5 Jun 2023 17:06

Ukrainian govt endorses procedure for paying compensation to ship owners whom insurers deny payments

MOSCOW. June 5 (Interfax) - The owners of marine vessels operating under the flags of Ukraine and foreign states wishing to receive compensation for damage resulting from the crisis are supposed to submit an application and the necessary documents within 90 days after receiving the insurer's refusal to make payment but no later than December 1, 2023 to the Ministry for the Development of Communities, Territories, and Infrastructure.

Ukrainian media have reported that this norm is stipulated in a procedure endorsed by the government on May 26, 2023 for providing compensation guarantees for damage caused by the crisis to charterers, operators, and/or owners of marine vessels and inland-waterway vessels operating under the flags of Ukraine and foreign states.

According to the document, entitled to compensation for damage are ship owners having an insurance contract or a protection and indemnity (P&I) policy concluded in line with Ukrainian law or laws of another country and valid at the time when the damage was caused, and the insurer's written refusal to make the payment.

Said procedure defines damage covered by the compensation guarantee mechanism as that caused to the ship as a result of its loss or constructive destruction after which its restoration or repair is unfeasible, that caused due to the loss of and/or damage to cargo, and that caused to third parties as a result of a collision with another vessel or a floating or stationary object.

In addition, subject to compensation are expenditures related to the removal of the remains of the ship and/or marked cargo from the place where they were caused damage, the handling of environmental pollution effects, the payment of fines for environmental pollution, and harm caused to the life or health of a vessel's passenger or crewmember.

Damage shall be evaluated based on a contract between the evaluator and the customer in line with the law On Property Evaluation, Property Rights and Professional Evaluation Activity in Ukraine and national property evaluation standards.

The size of compensation for damage is determined based on the documents submitted and cannot exceed the amount of insurance compensation stipulated by the insurance contract or P&I policy, or the remainder of the amount specified in Article 36 of the law On the State Budget of Ukraine for 2023 (up to 20 billion hryvni).

Decisions made by the government on compensation for damage at the expense of the State Road Fund within the state budget's special fund shall itemize the allocation of funds based on the results of the examination of each specific case.