Ukraine continues its policy of providing guarantees of compensation to shipowners for damage caused by the aggression of the Russian Federation.
Thus, in early April this year, the Procedure for Providing Guarantees of Compensation for Damage Caused as a Result of the Armed Aggression of the Russian Federation against Ukraine and Military Actions on the Territory of Ukraine to Charterers, Operators, and/or Owners of Seagoing Ships and Inland Navigation Ships Flying the Flag of Ukraine and Flags of Foreign States, adopted by the Cabinet of Ministers of Ukraine (Resolution of the Cabinet of Ministers of Ukraine No. 361 dated 29 March 2024), came into force.

First of all, this procedure defines that damage caused as a result of the armed aggression of the Russian Federation against Ukraine includes:

1. losses incurred by the shipowner as a result of:
   • the loss of the ship or
   • the constructive destruction of the ship, after which its restoration repair is impractical;
2. expenses related to rectifying constructive damage to the ship, which led to the loss of the seaworthiness of the ship, including, in particular, expenses for rescue and salvage operations;
3. losses caused by loss and/or damage to the cargo;
4. losses caused to third parties as a result of a collision with another ship, floating, or stationary object;
5. expenses related to:
   • removal of the remains of the ship and/or cargo and marking of the place where they were damaged (destroyed);
   • removal of environmental pollution;
   • payment of penalties for environmental pollution (if any);
   • the injury or damage to the life or health of a passenger or crew member of the ship, as well as repatriation due to these circumstances.

For such damage, the state of Ukraine provides guarantees of compensation up to the amount of two billion of UAH from the reserve fund of the state budget.

However, certain conditions must be met in order to receive compensation, including the following:

• the ship is transporting non-military cargo to (from) open seaports of Ukraine or entered such ports after 1 January 2024;
• damage is caused while the ship is in the territorial sea of Ukraine;
• the existence of a valid insurance contract and/or insurance policy or P&I policy under which or in accordance with the rules of the P&I club the shipowner is not provided with insurance coverage in connection with damage caused as a result of the armed aggression of the Russian Federation against Ukraine and/or in case the risk coverage does not extend to the territory classified as areas of military (combat) operations or areas with navigation restrictions as a result of military operations, strikes, terrorism, and related hazards;
• the shipowner is directly or indirectly not associated with the Russian Federation and the Republic of Belarus or individuals and legal entities subject to special economic and other restrictive measures (sanctions) in accordance with the Law of Ukraine “On Sanctions”

Compensation for damage is paid by Ukraine to the shipowner on a non-refundable basis and under a fairly simple procedure.

Such a policy on the part of Ukraine to provide guarantees is an important element in ensuring security and stability on sea routes, especially in the context of a military conflict, and also helps to maintain shipowners’ confidence in the Ukrainian authorities. The measures taken by the Ukrainian government confirm its commitment to shipowners and ensure their protection in the event of emergencies arising from hostile acts.