Interlegal has protected the interests of the Turkish and Bulgarian shipowners, which are performing cabotage voyages in Ukraine

The destruction of the Donetsk railway infrastructure, have also effected shipping industry. It is resulted in the creation of the new logistic routs: the raw materials for the steel plants in Donetsk region are now being carried by sea from three Ukrainian ports – Berdyansk, Nykolaev and Yuzhny – to Mariupol.

The specifics of the project was that the cabotage voyages are only performed by the vessels under Ukrainian flag. However, the Merchant Shipping Code of Ukraine allows some exceptions. Thus, special permission to use for shipment of raw materials vessels under the foreign flags was given by the Ministry of Infrastructure to MetInvest and PortInvest.

Almost at the same time Interlegal have received two requests from the Turkish and Bulgarian shipowners. The lawyers have given consultations about some risks and potential disputes between the owners and the charterers.

The main difference is that the foreign vessel is entering the territory of Ukraine under the customs regime of the temporary admission. The charterers have to perform the customs formalities of the temporary admission of the vessel to the territory of Ukraine and pay customs duties. The amount of duties will depend on the vessel’s price, declared by the owners in the proforma-invoice. For the most part, the importing duties for the vessel should be paid by the importer and usually supported by the guarantee letter warranting the payment of all necessary duties in accordance with the Customs Code of Ukraine. Usually such duties are to be paid in advance for the period of the intended temporary admission, which can not exceed the period of three years. The regime of the temporary admission shall be terminated by the re-export of the commercial vessel and the return of the respective guarantees to the importer. If the importer violates the requirements of the customs or tax legislation, the temporary admission transforms into import, he should fully pay all prescribed payments and penalties.

The separate issue was the amount of the bunker fuel on board of the vessel while entering the territory of Ukraine. According to the Customs Code of Ukraine and International Convention on Temporary Admission (1990), the fuel contained in the normal tanks of the means of transport temporarily admitted (imported) as  well as lubrication oils for the normal use of such means of transport shall be admitted without payment of import duties and taxes and without application of import prohibitions or restrictions. However, there are some nuances which should be foreseen by the prudent shipowners.

Working on the project, lawyers of  Interlegal – Nadiya Isikova, Andrey Perepelitsa and association partner, Natalia Myroshnychenko, have drafted additional agreements to the standard GENCON 94 charter-party in order to protect the interests of the shipowners and recommended some ways to handle the customs formalities for the vessel’s under foreign flag entering the territory in Ukraine.