All the questions

Shipping Industry Business Presentation

Ukraine is a maritime country with access to the Black Sea and the Sea of ​​Azov. Several Ukrainian ports are located along the Danube, the longest river in Europe, which crosses 10 countries (not counting new terminals and private ports). Currently, the Ukrainian port system has 18 seaports, including 13 on the continental territory of Ukraine and five on the temporarily occupied territory of the Autonomous Republic of Crimea. The total capacity of continental ports and terminals is 313.3 million tons. The Crimean peninsula has been under illegal foreign control since February 20, 2014, and the annexation of the Autonomous Republic of Crimea is not recognized by Ukraine. Since July 15, 2014, all ports in the Autonomous Republic of Crimea have been closed, and all vessels and their crews visiting the occupied territory and subsequently calling at a Ukrainian port face penalties under Ukrainian law.

The second stage of the war against Ukraine and the total invasion of Ukrainian territory, which began on February 24, 2022, temporarily blocked all Ukrainian sea and river ports located on the Dnieper.

The city of Mariupol and the seaport of Mariupol were totally destroyed by the invaders; all buildings and technical installations were completely demolished.

Once the war is over, the main advantages of the Ukrainian maritime port industry will include:

1. strong export potential of agricultural cargoes, sunflower oil, ferrous metals, coal and iron ore concentrate;
2. availability of cargo handling facilities;
3. favorable location of seaports to ensure transit cargo traffic;
4. the existence of a legal framework likely to attract private investment for the development of the port industry – concession; and
5. availability of highly qualified professionals from the port industry.

In Ukraine, as in the rest of the world, the demand for water transport is growing. Cargo owners, mainly grain traders, are trying to reduce transport costs and improve logistics in the face of economic instability, rising fuel prices and increasing disruptions to rail and road transport due to the conflict in eastern Ukraine.

River transport is becoming more and more relevant and in demand in Ukraine. In the near future, river transport could regain lost ground and compete with rail and road transport.

The Inland Waterways Law has already brought positive developments in inland waterways infrastructure, and local and foreign investors have gained support from the Ukrainian government. The development of river transport, which provides “green” transport, also has a significant impact on Ukraine’s social development and environment.

According to analytical studies of experts in the field of freight transport (COWI), the potential freight base of 12 regions, from which goods can potentially be transported through the Dnieper River, taking into account the overall growth of the economy, is about 60 million tons with an increase to 80 million tons by 2030. At the same time, since the Ukrainian economy is rather export-oriented, the transport of goods on the Dnieper could potentially reach 45 million tons per year (30 million tons of exports and 15 million tons of imports).

General overview of the legislative framework

The Ukrainian shipping industry is governed by local Ukrainian legislation and international conventions ratified by the Ukrainian Parliament. The Ukrainian legal system belongs to the Romano-Germanic legal tradition and the civil law framework. Codified acts are the traditional source of law in Ukraine, and they have a predominant status. Therefore, common law does not play a significant role in the Ukrainian legal system. The general principles of regulation of the maritime transport industry are defined by the Code of Ukrainian Merchant Shipping, the Law of Ukraine on Ports and the Law of Ukraine on Inland Waterways.

For separate cases concerning foreign economic activity but partially related to Ukraine, foreign law may be applied. If one of the parties is a foreign entity, the parties to a legal relationship have the right to specify the applicable law which is acceptable to all parties. Where no law is specified by the parties, international agreements entered into by Ukraine and the provisions of Ukrainian law shall define the applicable law. The regulations applicable to legal relations are defined in accordance with the provisions of the Ukrainian Law on Private International Law for disputes on the applicable law.

The law that defines the status of a foreign legal person in Ukraine is the local law of the jurisdiction where the legal person is registered. All entities must act in accordance with the local laws of the place where the action is carried out.

International conventions which have been ratified by the Ukrainian Parliament become an integral part of Ukrainian legislation and dominate all Ukrainian codes and laws. Conventions that Ukraine has ratified include:

1. the International Regulations for Preventing Collisions at Sea of ​​1972 (COLREG);
2. the International Convention for the Prevention of Pollution from Ships of 1973 (MARPOL);
3. the International Convention on Maritime Search and Rescue of 1992;
4. the York-Antwerp Rules (YAR), taking into account the 2016 edition of the YAR;
5. the International Convention relating to the Boarding of Seagoing Vessels of 1952 (the Brussels Convention);
6. the Athens Convention on the Carriage of Passengers and their Luggage by Sea 1974 (the Athens Convention);
7. the 1989 International Salvage Convention (the 1989 Salvage Convention); and
8. the International Convention on Load Lines, 1966 (the Load Line Convention).

For shipping-related interactions, the following codes are typically applied:

1. the Merchant Marine Code of Ukraine;
2. the Commercial Code of Ukraine;
3. the Civil Code of Ukraine;
4. the Customs Code of Ukraine; and
5. the Tax Code of Ukraine.

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

1. the Ukrainian law on ports;
2. Ukrainian law on private international law;
3. the Law of Ukraine on Foreign Economic Activity;
4. the Law of Ukraine on Environmental Protection”;
5. the Ukrainian Law on Internal Waterways;
6. the list of seaports of Ukraine open to foreign vessels, approved by Decree No. 466-p of the Cabinet of the Ministry of Ukraine; and
7. the Law of Ukraine on Port Customs, approved by Ordinance No. 316 of the Ministry of Infrastructure.