Sergey Nedelko Delivers a Speech at the Seminar “Maritime Business and Law 2023: the Year of War”

Sergey Nedelko, Attorney at Law, Counsel, Head of Odesa Office of Ilyashev & Partners, delivered a speech at the seminar “Business under martial law. Maritime business and Law 2023: the Year of War” held on 3 April 2023 in Odesa. The event was organized by the Committee on Maritime Law of the Ukrainian Advocates’ Association.

In his report “Aspects in the Disputes Between Shipowners, Insurers and Charterers related to the Vessel’s Constructive Loss following the Russian Military Aggression and Restriction of Navigation” Sergey noted that during the year of the war in Ukraine, navigation in most Ukrainian ports was impossible or significantly limited. Most shipowners, whose vessels were blocked in the ports, issued notices of abandonment and requested their insurers to reimburse the vessel’s value. Abandonment is justified by the constructive total loss of the vessel on the basis the shipowners have lost free use and disposal.

However, disputes arise between shipowners and insurers regarding the justification of the notice of abandonment, primarily in respect of the vessels blocked in the ports of “Great Odesa” that participate in the Black Sea Grain Initiative.

“Most of the disputes arise regarding the claimed constructive total loss of the vessels that called the ports of “Great Odesa”, loaded with non-grain cargo (iron, ore, metal) before the full-scale aggression started, however currently they cannot discharge the vessel, load her with agricultural products, and then sail through the “grain corridor”. The main reason is an unlawful refusal of charterers and cargo owners to unload the vessels, – Sergey Nedelko noted. – Refusing to accept the abandonment, the insurance associations explain their position that only the nature of the cargo on board and the insufficient efforts of the shipowner to replace cargo prevent free use and disposal of the vessel. Insurers emphasize that the issue of recovering control over the vessel lies exclusively in commercial relations between the shipowner and other parties of the sea carriage contract (cargo interests), which often take an unreasonable position being detrimental to the shipowner’s interests. Unfortunately, in the absence of the cargo interests’ consent and the lack of port terminal’s assistance, it is extremely difficult to carry out forced unloading in view of a number of practical aspects of the terminal’s operations and logistic processes as well as the aspects of law enforcement.”

The speakers of the event represented the leading law firms in the Maritime Law practice. The participants of the panel discussed the force majeure and law enforcement practice during the martial law, determined the problems of blocked vessels in Ukrainian ports and the “grain corridor”, as well as the special features of the bill of lading and sea waybills.