Ukraine said early last week that it had a “Plan B” in place in case the current Black Sea Corridor completely collapses, rather than continuing to limp along in its current half-life, with one of the three Ukrainian ports not using the corridor at all, and traffic from the other two at less than full capacity.
That “Plan B” consisted of the corridor continuing to function, without Russian agreement. It said that shipowners would be guaranteed compensation in the unlikely event that the Russians attacked their ships
The proposal has now been published. The procedure will apply to Ukrainian and foreign flagged vessels, but not to vessels sailing under a Russian or Belarusian flag. The Ukrainian authorities hope that the programme will keep grains moving from Ukrainian ports through the Black Sea to Istanbul, if and when Russia quits the Black Sea Grain Initiative (BGSI).
The official announcement from Ukraine stated that compensation would be provided to those shipowners denied payment by their insurer for damage caused by the war. Only shipowners that have concluded an insurance contract or P&I policy in accordance with the procedure established by the legislation of Ukraine or another state would be entitled to compensation.
The damage to be compensated includes:
Ilyashev & Partners Law Firm advised that the key conditions for entitlement to compensation were:
To receive compensation, the shipowner must submit a relevant application along with a set of supporting documents listed in the ‘Procedure’ (including the independent appraisal report) to the Ministry of Infrastructure of Ukraine. The documents must be submitted within 90 days from the date when the insurer refused to settle the insurance compensation, but not later than December 1st 2023.
The final decision shall be made by the Ukrainian Government [Cabinet of Ministers of Ukraine].
The maximum amount of compensation is limited to the amount of insurance indemnity under each policy. However, the total amount of insurance recoveries shall not exceed UAH 20 billion ($547m).
The official publication of the ‘Procedure’ and its entry into force are expected in the near future.
