Maritime Law in Ukraine

Ukraine has, as a maritime state, established short sea links with Turkey, Russia, Georgia, Bulgaria, Romania and Greece along with direct rail links to Central Europe, the Baltic States, the Russian Far East and Central Asia, thereby making it a trans-shipment hub as well.

Ukraine is one of the world’s leading grain and sunflower oil exporters and is an important gateway for import and export of commodities and goods. By 4 December 2017, Ukraine had exported more than 17.21 million tons of grain, which is 7.4% behind deliveries to foreign markets for the same period in the previous marketing year. The Ministry of Agrarian Policy and Food forecasts grain exports from Ukraine in the 2017/2018 marketing year (MG, July-June) at the level of 41 million tons.

Main Features of Maritime Law

Generally, Maritime Law describes all law related to ships and shipping, including the construction, navigation, crewing, operation and other activities and incidents related to ships. One feature is its international nature, which pleads for international uniformity in maritime law. This necessity has been satisfied internationally by implementing a number of international conventions or agreed rules like the Hague-Visby Rules which unify certain rules of law relating to Bills of Lading or the York-Antwerp Rules fixing the grounds for general average assessment. In some jurisdictions, but particularly in Ukraine, the provisions of such conventions are implemented in local laws such as the Merchant Shipping Code or similar. The widespread use of standard form documents as the basis of most contracts of carriage (like GENCON, SIINACOMEX, NYPE or BPTIME3) also has the effect of unification.

The second obvious feature of maritime law is that contracts for carriage of goods by sea fail to be performed in specific and often hazardous conditions in which it is practically impossible for one party to supervise the other party’s work on a daily basis. This factor is the key instrument in development of the sea carrier’s general duties and legal grounds for them including the duty to provide a seaworthy ship and not to deviate from the route stipulated by the charter party as well as other carrier’s duties connected with the sea voyage. It also influences those parts of Maritime Law dealing with the shipper’s duty to disclose the dangerous nature of goods shipped, the master’s powers of jettison and other extraordinary powers conferred on the master of the vessel in the event of an emergency.

The third notable feature which is affecting the nature and the practice of Maritime Law is that shipping regulated by such Maritime Law is directly dependent on other commercial activities. Contracts for the carriage of goods by sea are not made in commercial isolation. They are typically concluded in order to sell goods or to give effect to a previous sale. This means that contracts for sea carriage often reflect direct interest of both, sellers or buyers, under the sales contract. Third parties may become involved in the carriage of goods in other ways. This leads to complex questions about who can sue and who can be sued. In the absence of a contract provision dealing with the particular problem, the main role in such cases is played by the governing law of a carriage contract, which is English law for the majority of sea carriage contract forms or local law as the law of the place of incident.

The use of standard forms is a great point of maritime law practice. The vast majority of standard contracts developed by international associations, in particular, BIMCO (Baltic and International Maritime Council), FOSFA (Federation of Oils, Seeds and Fats Associations) and GAFTA (Grain and Feed Trade Association), contain standard or default provisions on application of English law. So, under the circumstances, Ukrainian Maritime Law practitioners deal mainly with casualties and incidents, not with contracts. The Merchant Shipping Code of Ukraine of 23 May 1995 regulates all the main questions in this respect such as collision, pollution or grounding. Ukraine signed and is a party to many international conventions. For example, the International Convention for the Prevention of Pollution From Ships, 1973 as modified by the Protocol of 1978 (MARPOL 73/78), the International Convention on Maritime Search and Rescue (SAR 1979), the International Regulations for Preventing Collisions at Sea  (COLREGs 1972), the International Convention on Maritime Liens and Mortgages (Geneva, of 6 May 1993), the International Convention Relating to the Arrest of Sea-Going Ships (Brussels, of 10 May 1952), etc.

Role of Arbitration in Shipping

Maritime cases are very specific and very complex. To make the right conclusion, one needs to have specific knowledge and expertise. That is why many in shipping favor arbitration over litigation. Arbitrators are more knowledgeable in maritime matters rather than judges, who have limited exposure to shipping. They can decide cases based upon the law, their practical knowledge and commercial reasoning. Furthermore, judges may be forced under the doctrine to decide modern-day disputes based on antiquated case law. Arbitrators, however, are not bound by this doctrine and have broad latitude to use their commercial sense of fairness. Neither are arbitrators bound by strict court rules of evidence and procedure.

The most popular choice for maritime arbitration is still London. The majority of standard form charter parties, international sale contracts, salvage contracts, reinsurance and P&I Club Rules provide for London arbitration and, in particular, arbitration at the LMAA (London Maritime Arbitrators’ Association). Many bills of lading incorporate the arbitration clause in the charter party under which the bill is issued.

In Ukraine there is the Maritime Arbitration Commission at the Ukrainian Chamber of Commerce and Industry, an independent, permanent arbitration institution operating under the Law of Ukraine On International Commercial Arbitration of 24 February 1994, the Statute on the Maritime Arbitration Commission at the Ukrainian Chamber of Commerce and Industry (Annex No.2 to this Act) and the Rules, approved by the Decision of the Presidium of the Ukrainian Chamber of Commerce and Industry No.18(1) of 17 April 2007, as amended by the Decision of the Presidium of the Ukrainian Chamber of Commerce and Industry No.24(6) of 25 October 2012.

Ukraine is a Maritime State

Ukraine’s position as a maritime power requires it to follow global trends in world sea trade and trends in the Black Sea and Sea of Azov regions. However, the legal framework which regulates the marine industry remains imperfect. In particular, most of the items on its functioning in Ukraine are still regulated by subordinate acts. There is not a sufficiently high level of marine activity management which is carried out by several central executive bodies without a sufficient level of coordination both with each other and with local executive bodies of maritime regions.

The Ukrainian legal community recently unified its efforts aimed at improving the legal framework regulating some of the main issues of Maritime Law, particularly ship arrest under maritime claims, ballast waters regulations and others. Such work will definitely result in necessary amendments to legislation giving Ukraine the possibility to obtain a strong system of Maritime Law and to become more attractive as a maritime jurisdiction.