A general introduction to the law and practice of maritime transport in Ukraine
All the questions
Business overview of the shipping industry
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). The Ukrainian port system has 18 seaports, 13 of which are on the mainland of Ukraine and on the temporarily occupied territory of the Autonomous Republic of Crimea. The total capacity of continental ports and terminals is 313.3 million tonnes. The Crimean peninsula has been under Russian control since February 20, 2014 and Russia’s 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 ships and their crews that violate the regime of the occupied territory would be held responsible under Ukrainian law.
The main advantages of the Ukrainian port industry are:
- the strong export potential of agricultural cargo, sunflower oil, ferrous metals, coal and iron ore concentrate;
- the availability of cargo handling facilities;
- the favorable location of seaports to handle freight traffic in transit;
- the existence of a legal framework likely to attract private investment for the development of concessions in the port industry; and
- the availability of highly qualified professionals in the port industry.
In Ukraine, as in the rest of the world, the demand for river transport is growing. Owners of goods, 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 the east.
River transport is becoming more and more relevant and demand is increasing. River transport could regain lost ground in the near future and be able to compete with rail and road transport.
A new law “on inland waterways” is a positive development for the infrastructure of inland waterways and local and foreign investors have welcomed the government’s support. The development of inland waterway transport, as a “green” means of transport, also has a significant positive effect on social development and the environment in Ukraine.
According to analytical studies by experts in the field of freight transport,2 the potential cargo base of 12 regions from which cargo can potentially be transported along the Dnieper River, subject to the overall growth of the economy, is around 60 million tons, reaching 80 million tons of ‘by 2030. As the Ukrainian economy tends towards exports, river transport on the Dnieper can 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 maritime transport industry is governed by Ukrainian law and international conventions ratified by the Ukrainian Parliament. The Ukrainian legal system follows the Romano-Germanic legal tradition and the framework of civil law. Codified acts are the traditional source of law and they have a preponderant status. Therefore, the common law is not an important part of the Ukrainian legal system. The general principles of the regulation of the shipping industry are the Merchant Marine Code of Ukraine, the Ukrainian law “On ports” and the Ukrainian law “On inland waterways”.
For cases concerning a foreign economic activity but with a partial link with Ukraine, foreign law can be applied. If a party is a foreign entity, the parties in a legal relationship have the right to specify the applicable law that is acceptable to all parties. Where no law is specified by the parties, international agreements concluded by Ukraine and the provisions of Ukrainian law will define the applicable law. The rules applicable to legal relations are defined in accordance with the provisions of Ukrainian law “On private international law” for disputes over 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 taken.
International conventions that have been ratified by the Ukrainian Parliament become part of Ukrainian legislation and replace all Ukrainian codes and laws.
The conventions that Ukraine has ratified are as follows:
- the International Regulations for the Prevention of Collisions at Sea 1972 (COLREG);
- the International Convention for the Prevention of Pollution from Ships 1973 (MARPOL);
- the International Convention on Maritime Search and Rescue, 1992;
- the York Antwerp Rules, taking into account their 2016 edition;
- the International Convention relating to the Arrest of Seagoing Ships of 1952 (the Brussels Convention);
- the Athens Convention on the Carriage of Passengers and their Luggage by Sea of 1974 (the Athens Convention);
- the 1989 International Rescue Convention (the 1989 Rescue Convention); and
- the International Convention on Load Lines of 1966 (the Convention on Load Lines).
For shipping-related interactions, the following are generally applied: Merchant Marine Code of Ukraine, Commercial Code of Ukraine, Civil Code of Ukraine, Customs Code of Ukraine ‘Ukraine and the Tax Code of Ukraine.
The following laws and acts are most relevant to the shipping industry:
- the Ukrainian law “on ports”;
- the Ukrainian law “on private international law”;
- the Ukrainian law “on foreign economic activity”;
- the Ukrainian law “On the protection of the environment”;
- the Ukrainian law “on inland waterways”;
- “The List of Ukrainian Seaports Open to Foreign Ships”, approved by Decree No. 466 – p of the Cabinet of the Ministry of Ukraine; and
- the Ukrainian Law on Port Customs, approved by Order No. 316 of the Ministry of Infrastructure.