UKRANIAN legislation which regulates the relations concerning arrest of vessels, is rather imperfect and makes arrest of a vessel in Ukrainian ports difficult. The relations related to arrest of vessels in Ukraine are regulated by Articles 41-47 of the Merchant Shipping Code of Ukraine (MSC).

Starting from the definition of concept of arrest of a vessel, different legal uncertainties arise. For example, Art. 41 (2) of MSC defines the arrest of a vessel as any detention of a vessel or limitation of her movements, but this definition may result in confusion of concepts of arrest and detention of a vessel.

Arrest of a vessel differs from her detention by that the arrest of a vessel does not include measures on enforcement of the effective awards of the courts; arrest of a vessel or her release from arrest are realised only by court award or decision of the Chairman of Maritime Arbitration Commission at Chamber of Commerce and Industry of Ukraine.

The vessel may be arrested only upon maritime claims, the list of which is exhaustive.

The vessel, in respect whereof a maritime claim arose, may be arrested only upon at least one of conditions provided by the Art. 43 of MSC, namely:

• the claim is referred to a category of preferred claims pursuant to Art. 358 (1)-(5) and (7) of MSC;
• the claim is based upon the registered mortgage of a vessel;
• the claim is referred to the right of property on a vessel or possession of her;
• the other claim, if the person possessing a vessel upon the right of property on time of origination of a claim bears liability on this claim and is the owner of a vessel on the moment of beginning of procedure connected with arrest of a vessel, or if the charterer of a vessel under the bare-boat charter bears responsibility on this claim and is the charterer of a vessel under the bare-boat charter or its owner on the moment of beginning of procedure connected with arrest of a vessel.

The arrested vessel is released, if the security of maritime claim acceptable in form and sufficient in amount is posted.

Upon disagreement of the parties on the form and amount of security of maritime claim, the Court, the Court of Arbitration (in Ukraine it is called Economic Court) or Maritime Arbitration Commission determine the form and amount of security, which does not exceed the value of a vessel.

Any request for release of a vessel from the arrest upon satisfying the requirements of maritime claim does not mean admitting liability, refusal from means of defense or right of limitation of liability.

The person who has secured a maritime claim may at any time appeal to Court or Maritime Arbitration Commission for decreasing, changing or canceling of security.

The person, upon whose request the vessel has been arrested, is liable for any losses incurred by the owner of a vessel or her charterer on the bare-boat charter basis as a result of ungrounded arrest of a vessel or posting of excessive security of maritime claim.

The Court, the Court of Arbitration or Chairman of Maritime Arbitration Commission may, as a condition of arrest of a vessel or continuation of arrest imposed earlier, oblige the person having placed a claim about it, to provide a security of a maritime claim in amount and on conditions determined by Court or the Chairman of Maritime Arbitration Commission, in connection with any losses which may be inflicted on the owner of a vessel or her charterer under the bare-boat charter as a result of ungrounded arrest of a vessel or excessive security to a maritime claim, the said person may be held liable thereof.

Although these rules as a whole meet the international standards, due to nonconformity of the maritime and procedural legislation of Ukraine with each other, the insoluble problems in connection with arrest of vessels arise, if the lawsuit submissions are not fully prepared yet.

The arrest of a maritime vessel can be effected only upon the award of the Court, the Court of Arbitration or Maritime Arbitration Commission at Chamber of Commerce and Industry of Ukraine, but the issues of procedure connected to arrest of a vessel are not provided by MSC. Pursuant to Art. 4 of MSC, the rules of the procedural legislation, namely rules of law contained in the Code of Criminal Procedure of Ukraine, Code of Civil Procedure of Ukraine (CCP), Code of Economic Procedure of Ukraine (CEP), Rules of Maritime Arbitration Commission at Chamber of Commerce and Industry of Ukraine and Regulation on Maritime Arbitration Commission at Chamber of Commerce and Industry of Ukraine are applied for regulation of such legal relations. The most unpleasant thing here is that the rules of the procedural legislation of Ukraine do not provide for a maritime claim as a special claim at all, and the legal status of a maritime vessel is not defined in the procedural legislation of Ukraine.

Therefore the ship may be arrested not only on maritime claims, what contradicts the international standards. For example, on March 11, 2001, the Chief of Investigation Department of a Tax Militia station of State Tax Inspection in one of districts of Odesa issued a resolution on arrest of vessels with the purposes to secure the civil lawsuit due to alleged overstating of budgetary compensation of the value added tax.

None of the rules of procedural legislation provides for features of arrest of vessels on maritime claims.

The arrest of a vessel on maritime claims is an arrest made upon ensuring of the demand in dispute arising from the relations of merchant shipping according to the Art. 1 of MSC. The arrest of a maritime vessel for ensuring claims in the disputes on law arising from legal relations of other nature seems for us as a particular measure of ensuring of the claim, which can be applied in case of impossibility to secure interests of the claimant in civil and criminal procedure by a different way.

On the basis of the procedural legislation of Ukraine, it is impossible to arrest a vessel without placing a lawsuit or instituting a criminal case, even if the claim is maritime and follows the relations of merchant shipping, and in order to bring the legal proceeding from dispute on the contracts of carriage of a cargo the cargo owner must first file a claim to the carrier of a cargo according to Art. 136 (2), b of CCP and Art. 383 of MSC. This unfairly complicates the procedure of arrest of a vessel. On the basis of Art. 14 of MSC, it is explicit, that MSC regulates only issues of arrest of the vessels flying the flag of Ukraine and does not regulate the arrest of the vessels flying a foreign flag in Ukrainian ports. In such case, it is necessary to be guided by standards established by the procedural legislation. Particular difficulties arose while applying to the Code of Economic Procedure of Ukraine.

According to the Law of Ukraine On Amendments of the Code of Arbitration Procedure of Ukraine of June 21, 2001, the Code has received the new name: the Code of Economic Procedure of Ukraine as well it as was supplemented by the articles123 - 125, consolidated in section XV 'Proceedings with participation of the foreign enterprises and organizations'.

Before the entry into force of the mentioned Law the arbitration courts did not apply the rules of MSC, regulating the arrest of vessels, to vessels flying a foreign flag and staying in Ukrainian ports. Now the Art. 124 (2) of the Code of Economic Procedure may serve as a legal basis for applying the procedure of arrest upon maritime claims of vessels flying a foreign flag in the Ukrainian port, as far as it provides, that the economic courts have the right to consider the cases with participation of the enterprises and organizations, if the foreign enterprise or the organization has in the territory of Ukraine real property, with regards to which the dispute arose.

Inasmuch as the maritime vessel can be referred to a category of the real property and, if the maritime claim concerning this vessel was filed, vessel flying the foreign state flag may be arrested, but still only within the framework of court procedure.

Besides, pursuant to Art. 24 (3) of CCP the cases in which the foreign subjects, stateless persons, the foreign enterprises and organizations take part, may be considered by courts of the general jurisdiction. Thus, CCP admits the consideration in the district court of a dispute of two legal persons, one of which is a foreign legal person.

On the basis of rules of CCP, it is possible to conclude that the Ukrainian legal person filing a maritime claim to the foreign shipowner concerning securing of such claim as arrest of its vessel in a port of Ukraine, can bring the appropriate claim to economic court or alternatively to general district court.

Ukraine has not still ratified the 1952 International Convention For The Unification Of Certain Rules Relating To The Arrest Of Sea-Going Vessels effective from 1956. Acceding of Ukraine to the aforementioned Convention will allow to unify the regulations on arrest of vessels and thus to harmonize national maritime legislation of Ukraine with the international standards in this sphere.

The Lloyds List Maritime Law Brief 2003 - autors Arthur Nitsevych and Vyacheslav Lebedev