Black Sea Law Company successfully provided legal assistance in the shipbuilding project!
As you know, shipbuilding contracts require extremely professionalism, because this industry is highly capital intensive. Our maritime lawyers drafted the shipbuilding contracts and provide advice to our Client on contractual issues. It is important for us that our Client has avoided possible financial losses for business and made the right choice according to our recommendations.
Overview of the shipbuilding industry in Ukraine
Shipbuilding is considered to be one of the oldest, most open, and highly competitive markets in the world. Much of the world’s shipbuilding today is concentrated in Asian countries such as China, Japan, and South Korea, although large shipyards also exist in many other countries. Ukraine is one of those countries where shipbuilding develops more and more every year.
Ukrainian shipbuilding companies are mostly concentrated in the Nikolaev and Kherson regions. Dealings concerning shipbuilding contracts and sale and purchase agreements are regulated by the Civil and Commercial Codes of Ukraine. Ukrainian law allows the parties to define the wording of obligations and rights, the means of fulfillment of the contract, and any other terms and conditions of purchase. The parties are entitled to conclude both preliminary agreements and additional agreements. As soon as an agreement is finalised, it is deemed to have been accepted by all parties. The parties also define the form of the agreement (whether in writing or certified by a notary). Title passes to the buyer when the ship is delivered in accordance with the acceptance protocol; however, the parties can opt for an alternative means for the ship’s title to pass. By concluding the preliminary agreement, the purchaser has control of the shipbuilding process.
It is preferable for the parties to declare the amount of the bank guarantee provided by the shipyard during the construction period. Penalties for non-performance of the agreement may be included in the wording of the agreement. In the event of a shipyard’s failure to fulfill any provision of the contract, the purchaser has the right to apply to the court for reimbursement of costs.
According to the changes to Article 151 of the Customs Code, objects for shipbuilding and ship reconstruction shall be under customs control for up to 730 days. The reconstruction customs regime is usually used for foreign vessels that proceed to Ukrainian shipyards for reconstruction.
The shipbuilding prospects in Ukraine are in the development process and the shipbuilding industry is now focused on sea-river models of tankers, general cargo vessels, and sailing yachts.
You can read a full overview of Shipping Law in Ukraine in our chapter – The Shipping Law Review, Edition 7
