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Compensation for damage to ships entering the ports of Ukraine

On February 24, 2023, the Verkhovna Rada adopted the Draft Law on Amendments to the Law of Ukraine “On the State Budget of Ukraine for 2023”, taking into account amendments regarding the provision of guarantees for compensation for damage to charterers, operators and / or owners of ships (hereinafter referred to as «the Draft»).

Thus, the Draft provides for the provision in 2023 to charterers, operators and / or owners of sea vessels and inland navigation vessels sailing under the flag of Ukraine and under the flags of foreign states, guarantees of compensation for damage caused as a result of the armed aggression of the Russian Federation against Ukraine and military operations on the territory of Ukraine, in the amount of up to 20 billion hryvnia.

Funds for such compensation will be provided by the Cabinet of Ministers from the state road fund1. The procedure for providing such compensation should be developed by the Cabinet of Ministers in the nearest future.

The purpose of this innovation is to restore civil navigation in the Black Sea, ensure the operation of Ukrainian ports and expand the range of goods for trade. It is also expected that the guarantee of monetary compensation for damage will reduce the cost of transportation both in the “grain corridor” and on the Danube by reducing insurance rates, etc.

We would like to remind that a year ago, in February 2022, a similar decision was made for the aviation industry. Then the government, in agreement with the Budget Committee of the Verkhovna Rada of Ukraine, allocated UAH 16.6 billion to ensure flight safety in Ukraine for insurance companies, reinsurers, leasing companies and air carriers.

1 The State Road Fund is a special fund of the state budget, the funds from which are usually directed to the construction, reconstruction, repair and maintenance of roads and other related activities. Therefore, the allocation of funds from this fund to compensate for damage to sea vessels and inland navigation vessels will be carried out as an exception.