Ukraine unveils procedure for compensation for civilian vessels calling at its ports

The Cabinet of Ministers of Ukraine has approved the Procedure for Providing Guarantees of Compensation for Damage Caused to Charterers, Operators and/or Owners of Sea and Inland Navigation Vessels as a Result of Armed Aggression of the Russian Federation. This applies to vessels flying Ukrainian and foreign flags (except for Russia and Belarus).

“Stable operation of civilian shipping in the Black Sea, including within the framework of the Grain Initiative, is impossible without insurance coverage of all risks associated with the Russian aggression. We see that insurance companies are wary of covering such risks, and this poses a threat to non-military shipping from Ukrainian ports,” said Oleksandr Kubrakov, Vice Prime Minister for Reconstruction of Ukraine, Minister of Communities, Territories and Infrastructure Development.

He added that the launch of the damage compensation mechanism will allow charterers and shipowners to continue to ensure calls to our ports regardless of how the grain deal works or does not work.

According to the procedure, compensation will be provided to a shipowner whose insurer has refused in writing to compensate for damage caused by the armed aggression of the Russian Federation.

Only those shipowners who have entered into an insurance contract or P&I (Protection and Indemnity) policy in accordance with the procedure established by the legislation of Ukraine or another state will be entitled to compensation.

The damage to be compensated includes

• losses caused to the vessel due to loss or destruction beyond repair,
• costs of repairing structural damage to the vessel that caused the vessel to lose its seaworthiness
• losses due to loss of or damage to cargo,
• expenses related to damage to the health or life of a passenger or crew member.

For this purpose, the shipowner may submit a set of documents to the Ministry of Infrastructure no later than 90 calendar days from the date of receipt of the insurer’s refusal to provide insurance indemnity.

In late February, the Government announced that Ukraine would guarantee financial compensation to owners and operators of ships involved in the grain deal. Payments will be made from the state budget if Russia starts sabotaging the grain deal and creates risks of destruction of vessels operating under this agreement.

Tags: insurance, Black Sea grain corridor