REFORMING UKRAINE: New law privatizes ports

At times, the nascent nation known as the Ukraine appears to be something of an enigma. The largest country in Europe behind the Russian Federation has embraced the market economy, yet continues to enforce strict state controls and an ambiguous legal system, which results in uncertainties and unpredictability. For the shipping sector, those uncertainties are most evident in the Black Sea nation’s inability to launch serious reforms in the maritime trade since it emerged 22 years ago from the collapse of the Soviet Union. Despite such serious challenges, Ukrainians believe their nation has great potential to grow into a dynamic maritime state. Ukraine’s maritime potential becomes clear when one considers its coastline of 2,782 kilometers along the Black Sea and Sea of Azov, 18 maritime ports and two shipping rivers, the Danube and Dnipro.

Ports Privatized

This year, the Ukraine maritime sector is undergoing several changes. The government recently adopted and published a new Law on Sea Ports aimed at reforming port infrastructure. Scheduled to go into effect June 14, the law provides a compensation arrangement for private investors to make improvements to port infrastructure. Ukraine’s ports will continue to be owned by the government, and the new Administration of Ports will control the investment process. The new law

means the 18 state ports can now take advantage of private investment while the government is able to improve port infrastructure using private money. However, strategic elements of port infrastructure will not be privatized. These include hydraulic facilities, objects of common use, navigation equipment facilities and other objects of navigation, hydrographic and cartographic support, and the ships traffic control system. It’s not yet known what issues shipowners will face when the law comes into full force. Bear in mind that commercial and administrative authority in seaports will be separated. Currently, managers of the public ports hold all the power . But soon all handling and other commercial port operations – tug services, for example – will be passed to private companies. From our experience, we know there will be confl icts and misunderstandings.

Detention, Arrest of Vessels

Vessels calling at ports in Ukraine face numerous and serious perils, including detention. The harbormaster may bar a ship from sailing under the following conditions:

• Requirements regarding cargo loading have not been followed.

• Provisioning and personnel fail to comply with normal rules.

• The discovery of defi ciencies that may be hazardous to the safety of navigation, health of the crew and the natural environment.

• Shipping documents are out of order.

• Charges, fi nes and other statutory payments are unpaid.

• Relevant decisions or rulings of authorized bodies are issued.

A vessel and its cargo may be detained for 72 hours by the order of the head of a seaport under the maritime claims by request of the party having such claim. The vessel shall be released if the maritime claim or arrest is unsecured. Second, the arrest of a vessel is intended to secure maritime claims. Ukraine has become a party to the Convention for the Unifi cation of Certain Rules Relating to the Arrests of Sea-Going Ships 1952. Thus, vessels can be attached in Ukraine ports under maritime claims. Shipping executives have expressed concern that there is no corresponding legal procedure for arresting vessels. So, ships in Ukraine must be arrested through the procedure set for attachment of any other property.

Cargo Shortages

Vessels carrying cargo, especially bulk, to Ukraine are often subject to disputes about cargo shortages. Foreign shippers probably ask about this issue the most. Such claims as a rule cover up to 50-100 tons of shortage amounting to up to US$100,000. The core answer is that in the Ukraine, the slightest cargo shortage is fi xed, as

opposed to other countries where the norm of the ‘paper’ shortage exists. So, in a Ukrainian port, the slightest shortage may serve as grounds to fi le a claim. The following actions should be taken to minimize risks related to a shortage of cargo:

• A ship’s holds should be sealed in the presence of surveyors representing all interested parties after completion of the cargo loading;

• If there are any damages to the seals, the surveyors must be present in the port of discharge when the holds are opened;

• Draught surveys should take place at the port of loading as well as before discharging cargo.

• An “empty hold certificate” should be issued. The document will also be signed by the supervisor of the stevedore company by request of the master. In case questions arise about shipping in Ukraine, it is best to seek local attorneys who specialize in maritime and transport law.

Авторы:

Arthur Nitsevych, Nikolay Melnykov

are partners of Interlegal Ukraine,

www.interlegal.com.ua.