Trends in the Ukrainian maritime law service market

• Shipping

Maritime law service market is a part of the Ukrainian legal service market, so its features are typical also for such specific commodity market as the legal service market in legal relationship used for implementation of the maritime law provisions in Ukraine. But specifications of the maritime law service market are observed both in the Ukrainian and in other territorial markets, since maritime law is an industry tightly related to the international law system due to the high level of the Ukrainian maritime industry integration in the global maritime economy system. So we see correlation between the Ukrainian maritime law service market and global market of maritime industry services, in particular, cargo carriage as the most important type of maritime transport services.

Market challenges

International sea cargo carriage market, in particular freight market as its essential segment, has a high volatility. This market has a sensitive response on situation at the international commodity trade market, so its revival provides grounds for restrained optimism. Meantime, freight market volatility not only remains the same but also has trends to increase which causes unstable situation at the maritime law service market in Ukraine. Although global economic crisis has been overcome in the first half of 2010s, the Ukrainian maritime economy has been renovated slowly and unstable. Trend in saving the budget for legal services still goes on. Although the number of maritime claims does not decrease, our clients try to settle them without applying to arbitrations and courts. We support such attempts with great pleasure, since they fully comply with our law firm policy. There have been created and increased internal law firms of shipping companies and other large transport market players, which significantly facilitates our efforts of our client legal support, since it is easier for lawyers to find understanding in complex legal issues.

Impact of political factors on the legal service market related to our clients’ maritime activity cannot be ignored. Political and military crisis in the Eastern Ukraine and the Crimea has been shimmering, while tense remains quite large. It facilitates force majeure the details whereof we have to study. Today political situation in Ukraine, in particular anti-terror operation in Donetsk and Lugansk Regions has a large impact on the opportunity to cooperate with persons making business at the above territories. Recently Interlegal experts, at the request of a famous multi-industry group, assessed the possibility of debt recovery from the Ukrainian entity in Donetsk Region and the correlated risks.

In particular, Interlegal lawyers studied circumstances of anti-terror operation and their impact on the possibility to fulfill the contractual monetary obligations by the debtor – Ukrainian entity. Having studied thoroughly the current circumstances, with regards to their international nature, Interlegal lawyers analyzed the Ukrainian legislation, international treaties a party to which Ukraine is and court practice upon settlement of disputes arising from the claim on force majeure. In particular, they studied the following issues: whether such circumstances can be treated as force majeure; who is entitled to certify the fact of force majeure in Ukraine; which effects may force majeure cause for parties to the contract.

Shipping activity, in particular, navigation is a hazardous business industry, with so high level of routine risks that it is difficult to distinguish force majeure and circumstances treated as common factors causing danger.

There is still a shortage of financing both shipping industry and, in particular, the port sector in Ukraine. It is quite a controversial trend. From one hand, the number of large-scale projects and therefore the legal service market decreases. From the other hand, lack of investments deteriorates condition of the port infrastructure facilities which causes additional dangers in the shipping industry. Such dangers often occur in various emergency situations, causing essential losses which serve as grounds for legal disputes. Apart from lack of investments in the Ukrainian shipping industry, sometimes occurs their outflow, money export abroad and similar phenomena. We believe that only privatization of the Ukrainian sea port infrastructure (of course, except strategic facilities) may save the situation or crucially change its development trend. Maybe there are any other palliative ways to improve business activity at sea ports. For example, potential of concession as port infrastructure privatization mechanism shall not be underestimated, but concession is only a palliative which may be used to improve the situation in short-term or middle-term prospect, although under its commercial nature such business form is the most effective for long-term investment activity. Also such privatization form is quite untypical and hardly regulated. In today Ukraine, such investment activity is possible only in its simplest forms and today world treats such mechanism as retrograde. So we hope that development plans upon the Ukrainian port economy privatization will be implemented in order to expand the maritime law service market, with the larger indirect effect, since in fact privatization should create a highly developed port service market which will require for a qualified legal support.

Conclusion: our answer

Today there is quite an optimistic situation at the maritime law service market. Our law firm Interlegal has been specialized in this industry for almost 21 years. It is not a surprise, because our main office is located in Odessa – center of the Ukrainian maritime business. But it is incorrect to hope only on the benefits of our location. We often face many challenges which require for proper and even immediate response. We look confidently in the future. Our specialization in maritime industry is justified. But we shall keep on developing. Those who stop will fall behind the times. Fortunately, maritime law is an inexhaustible ocean of legal matter, so our practice in this industry may be permanently expanded and diversified. Of course we are not limited by cases arising from navigation or, in broader sense, sea usage. Our practice covers legal relationship tightly correlated thereto, e.g. transport and logistics. We are mostly focused on shipping relationship – specifically relationship with shipowner engaged. Lately the number of legal services upon ship arrest relationship has been increased. Therefore cannot but mark the improvement of commercial court practice in consideration and settlement of disputes arising in such complex industry.

Growth in economic competition at the Ukrainian legal service market is caused by growth in integration between the Ukrainian and global, in particular, European market, economic environment forcing to increase the price policy flexibility. Market success also depends significantly on the marketing and HR policy. In order to develop effectively the maritime law practice, our lawyers participate regularly in conferences, seminars and other similar events gathering experts in maritime law and maritime trade, in particular, grain trade. We also organize and hold jointly with our agro-industrial partners the conference Grain Forum and Maritime Days in Odessa – the largest event in the above industries in the whole Black Sea Region. All the Black Sea countries have offices cooperating with us or our associated offices. Number of such offices worldwide already approaches thirty. Other marketing and HR instruments – publication of our investigation results and generalizations in maritime law and practice of their performance – shall not also be ignored.

Our slogan is: To find an answer to any challenge!    

Arthur Nitsevych

nitsevych@interlegal.com.ua

Nikolay Melnykov

melnykov@interlegal.com.ua