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New procedural rules for ship arrest in effect in Ukraine since 16 May 2012
On 7 September 2011 Ukraine acceded to the International Convention for the Unification of Certain Rules relating to the Arrest of Sea-going Ships, known as the Brussels Convention (1952).
Law of Ukraine "On Accession of Ukraine to the International Convention for the Unification of Certain Rules relating to the Arrest of Sea-going Ships," No.3702-VI dated 7 September 2011, available in Ukrainian at: http://zakon1.rada.gov.ua/laws/show/3702-17 (last visited 1 June 2012).
In accordance with Art. 15 of the Brussels Convention the Convention enters into force in respect of the acceding State six months after the date of the receipt of notification of accession. In accordance with the website of Verkhovna Rada of Ukraine (Ukrainian Parliament) the Convention entered into force for Ukraine on 16 May 2012.
The date of entry into force of the Convention concurred with the entry into force of amendments to the Civil Procedure Code (CPC) and Commercial Procedure Code of Ukraine (ComPC).
The Brussels Convention seeks to clarify the jurisdiction of the courts to arrest vessels by providing in Art. 4 that "[a] ship may only be arrested under the authority of a Court or of the appropriate judicial authority of the contracting State in which the arrest is made."
The jurisdiction of Ukrainian courts before the accession to the Brussels Convention and entry of amendments to the codes of procedure was regulated by Art. 41 of the Merchant Shipping Code of Ukraine which provides that "[a] ship may be arrested or arrest may be lifted by a decision of a court, commercial court or the Chairman of the Maritime Arbitration Commission at the Ukrainian Chamber of Commerce and Industry."
The challenges that existed before with this provision of the Merchant Shipping Code were that (1) arrests by either courts or the Chairman of the MAC are not made via ‘decisions' and (2) the provision does not stipulate in what circumstances would a court or the Chairman of the MAC have jurisdiction to hear an application for arrest.
As a matter of construction, Art. 14 of the Merchant Shipping Code provides that Part II of the Code applies to ships that are registered in Ukraine. The above mentioned Art. 41 of the Code is located in Part II of the Code and, accordingly, a court or the Chairman of the MAC would not have jurisdiction to arrest a ship which is not registered in Ukraine.
This was the reasoning employed by the High Commercial Court of Ukraine in its order dated 15 April 2004. In that case the High Commercial Court of Ukraine considered an appeal from a Commercial Court of Kyiv city order by which vessel "I" was arrested on 11 March 2004. The amount of claim in the case comprised USD 66,1348.8. The appellant argued that the court of first instance violated the rules applicable to application of measures to secure a claim. Ultimately, the High Commercial Court found that the ship was not registered in Ukraine as is required cumulatively by of Arts. 14 and 41 of the Merchant Shipping Code for its arrest on the territory of Ukraine and for this reason the court of first instance did not have grounds to arrest the ship.
The accession to the Brussels Convention and amendments to the procedural codes seek to alleviate the uncertainty. In particular, now Art. 114 CPC and Art. 16 ComPC provide that cases concerning ship arrest made to secure a maritime claim may be submitted to the district courts with territorial jurisdiction over (i) any Ukrainian maritime port where the ship is located or (i) any Ukrainian maritime port where the ship is registered.
The application of the Brussels Convention as well as of the provisions of the amended procedural codes will provide certainty in cases where security of a maritime claim is sought on the territory of Ukraine.
Information on the status of the Convention for Ukraine may be found here: http://zakon1.rada.gov.ua/laws/show/995_g89/card4#History (last visited 1 June 2012).
Law of Ukraine "On Amending Certain Legislative Acts of Ukraine Regarding Determination of Jurisdiction in Cases Concerning Arrest of Sea-going Ships," No.4190-VI dated 20 December 2011, available in Ukrainian at: http://zakon2.rada.gov.ua/laws/show/4190-17 (last visited 1 June 2012).
Law of Ukraine "Code of Merchant Shipping of Ukraine," No.176/95-ВР dated 23 May 1995, available in Ukrainian at: http://zakon2.rada.gov.ua/laws/show/176/95-%D0%B2%D1%80/print1330009413907039 (last visited 1 June 2012).
High Commercial Court of Ukraine, Case No.39/71, Order dated 15 April 2004, reported in Yuridicheskaya Praktika, No.27, 4 July 2006.
For more information please visit www.arbitrade.com.ua