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Ship arrest in Ukraine: updated regulations

Ship arrest in Ukraine: updated regulations

There is no doubt that the main event which will determine Ukrainian legal trends in sea carriage in 2018 is the entry into force of the Law of Ukraine No. 2147-VIII dd. 03.10.2017 “On amendments to the Commercial Procedural Code of Ukraine, Civil Procedural Code of Ukraine, Administrative Court Procedural Code of Ukraine and other legislative acts”. This law substantially modifies provisions of the Commercial Procedural Code of Ukraine and Civil Procedural Code of Ukraine regarding the arrest of ships as a precautionary measure to secure a maritime claim. We highlight the following major changes in procedural law with respect to ship arrest:

– The jurisdiction of the courts in respect of ship arrest is extended — there is now an additional possibility for the Ukrainian courts to consider the arrest of vessels heading to Ukrainian seaports. Such novelty eliminates practical obstacles when the claimant had to prove the actual presence of the vessel at the seaport. Previously, it took some time to obtain information about the vessel from harbour masters, and the vessel was able to sail from the seaport during this period. However, some legal issues still remain open, particularly with regard to proper evidence, which prove that the vessel is bound for a Ukrainian seaport, and the admissibility of data obtained from open AIS trackers on the Internet (e.g. MarineTraffic etc).

– Provision regarding the correlation between the amount of the claim and value of the vessel being subject to arrest. In many cases before, the courts, while rejecting applications on ship arrest, pointed at inadequacy of the claim and precautionary measures requested.

– The period of arrest before filing the claim on merits is significantly extended. Now, in case of filing an application on ship arrest, the claimant must submit the claim on merits within 30 days from the date of the ruling granting the precautionary measures.

– The duty to take measures preventing the arrested vessel from sailing from the port now rests on Ukrainian Sea Ports Authority branches, State Border Service and customs offices.

– The requirements as regards the contents of the application for arrest are now given in more detail.

– The amount of counter security is now limited with the possible losses of the ship owner due to ship arrest. Previously, courts obliged the applicant to lodge a counter security amounting from 70 to 100 percent of the amount of claim.

– It is now expressly provided that the counter security must be lodged by means of remittance of funds to the court’s deposit account, bank guarantee, surety of solvent person/entity, other financial securities or other actions prescribed by the court in order to eliminate a ship owner’s potential losses and other risks related to ship arrest.

Court decisions made during the period of new wording of the law demonstrates that the courts, while considering arrest cases, reduced the amount of additional evidences previously requested for the purpose of proving the possibility of the vessel leaving the Ukrainian jurisdiction. Another positive feature is the obvious progress in determination of sums of counter security during ship arrest.

Summarizing the above mentioned amendments to the Commercial Procedural Code of Ukraine and Civil Procedural Code of Ukraine regarding ship arrest, we should note their progressive nature, which brings Ukrainian legislation closer to the International Convention Relating to the Arrest of Sea-Going Ships and global ship arrest practice.

By: Andrey Perepelitsa
Senior lawyer, Ukraine







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