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Sergey Nedelko Delivers a Speech at the Online Marathon On Maritime Business & Trends in Maritime Law

News date: 23 November 2023

Sergey Nedelko, Attorney at Law, Counsel, Head of the Odesa Office of Ilyashev & Partners Law Firm, delivered a speech at the online marathon on Maritime Business & Trends in Maritime Law, held on 20 November 2023 in Odesa. The event was organized by the Committee on Maritime Law of the Ukrainian Advocates’ Association.

In his report entitled Fate of Marine Vessels Arrested as Part of Criminal Proceedings – Is There a Real Possibility of ARMA Effective Management? Sergey noted that the management mechanism of Asset Recovery and Management Agency or ARMA is carried out in two forms: the transfer of assets (vessels) for management on a competitive basis based on a management agreement and the sale of assets (vessels). Managing a vessel under the Ukrainian flag is regulated by national legislation and is clear, in contrast to the management of a vessel under a foreign flag. Each foreign ship has its own nationality and is registered in the Ship Registry of the flag state. To make changes, the shipowner’s consent is required, which is unlikely to be obtained. Therefore, it is almost impossible to fully operate a ship under a foreign flag in foreign territorial waters, given the significant risks of its arrest at the maritime claim of the ship owner.

“In practice, such vessels are actually used as storage vessels on the territory of Ukraine. Managers of this property enter into holds lease agreements and these vessels are not involved in international shipping, taking into account the opposition risks from the side of shipowners. Hearing of a dispute in a foreign court may take a long time, during which the vessel will be blocked or even lost as a result of the trial on the merits. The foreign court will be guided, first of all, by data from the Ship Registry of the flag state. The manager will be forced to prove the legality of his right to own and use the vessel in the context of Ukrainian special legislation. In general, out of 56 arrested vessels formally transferred to the management of ARMA, only 11 were transferred to the managers. The management agreement for 9 vessels is at the stage of termination due to inefficient use of the asset. Therefore, a possible solution to the problem may be to transfer the vessel to the management of ARMA by selling the asset at public auctions and today there is already the first positive precedent,” said Sergey Nedelko.

The event speakers were representatives of leading law firms in the Maritime Law practice. The participants of the panel also discussed the TOP 10 arrests of ships during martial law, key innovations during the war regarding the employment of Ukrainian sailors, tonnage dues collection features, as well as maritime claims and specific aspects of arrest in cases of damage to liquid cargo.

Online marathon of the Ukrainian Advocates’ Association is a platform created for communication between lawyers, judges, representatives of government agencies and business for the purpose of discussing current legal problems and ways to solve them.