Ship Arrest in Ukraine by Vagif Mallayev.
Chechel Mallayev & Partners Law Firm
27 Degtyarnaya Str, ap.1
65020 Odessa
Ukraine
Tel: +380482362581
Fax: +380487845875
Email: mallayev@cmlaw.com.ua
Web: www.cmlaw.com.ua
1. Please give an overview of ship arrest practice in your country.
Unfortunately Ukraine is not a signatory to the International Convention for the Unification of Certain Rules relating to the Arrest of Sea-Going Ships (Brussels, 1952) nor is the Ukraine a signatory to the International Convention on Arrest of Ships (Geneva, 1999).
It was a position of Ukrainian government which was vainly attempting to protect state shipping companies (namely: Black Sea Shipping Company, Azov Sea Shipping Company) from arrests of the state commercial vessels in foreign jurisdictions.
And we are the witnesses of the fact that many of Ukrainian state vessels had been arrested somehow in foreign jurisdictions, virtually all our state shipping companies are liquidated or are in the bankruptcy process but Ukraine has not still changed its position in respect of the mentioned above Conventions.
The ship arrest procedure is set out in the Merchant Shipping Code of Ukraine (the MSCU) which implemented identical scope of maritime claims defined in the 1999 Convention. It was a good effort of Ukrainian legislators to implement international arrest procedure into Ukrainian law but it failed. The problem is that the section II (4) “Ships Arrest” of the MSCU could be applied to vessels flying the Ukrainian flag only (Article 14 (1) of the MSCU).
Thus local lawyers have to use other legal instruments than MSCU to arrest foreign sea-going vessels in Ukraine. These instruments are the Civil Procedure Code of Ukraine and the Commercial Procedure Code of Ukraine.
Applicable laws
2. Which International Convention applies to arrest of ships in your country?
Ukraine is not a signatory to any of Arrest Conventions mentioned above.
3. Is there any other way to arrest a ship in your jurisdiction?
Yes, the ship is considered as a property of a debtor and can be arrested to secure any claim regardless of its nature. Sister ship arrest is therefore permissible.
There is an important prerequisite that must be met to get an arrest of a ship – a Ukrainian court has jurisdiction on the claim on merits. The mere presence of a foreign ship in Ukrainian territorial waters is not sufficient to found jurisdiction in Ukraine.
Claims subject to ship arrest
4. For which types of claims can you arrest a ship?
Vessel flying under Ukrainian flag can be arrested for any types of claim regardless whether the claim has maritime nature or not.
Foreign vessel that is a property of a non-resident person can be arrested in case a Ukrainian court has its jurisdiction on the claim on merits, in particular for the claims as follows:
(a) Any claims if one of defendants is domiciled in Ukraine (Art.15 (3) of Commercial Procedure Code of Ukraine, Art.113 of Civil Procedure Code of Ukraine).
(b) Proprietary claims relating to the possession of a ship, title to or ownership of a ship or a share in a ship (Art.16 (2) of Commercial Procedure Code of Ukraine).
(c) Claims arising out of employment contract with ship’s crew if a claimant is domiciled in Ukraine (Art.110 (1) of Civil Procedure Code of Ukraine).
(d) Claims arising out of loss of life or personal injury to a person who is domiciled in Ukraine or in case the accident took place in Ukraine (Art.110 (3) of Civil Procedure Code of Ukraine, Art.76 (3),(5) of Law of Ukraine No.1618-IV dd. 18.03.2004 “On International Private Law”).
(e) Claims arising out of damage caused in Ukraine to property of private persons or legal entities during the operation of a ship (Art.110 (6) of Civil Procedure Code of Ukraine, Art.76 (3) of Law of Ukraine No.1618-IV dd. 18.03.2004 “On International Private Law”).
(f) Claims arising out of any contract which specified a place of its execution or has to be executed in Ukraine only (Art.110 (8) of Civil Procedure Code of Ukraine).
(g) Claims arising out of collisions and compensation relating to salvage operation (Art.110 (11) of Civil Procedure Code of Ukraine).
(h) Any claims if the debtor owns any movable or real estate property that is located in Ukraine (Art.76 (2) of Law of Ukraine No.1618-IV dd. 18.03.2004 “On International Private Law”).
5. Can you arrest a ship irrespectively of her flag?
Yes, it is possible to arrest a ship irrespectively of her flag.
6. Can you arrest a ship irrespectively of the debtor?
No, it is not possible to arrest a ship irrespectively of the debtor.
Proceeding in rem is not permissible in Ukraine.
We may arrest only ships which are owned by the debtor.
Arrest procedure
7. Do your Courts require counter-security in order to arrest a ship?
The courts may require counter-security for potential damages to the defendant but it happens very rare. The court defines the sum of counter-security that to be transferred to deposit account of the court. The better evidences arranged and presented with the claim to the court the more chances to avoid the payment of counter-security.
8. Is there any difference in respect to arresting a ship for a maritime claim and a
maritime lien?
No, there is no any difference in respect to arresting a ship for maritime claim and a maritime lien.
9. Does you country recognize maritime liens? Under which International Convention,
if any?
Yes, Ukraine ratified the International Convention on Maritime Liens and Mortgages (Geneva, 1993) on 22.11.2002.
10. What lapse of time is required in order to arrest a ship since the moment the file arrives to your law firm?
Should we have all documents translated into Ukrainian a ship can be arrested within 2 (two) working days.
11. Do you need to provide a POA, or any other documents of the claim to the Court?
We need all evidences relating to the claim. Copies of most important evidences should be notarized and legalized/apostilled, other copies should be certified by the claimant’s seal and signature. Original Power of Attorney has to be notarized, dully legalized/apostilled and translated into Ukrainian. In case the arrest petition is submitted to a court of common jurisdiction a local attorney-at-law is not required to present the POA (Art. 42 (4) of the Civil Procedure Code of Ukraine).
12. According to which rules of law will your Courts acknowledge jurisdiction on the main
action of the claim?
Ukrainian courts shall apply provisions of the Commercial Procedure Code of Ukraine, the Civil Procedure Code of Ukraine, and the Law of Ukraine “On the Private International Law”.
Miscellaneous
13. Which period of time will be granted by the Courts in order for the claimants to take legal actions on the merits?
Proceedings within civil jurisdiction: The petition to arrest a ship has to be submitted to a court of common jurisdiction on the same day of filling a statement of claim, or later during the civil proceedings.
Proceedings within commercial jurisdiction: Pursuant to the Art. 43-3 (3) of Commercial Procedure Code of Ukraine the claimants must commence legal actions on the merits within 10 (ten) days from the day of obtaining the arrest order.
14. Do the Courts of your country acknowledge wrongful arrest?
Yes, Ukrainian courts on request of defendant acknowledge wrongful arrest in case of:
(a) The arrest is cancelled by the decision of court.
(b) The claimant fails to commence proceedings on the merits within the given time.
(c) The claimant recalled his claim.
(d) The claimant fails in his legal action on the merits.
15. Do the Courts of your country acknowledge the pierce and lift of the corporate veil?
No, Ukrainian courts do not acknowledge the pierce and lift of the corporate veil. The basic principle of civil law is that a shareholder or director/officers of a corporation could not be held liable for any debts or liabilities of the corporation.