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Confirmation of force majeure under martial law

On March 15, the President issued a Decree on the extension of martial law1 for a period of 30 days, which was approved by the Verkhovna Rada on the same day. Thus, the duration of martial law in Ukraine has been extended until April 25, 2022. At the same time, we continue to receive questions regarding the procedure for notifying counterparties of the force majeure, the need to obtain Chamber of Commerce certificates and related issues. Below we bring to your attention our review on this topic.

  1. Notifying the counterparty about force majeure

According to the established practice of the Ukrainian Chamber of Commerce and Industry (hereinafter – CCI), as well as the generally accepted wording of agreements in terms of force majeure, first of all, a party must send its counterparty a written notice of the inability to perform obligations (all or some) due to the occurrence of force majeure circumstances (force majeure).

Such notification must contain the date from which the obligations cannot be fulfilled, description of such obligations and their connection with the force majeure (for example, closure of seaports for entry/exit of ships, closure of airports, restriction or closure of road or rail transport within the country, restrictions imposed by the NBU on the foreign exchange market and so on). The notification can be sent by e-mail to the address of the counterparty specified in the agreement.

  1. Confirming force majeure

Usually, a document issued by the Chamber of Commerce of Ukraine or regional chambers is used as confirmation of the fact of force majeure. According to the CCI Regulation, the fact of force majeure is confirmed by a certificate, which is issued for each specific contractual or non-contractual obligation at the request of a business entity to the Ukrainian CCI or regional chambers. The deadline for processing the documents is 7 days, but may be extended by decision of the Chamber of Commerce.

As we reported earlier, in connection with the introduction of martial law, the Ukrainian Chamber of Commerce and Industry published on its website the general confirmation of the fact of force majeure in connection with the military aggression of the Russian Federation in Ukraine (hereinafter referred to as the Confirmation)2. According to the news on the website, the contents of the Confirmation and the telephone conversations we had with representatives of the Ukrainian CCI, the Confirmation can be used instead of an individual CCI certificate during martial law, i.e. until April 25, 2022, because it is a so-called “continuing” force majeure.

Formally, the Ukrainian Chamber of Commerce continues its work, but due to the fact that the regional chambers are unstable (you need to contact the specific chamber and clarify the order of work) and even under normal conditions it can take up to several weeks to obtain a certificate, representatives of the CCI recommend that, if necessary, individuals should apply for individual certificates after the situation has stabilized and the martial law has been lifted.

As for the term of the force majeure, the Confirmation contains a reference to the Presidential Decree introducing martial law from 24.02.2022 for a period of 30 days, that is until 25.03.2022 inclusive. At the same time, the Presidential Decree on the extension of martial law sets a new term: from 26.03.2022 for 30 days, that is, until 25.04.2022.

The Confirmation also states that the CCI of Ukraine confirms the circumstances of force majeure from 24.02.2022, until their official end. Thus, the Confirmation can be used as a certificate of force majeure for the period from 24.02.2022 to 25.04.2022 (or until a later date in case of subsequent extension of martial law in Ukraine).

  1. Use of CCI Confirmation with respect to foreign counterparties

It should also be noted that the use of the Confirmation of the CCI of Ukraine (or a certificate of CCI on a particular obligation) is relevant not only in respect of resident counterparties, but also foreign counterparties.

Thus, according to the provisions of Article 44 of the Law of Ukraine “On International Private Law”, in the absence of a reservation by the parties as to the choice of applicable law, a party may refer to the law most closely related to the deal of the state where the party which is decisive to the deal is incorporated or domiciled.

For agreements on rendering of transport forwarding services such party is the freight forwarders, and for agreements on transportation – the carriers. Accordingly, even if a Ukrainian freight forwarder has concluded a freight forwarding agreement with a foreign customer and there is no reference to foreign law in such agreement, by virtue of Article 44 of the Law such agreement is governed by Ukrainian law and, therefore, the provisions on force majeure may be applied to it.