; allholdersofregisteredmortgages,hypothecsorchargesissued

to bearer and all holders of the maritime liens, provided that thecompetent authority conducting the forced sale receives noticeof their respective claims; and

theregisteredownerofthevessel.

Such notice shall be provided at least 30 days prior to the forced saleand shall contain either:(i) the time and place of the forced sale and such particulars

concerning the forced sale or the proceedings leading to the

forced sale as the authority conducting the proceedings shalldetermine is sufficient to protect the interests of persons entitledto notice; or

(ii) if the time and place of the forced sale cannot be determinedwith certainty, the approximate time and anticipated place of theforced sale and such particulars concerning the forced sale as theauthority conducting the proceedings shall determine is sufficientto protect the interests of persons entitled to notice.

If notice is provided in accordance with (ii), additional notice ofthe actual time and place of the forced sale shall be provided whenknown but, in any event, not less than seven days prior to the forcedsale.

The notice shall be given in a judgment or arbitrators awardby press announcement in the central state newspaper for threeconsecutive days. The publication must contain an invitation forother creditors to file a claim against the vessel within 60 days fromthe date of the publication.

The court duty is 1 per cent of the amount of the claim.

29 What is the order of priority of claims against the proceeds of sale?

Claims arising out of the arrest or seizure and subsequent sale ofthe vessel, including the claims for the upkeep of the vessel and thecrew as well as wages, other sums and costs, for example, costs ofrepatriation and social insurance contributions payable on theirbehalf, are first priority. Claims for reward for the salvage of the

vessel are second priority. Claims in respect of loss of life or personalinjury occurring in direct connection with the operation of the vesselare third priority. Claims for port, canal, and other waterway duesand pilotage dues are fourth priority. Claims based on tort arising outof physical loss or damage caused by the operation of the vessel otherthan loss of or damage to cargo, containers and passengers effectscarried on the vessel are fifth priority. Claims out of other registeredmortgages, hypothecs or charges are sixth priority.

30 What are the legal effects or consequences of judicial sale of a

vessel?

In the event of the forced sale of the vessel, all registered mortgages,

hypothecs or charges, except those assumed by the purchaser withthe consent of the holders, and all liens and other encumbrancesof whatsoever nature, shall cease. So, the purchaser may get cleantitle to the vessel, if he does not assume some encumbrances or if theholders of these encumbrances do not agree to this act. The costs and

expenses arising out of the arrest or seizure and subsequent sale of thevessel shall be paid. The balance of the proceeds shall be distributedin accordance with the respective claims. Upon satisfaction of allclaimants the residue of the proceeds, if any, shall be paid to the owner.

31 Will judicial sale of a vessel in a foreign jurisdiction be recognised?

The judicial sale of a vessel in a foreign jurisdiction is recognised in

Ukraine, in principle.

32 Is your country a signatory to the International Convention on Maritime

Liens and Mortgages 1993?

Ukraine adhered to the International Convention on Maritime Liensand Mortgages 1993 on 22 November 2002.

Carriage of goods by sea and bills of lading

33 Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some

variation in force and have they been ratified or implemented without

ratification? Has your state ratified, accepted, approved or acceded

to the UN Convention on Contracts for the International Carriage of

Goods Wholly or Partly by Sea? When does carriage at sea begin and

end for the purpose of application of such rules?

The Hague Rules, Hague-Visby Rules, Hamburg Rules andRotterdam Rules are not ratified by Ukraine, but the regulations ofthe Hague Rules are implemented in Ukrainian maritime law withoutratification. Carriage covers the period from the time when the goodsare loaded on board up to the time when they are discharged.

34 Are there conventions or domestic laws in force in respect of road, rail

or air transport that apply to stages of the transport other than by sea

under a combined transport or multimodal bill of lading?

There are no laws in force in respect of carriage under multimodalbill of lading. However, combined transport and multimodal billof lading have fairly good usage in practice. The Association ofInternational Forwarders of Ukraine has been a national memberof the International Federation of Freight Forwarders Associations(FIATA) since 1994, and the members of this association may usecombined transport bill of lading and other FIATA forms.

35 Who has title to sue on a bill of lading?

The cargo shall be delivered at the port of destination: onproducingthestraightbillofladingtotheconsigneeindi -

cated in the bill of lading or to the person by whom it wasendorsed;

onproducingtheorderbillofladingtotheshipperortheconsignee, depending on whose order it was made (to order ofa shipper or to order of a consignee) and, if the said bill of lad-ing contains endorsement, to the last person endorsed, or to theholder of the said bill of lading with the last blank endorsement;or

onproducingthebearerbillofladingtothebearerofthesaidbill of lading.

So, correspondingly, the above persons have title to sue on a bill oflading.


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36 To what extent can the terms in a charter party be incorporated into

the bill of lading? Is a jurisdiction or arbitration clause in a charter

party, the terms of which are incorporated in the bill, binding on a third-

party holder or endorsee of the bill?

The terms of the contract not included in the bill of lading shallbe obligatory to the consignee if there is a note in the bill of ladingreferring to a document wherein they are included. Thus, when theconsignee and shipper or charterer is not the same person, the termsof charter are not obligatory to the consignee. But if in the bill oflading there is a note referring to the charter party, then, the charterparty terms are considered incorporated. The more general characterof the note in the bill of lading is, the narrower is the range of thecharter party terms that can be incorporated into the bill of lading.Thenotelikeallothertermsincompliancewithcharterpartyisanote of the most general character. If some term in the charter partydoes not make sense in the context of the bill of lading, then this termis to be considered as unincorporated into the bill of lading.

If the content of the arbitration clause in the charter party doesnot envisage consideration of disputes under the bill of lading, itcannot be incorporated; if not, it can be incorporated in the bill andit is binding on third parties.

37 Is the demise clause or identity of carrier clause recognised and

binding?

The demise clause and identity of carrier clause are not recognisedor binding.

38 Are shipowners liable for cargo damage where they are not the

contractual carrier and what defences can they raise against such

liability? In particular, can they rely on the terms of the bill of lading

even though they are not contractual carriers?

The shipowner is not liable for cargo damage where he or she is notthe carrier under bill of lading and he or she cannot rely on its terms.The shipowner is liable for cargo damage if he or she is guilty oftrespass or if the shipowner is liable on the claim of recourse.

39 What is the effect of deviation from a vessels route on contractual

defences?

Any deviation of the vessel from the planned route with the purposeof saving life, vessels or cargoes at sea and, similarly any otherreasonable deviation (if it has not been caused by wrongful actionsof the carrier), shall not be considered a violation of the contract.

40 What liens can be exercised?

The carrier is at liberty not to deliver the cargo until payment isreceived or secured. The carrier shall retain the right of lien on thecargo if he or she deposits the cargo in a warehouse not belongingto the consignee, provided the carrier informs the warehouse ownerof the said right.

41 What liability do carriers incur for delivery of cargo without production

of the bill of lading and can they limit such liability?

If the value of cargo has not been declared and included in the billof lading, the reimbursement for a missing or damaged unit ofcargo shall not exceed 666.67 units of account of the InternationalMonetary Fund or 2.0 units of account per 1 kilogram of gross mass

of the missing, damaged or spoiled cargo, whichever sum is greater.

42 What are the responsibilities and liabilities of the shipper?

Among the most important responsibilities and liabilities of theshipper are complete and distinct marking, proper packing of cargorequiring care and packing for safe delivery to the receiver of cargo.The shipper has to sign and hand in all necessary documents whentransferring the cargo to the carrier. These documents must containall data necessary to issue the bill of lading or other documentproviding the receipt of cargo for carriage. The shipper shall be liableto the carrier for any consequences that arise out of incorrect orincomplete data entered in said documents. The shipper shall, in atimely manner, pass to the carrier all the documents related to cargoas required by the port, customs, sanitary and other administrativerules. The shipper shall be liable to the carrier for any losses causedby untimely transfer, incorrectness or incompleteness of thesedocuments. Timely loading of cargo is one of the most importantduties of the shipper. Delay of the vessel for completion of cargoloading entails demurrage, and completing the loading prior toexpiry of lay time entails dispatch as an award to the shipper. Ifloading the vessel continues past the expiration of the demurragetime, the shipper has to recover the losses incurred by the carrier, andthe carrier may send the vessel to the sea even if unavailable cargo is

not loaded on board for reasons not dependent on the carrier, whopreserves his right to receive the freight in full. Usually the shipperhas to advance the charter freight.

Jurisdiction and dispute resolution

43 Which courts exercise jurisdiction over maritime disputes?

Commercial courts and courts of general jurisdiction are the statecourts that exercise jurisdiction over maritime disputes.

44 In brief, what rules govern service of court proceedings on a defendant

located out of the jurisdiction?

The Law on International Private Law, Commercial ProceduralCode, and the Civil Procedural Code contain the rules that governservice of court proceedings on a defendant located outside Ukraine.

45 Is there a domestic arbitral institution with a panel of maritime

arbitrators specialising in maritime arbitration?

The Maritime Arbitration Commission at the Chamber of Commerceand Industry of Ukraine is a domestic arbitral institution with a panelof arbitrators specialising in maritime arbitration.

46 What rules govern recognition and enforcement of foreign judgments

and awards?

Ukraine is a member of the New York Convention on theRecognition and Enforcement of Foreign Arbitral Awards of 10 June1958. The UNCITRAL Model Law on International CommercialArbitration of 21 June 1985 is the basis of the Law on InternationalCommercial Arbitration of 24 February 1994. The Rules ofthe International Commercial Arbitration Court and MaritimeArbitration Commission at the Ukrainian Chamber of Commerceand Industry are the Annexe to this Law. Ukraine is a party to theHague Convention on the Taking of Evidence Abroad in Civil orCommercial Matters of 18 March 1970 and the Convention on theService Abroad of Judicial and Extrajudicial Documents in Civilor Commercial Matters of 15 November 1965. According to theirregulations and the regulations of Ukrainian domestic legislation,

a judgment creditor can enforce a foreign judgment in Ukraine.Bilateral treaties between Ukraine and foreign countries also maybe legal grounds for enforcement. The enforcement of a foreignjudgment may be implemented within three years from the date thejudgment becomes effective.


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47 What remedies are available if the claimants, in breach of a

jurisdiction clause, issue proceedings elsewhere?

If the claimants issue proceedings in breach of a jurisdiction clauseoutside Ukraine, the defendants will have no remedies to stop ordismiss the matter by an action in Ukraine. But an award coming

from such proceedings will rarely be enforced in Ukraine.

48 What remedies are there for the defendant to stop domestic

proceedings that breach a clause providing for a foreign court or

arbitral tribunal to have jurisdiction?

Filing a claim to the domestic court that breaches a jurisdiction clauseis not qualified as infringement of justice if no party requests to stopor dismiss the matter. The court is obliged to dismiss the matter ifone or both of the parties request it and the jurisdiction clause is notinvalid or cannot be executed.

Limitation periods for liability

49 What time limits apply to claims? Is it possible to extend the time limitby agreement?

General limitation of action is established for three years. For certaintypes of claims the laws establish a special limitation of action. Forrecovery of a forfeit (penalty, fine, etc) or for disputes connected withfreight a one-year limitation shall be applied. The limitation periodestablished by the law may be extended by agreement of the partiesin writing.

50 May courts or arbitral tribunals extend the time limits?

Upon an application of the claimant, the court may consider that thelimitation period was missed for good reasons. Thus, the time limitsmay be extended.

Miscellaneous

51 Is it possible to arrest bunkers in your jurisdiction or to obtain an

attachment order or injunction in respect of bunkers?

Arrest of bunkers is possible in Ukraine, in principle.

52 Can external factors, such as the recent global restriction on the

availability of credit, affect the legal rights and liabilities of the parties

to a shipping contract?

There are no special legal provisions in Ukraine that affect the legalrights and duties of the parties to shipping contracts as force majeurecircumstances connected with transient factors of recent globaleconomic crisis.

53 Are there any other noteworthy points relating to shipping in yourjurisdiction not covered by any of the above?

The Merchant Shipping Code remains the main source of maritimelaw. At the present time the new Law of Ukraine on Sea Ports, whichwas adopted and entered into force partially from 13 June 2012,adjusts the legal status of the port to world standards and bringsabout the liberalisation of the sector. For example, the Sea PilotService need no longer be a state enterprise. The following activities,however, will contuniue as state monopolies: theprovisionofsalvageandrescueoperations; navigationalandhydrographicsupport; cartographicseagoingsupport;and provisionforpreventionandreliefofpollutantoverflow.

Some aspects of port activity have already faced a certain liberali-sation. Economic activity is separate from administrative activity,in particular from navigation safety management. Almost half ofstevedore works is carried out by private enterprise and the share ofthe private sector is still growing. Liberalisation of the port servicetariffs is expected. The Register of Sea Ports of Ukraine will be cre-ated, the ports will cease to be legal entities and their administrationswill become branches of the state enterprise Administration of SeaPorts of Ukraine. This Law is expected to enter completely into forcewithin one year.

Arthur Nitsevych [email protected]

Nikolay Melnykov [email protected]

2/4 Observatorny lane, Suite 57 Tel: +38 0482 33 75 29

65014, Odessa Fax: +38 0482 49 69 25

Ukraine www.interlegal.com.ua

Although the maritime law of Ukraine has been significantly

developed recently, most aspects of the sea industry are still not

regulated enough. For example, despite Ukraine acceding to the

International Convention Related to the Arrest of Seagoing Ships

as of 1952, almost nothing has changed concerning foreign-flag

vessels. In order to realise the Law on Sea Ports, the Cabinet of

Ministers must enact nearly 40 Decisions and a large numberof bylaws to extensively amend regulations on shipping in sea

ports. Different schemes of state-private partnership, in particular

concession forms, are supposed to be significantly developed.

Large privatisations in the port industry, not including strategic

objects, will become possible.

Update and trends


9/9

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