War risks in shipping contracts: the impact of the Russo-Ukrainian armed conflict

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National University Odessa Law Academy

War Risks in Shipping Contracts: The Impact of the Russo-Ukrainian Armed Conflict

Bohdan Fasii

PhD in Law, Associate Professor



Abstract

The article reviews certain issues of maritime contractual practice in the Russian-Ukrainian war context. Maritime supply chains have been heavily impacted by the devastating effect of hostilities which have shaped regional crisis practices for eighteen months. Changes in public order concerning the introduction of martial law in Ukraine have posed a significant challenge for the national maritime industry and all foreign actors involved. Military threats have necessitated updating charter-parties' force majeure and war risk sections. They have also changed insurance policy and formed new judicial practice.



Анотація

Фасій Б. Воєнні ризики у контрактах про морські перевезення: вплив російсько-українського збройного конфлікту. - Стаття.

У статті розглядаються деякі питання морської договірної практики в умовах російсько-української війни. Морські ланцюги постачань зазнали значного впливу руйнівних наслідків воєнних дій, які формували регіональну кризову практику упродовж півтора років. Зміни у публічному порядку у зв'язку із запровадженням воєнного стану в Україні стали великим викликом для вітчизняної морської галузі та всіх залучених іноземних суб'єктів. Воєнні загрози стали каталізатором оновлення розділів чартерів про форс-мажор та воєнні ризики. Вони також змінили страховий поліс і сформували нову судову практику.

Ключові слова: міжнародне приватне право, судноплавство, публічний порядок, форс-мажор, страхування, Україна, Росія, збройний конфлікт, російське вторгнення.



Introduction

Following the start of a full-scale Russo-Ukrainian armed conflict, the risks of nonperformance or improper performance of shipping contracts due to emergency circumstances related to sanctions policy (Goldstein et al., 2022; Hosoe, 2023) and military threats (Abay et al., 2023; Pereira et al., 2022) have become a new normal for the Black Sea. The conflict has exposed weaknesses in maritime logistics and securing the operation of international supply chains (Fernandes et al., 2023). Against this background, it became paramount for Ukraine to ensure the safety of export-import operations, especially their maritime component (Kormych & Averochkina, 2022). It is impossible for most subjects of private law relations to manage such risks; however, they must be considered. Public policy has changed during the martial law regime, legislation has been updated, and significant cyber risks in the operation of the electronic maritime services system are growing (Afenyo & Caesar, 2023). Military threats related to attacks on ships and seaports, their blockade, and mine threats are force majeure circumstances. Such events may result in the parties delaying their obligations, revising the contract terms, or agreeing on the contract's cancellation (What Is Force Majeure? Definition and Examples, 2022). At the same time, "safe places” ("safe ports/berths") are a classic condition of charter-parties (Faqiang & Abliakimova, 2020, p. 12), and few insurers will cover the risks associated with hostilities (Cohn, 2022; Lebedovskyi, 2022).



Methodology

This research aims to address the issues of contractual practice in maritime transport under conditions of war risks, using the example of Ukraine under the Russian Invasion. This concerns the interaction of public order and force majeure categories with the consequences of an international armed conflict and martial law. A separate focus is placed on a) the practice of force majeure confirmation in Ukraine, b) clauses on war risks in different charter-party forms, c) changes in maritime insurance practice, and d) experience in litigation for damages from the actions of the aggressor state.

1. Merchant Shipping in War Zones - Public Order & Force Majeure

The evolved structure of the international commercial shipping industry and the manner in which goods are now shipped globally have made traditional approaches to naval blockade or interdiction hardly enforceable (Haines, 2016). The experience of merchant shipping in the second half of the twentieth century shows that an armed conflict in the region is not a reason for maritime transport to avoid it. Moreover, high-risk areas are attractive for some shipowners due to higher freight rates and less competition. The issue mainly concerns changes in traffic conditions, which typically cover four areas: 1) consequences for traffic volumes; 2) the impact on the cost of insurance; 3) financial consequences and risks incurred by seafarers; and 4) the modification of shipping routes (Marcadon, 1984). Furthermore, the regulative environment for shipping in zones of international armed conflict has become more complex. From the business perspective, armed conflicts trigger three areas of international law: law proper to a particular sphere of business, international humanitarian law, and human rights law (Schreuer, 2019). These laws apparently provide guarantees of property rights for both belligerents' and neutral subjects. Furthermore, there is no automatic obligation of third States to suspend certain trade and economic relations with one of the belligerents. However, if belligerents decide to conduct "economic warfare", they may escalate the use of measures interfering with the respective third State's trade (Heintschel von Heinegg, 2021, p. 465).

In addition, the experience of many armed conflicts shows that the belligerents not only resort to seizing or freezing the property of the other party's nationals but also take other measures, including taxation and measures of administrative control, which make it impossible or at least extremely difficult for the persons to keep or use their property (Bothe, 2021). This, in turn, gives additional relevance to the public order clause in choosing jurisdiction for shipping contracts related to armed conflict zones.

Ordre public & public policy (public order) - as a doctrinal matter - are well-established parts of the architecture of choice of law. At the same time, they lack a clear regulatory definition. This complexity is because the public order is a generalization of the national legal order, which can change over time and, in its dynamics, affect social relations and contractual practice in different ways. National legal orders are diverse, and it is impossible to predict the consequences of applying the norms of foreign domestic laws on the territory of the state of a potential court. According to Moses (2023), different countries have different standards undergirding their national public policy, and these can result in substantially different interpretations of the term public order. In addition, public policy is not necessarily static, and over time may continue to evolve (p. 1-2). Furthermore, scholars have struggled to understand why it should be part of the choice of law doctrine, given the normative structure of the field; as well as how to differentiate between the fundamental and non-fundamental norms that inform its use and how to understand the leading public policy cases in a coherent manner (Langille, 2023).

In private international law, a public order clause restricts the operation of foreign laws and the implementation of decisions of foreign judicial (arbitration) institutions. Attempts to determine the public order are made in the framework of judicial practice and legal science. For example, the Resolution of the Supreme Court of Ukraine, dated December 24, 1999, No. 12 states that public order ... should be understood as the legal order of the state, the defining principles and principles that form the basis of the existing order in it (related to its independence, integrity, autonomy and inviolability, fundamental constitutional rights, freedoms, guarantees, etc.). Public order represents everything that aims to ensure the peace and tranquility of society and the preservation of the State and the State organization. In other words, it covers the rules that form the basis of the order of the society in every field (Kesikli, 2021). Public policy offers flexibility in the application of choice-of-law or judgment recognition and enforcement rules without undermining the universality of the rule system (Mills, 2008, p. 216).

Public order influence on private law relations is always national (this is indicated by the wording of the Law of Ukraine on Private International Law - "found the legal order (public order) of Ukraine". It is formed from the imperative norms of the domestic legislation of the country, which do not allow the intervention of foreign law ("positive" public order clause) and performs a protective function toward the internal legal order ("negative" public order clause). As Wolff (1950) noted, "Every court applies the rules of its public policy only; it does not consider any foreign ordre public. With one exception, however: where the court applies foreign private international law (by way of renvoi), it must not disregard the rules on public policy embodied in that law" (p. 184).

National laws and international treaties frequently mention public policy as a limiter on the parties' autonomy and the possibility of enforcement/cancellation of decisions of judicial (arbitration) institutions (Art. 12 of the Law of Ukraine on Private International Law, Art. 459, 478 of the Civil Procedure Code Of Ukraine, Art. 7 of the Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters 2019). In practice, recourse to public order occurs in exceptional cases, especially in contractual relations. For example, English courts have refused to recognize contracts in restraint of trade or made under influence or duress, or contracts to trade with an enemy or violate the laws of a friendly country (Levontin, 1976, p. 13). Concerning shipping law, a public policy clause is usually applied in areas such as the enforcement of foreign judgments and arbitral awards, shipbuilding contracts, fraudulent claims, cargo claims, registration of ships, shipwreck removal, etc. (Chamberlain et al., 2022).

The concept of public order also exists in international and transnational aspects. International public policy arose from the interest in protecting "global public goods" that transcend states' individual interests (Thin, 2021). For example, international waters serve the vital interests of all nations, interests that are not entirely suspended when other nations engage in hostilities (Corn et al., 2023). International public order, formed through the conclusion of international treaties, has significant value for the state's public order. Transnational public policy ("transnational public policy", "truly international public policy"), in contrast, is much less connected with the legal order of a particular state; rather, it is defined as emerging out of an international consensus regarding universal standards as to norms of conduct that are generally recognized and agreed upon as unacceptable in most civilized countries, such as slavery, bribery, piracy, murder, terrorism, and corruption (Moses, 2023, p. 2). maritime contractual military war

Thus, the public order clause lies at the intersection of public and private law regulation, acts as a "fuse" for the national legal order, and is designed to prevent the operation of foreign norms that contradict it. Public policy can also exceptionally possess an absolute character, derived not from international rules but from an essential national interest. Such cases are rare but explain the use of public policy to prevent the enforcement of a contract that may aid an enemy state during a war (Mills, 2008, p. 215). Public order is extremely sensitive to the introduction of special legal regimes in the country such as martial law. In Ukraine, such a regime was introduced by the Decree of the President on February 24, 2022, No. 64/2022, after the Russian Invasion.

Martial law has become a new legal reality for Ukraine, for the first time in its modern history since 1991. The conflict caused the blocking of more than 100 merchant ships in the ports of Ukraine (500 seafarers remain trapped on vessels stuck in Ukrainian ports, 1,500 evacuated since March, 2022). They lost the opportunity to perform their work so the contracts for maritime transport were overdue and not fulfilled. This became the "third wave” of exceptional circumstances in contractual relations geographically connected with Ukraine. The first was related to the conduct of the anti-terrorist operation (Law of Ukraine on temporary measures for the period of the anti-terrorist operation, 2014); the second with the COVID-19 quarantine (Decree of the Cabinet of Ministers of Ukraine of 03/11/2020 No. 211).

Changes caused by the Russian Invasion have significantly affected the enforceability of obligations under contracts, and the force majeure section has taken on special significance, despite previously being isolated and rather specific (Rvach, 2022). In conditions of hostilities, it is essential to accurately describe the order of relations between the parties in the event of their occurrence. When a contract lacks a force majeure clause, a party may be able to claim frustration of purpose under common law, also known as the Doctrine of Frustration. This claim would void an entire contract and all obligations by both parties if found applicable (What Is Force Majeure? Definition and Examples, 2022). Unlike force majeure situations, the doctrine of frustration clearly defines conditions in the contract. It is typical in English law, where the concept of force majeure is a contractual category and is not applied "by default”; it can be used to limit/exclude liability only if there is unambiguous agreement between the contracting parties. Moreover, force majeure cases should be expressly agreed upon, and the phrase "and other circumstances falling under the concept of force majeure” requires further establishment of the parties' true intention (Interlegal, n.d.). In addition, international arbitration practice emphasizes that the effect of war is subject to the general tests of "impossibility” and "imputability”; war qualifies as an event of force majeure only if it effectively and materially renders an obligation impossible to perform, e.g., if the war has directly prevented the party from "putting goods on board ship” (Firoozmand & Zamani, 2017, p. 397).

According to Art. 14-1 of the Law on Chambers of Commerce and Industry in Ukraine, force majeure circumstances (circumstances of force majeure) include, in particular, the threat of war, an armed conflict or a severe threat of such a conflict, general military mobilization, military actions, declared and undeclared war, facts of terrorism, sabotage, piracy, disorder, invasion, and blockade. Force majeure exempts from responsibility for breach of obligation (payment of fines, fines, etc.) for its validity but does not exempt from the need to fulfill the obligation itself (Article 617 of the Civil Code of Ukraine). Whatever the applicable law, three elements are generally required for an event to qualify as force majeure: unforeseeability, uncontrollability (or "externality”), and impossibility (or "irresistibility”) (Pieri, 2023). Force majeure certification is issued by the Chamber of Commerce and Industry of Ukraine, and is approved by the regional chambers of commerce and industry for skin goiter (one contract - one certificate).

At the beginning of the Russian Invasion, the Chamber of Commerce and Industry of Ukraine issued a general official letter No. 2024/02.0-7.1, which certified force majeure circumstances (circumstances of irresistible force) for the military aggression of the Russian Federation against Ukraine. However, more than a formal reference to this document is required during the hearings as the court must examine the other evidence (Hanchar, 2023; Decisions of the Supreme Court of Ukraine on cases No. 926/2343/16, No. 917/1053/18, No. 905/55/21). Even the certificate of the Chamber of Commerce, which confirms the existence of force majeure circumstances, cannot be considered indisputable evidence of their existence but must be critically evaluated by the court, considering the established circumstances of the case and, in combination with other evidence, proving the occurrence of such extraordinary events. In the period from March to November 2022, the courts of the first instance passed numerous decisions in cases in which the participants referred to the letter of the Chamber of Commerce and Industry of Ukraine No. 2024/02.0-7.1. Some were reviewed by the courts of the appellate instance, while in many cases the courts of the first and appellate instances critically evaluated the reference of the participants in the case to the letter of the Chamber of Commerce and Industry of Ukraine No. 2024/02.0-7.1 because it is not a legally defined form of certification of force majeure circumstances (Kravchuk, 2023). It is also necessary to consider that "the existence of circumstances of force majeure regarding the violation/non-fulfillment of obligations ... can be proved by any evidence” (Decision of the Supreme Court of Ukraine on case No. 912/3323/20).

It is also helpful to confirm the fact that hostilities are taking place in a particular territory of Ukraine or that it is occupied and the fulfillment of obligations is significantly difficult or impossible. For this, one should refer to the order of the Ministry on Reintegration of the Temporarily Occupied Territories of Ukraine dated 12.22.2022 No. 309, which approved the list of territories on which hostilities are (were) conducted or temporarily occupied by the Russian Federation. These territories include the coasts in the Odesa, Mykolaiv, Kherson, Zaporizhzhia, and Donetsk regions, and the Autonomous Republic of Crimea. Force majeure circumstances are confirmed only after the deadline for fulfilling obligations has expired. There is no statute of limitations for their certification. Furthermore, force majeure circumstances do not have a prejudicial (predetermined) nature (Decision of Commercial Cassation Court Within the Supreme Court on case No. 910/9258/20). In the event of their occurrence, the party that refers to force majeure circumstances must prove them, as well as their emergency and inevitability (Decision of the Supreme Court on case No. 904/5328/21 dated 22.06.2022). Circumstances, the occurrence of which the parties do not expect in the ordinary course of affairs and the event of which a good-faith and reasonable party could not have anticipated and foreseen even if it had shown a sufficient degree of prudence, can be counted as extraordinary. Circumstances are inevitable if they are ones the onset of which a party could not prevent, and it could not avoid the consequences of such circumstances, even showing the appropriate degree of prudence and applying reasonable measures to avoid such outcomes. That is, the critical requirement is that the force majeure makes it impossible to fulfill the obligation in principle, regardless of the efforts and material costs that the party has suffered or could have suffered, and not only such that causes difficulties or is economically unprofitable (para 38 of the Decision of the Supreme Court on case No. 912/3323/20 dated 07/21/2021).

Relying on the confirmation of force majeure circumstances by various types of evidence does not relieve counterparties from the need to notify each other of their occurrence. The force majeure section of the contract should be as specific as possible and provide for such a duty. The circumstances in which the party will be spared the right to apply for force majeure through untimely notification may be expressly stated in the contract (Decision of the Supreme Court on case No. 904/5328/21 dated 22.06.2022; Principles of European Contract Law (Art. 8:108 "Excuse Due to an Impediment"); UNIDROIT Principles of International Commercial Contracts 2016 (Art. 7.1.7); United Nations Convention on Contracts for the International Sale of Goods 1980 (Art. 79), Civil Code (Art. 617); and the Commercial Code of Ukraine (Art. 218).

In response to the unforeseen events and disruption experienced in recent years, largely by the COVID-19 pandemic, BIMCO has published a new force majeure clause - the BIMCO Force Majeure Clause 2022. BIMCO explains that the Clause is designed to help parties prepare for the unexpected, something which vessel owners and charterers are experiencing with increasing frequency due to extreme weather conditions caused by climate change, the COVID-19 pandemic, and now the Russia-Ukraine conflict (Interlegal, 2022). The BIMCO Force Majeure Clause 2022 addresses force majeure events occurring under contracts used by the shipping industry that affects the performance of the parties. Force majeure events in particular include (i) actual, threatened or reported war, act of war, civil war or hostilities; revolution; rebellion; civil commotion; warlike operations; laying of mines; (ii) act of piracy and/or violent robbery and/or capture/seizure; act of terrorists; act of hostility or malicious damage; (iii) blockade, generally imposed trade restriction, embargo;... (vii) explosion; fire; destruction of equipment; destruction of port facilities; obstruction of waterways; cyber security incident; break-down of transport, communication, information system or power supply; in each case unless caused by negligence of the Affected Party.

War Risks in Practice: Charter-Parties and Insurance

The outbreak of hostilities caused severe threats to merchant ships near the coast of Ukraine (Shumilova et al., 2023). Coastal warnings issued by Ukrainian and Russian authorities at the outbreak of the armed conflict signaled the establishing of maritime exclusion/war zones (MEZs) in the Sea of Azov and the Black Sea, which are typically used to warn neutral vessels and aircraft to reduce their exposure to collateral damage and incidental injury (Pedrozo, 2022a, p. 527, 535-536). However, in February 2022, Russia deliberately attacked several Marshall Islands (RMI)-flagged bulk carriers: M/V Yasa Jupiter (IMO 9848132), Panamanian- flagged bulk carrier, the M/V Lord Nelson (IMO 9296315) (Pedrozo, 2022b), the "Namura Queen", IMO 9841299, and Moldova ("Millennial Spirit”, IMO: 7392610) off the port of Pivdennyi (Odesa Region) (Reuters, 2022a). Two additional attacks were reported on March 2, 2022. The Estonian-owned, Panamanian-flagged general cargo ship M/V Helt (IMO: 8402589) was hit by a missile 16 nautical miles southeast of Odessa. Six crew members were rescued, but the ship sank. Earlier that day, the Bangladesh-flagged bulk carrier M/V Banglar Samriddhi (IMO 9793832) was hit by a missile in the port of Olvia south of Mykolaiv, killing one of its 29 crew members (Pedrozo, 2022b). Hostilities on Snake Island (Giangiulio, 2022), multiple missile attacks on Ukrainian ports (Francis et al., 2022), and mine danger in the region (IMO Circular No. 4573; Lancaster, 2023, p. 9) also severely eroded navigation safety.

According to NATO threat estimates, as of February 2023, a) the threat of collateral damage or direct hits on civilian shipping in the Black Sea area's War Risk Area (NAVAREA III 0124/2022) remains high; b) the threat of GPS jamming, AIS spoofing, communications jamming, electronic interference, and cyber-attacks in the area are also considered high; and c) the harassment and diversion of shipping in the area cannot be excluded. All these risks have critically complicated navigation in the northwestern region of the Black Sea and placed those who depend on the marine supplies of agricultural products from Ukraine in a difficult position (Arndt et al., 2023; Bentley et al., 2022; Mottaleb et al., 2022).

After the start of the Russian Invasion, IMO Circular Letters No. 4524 (7 March 2022) and No. 4524/Add.1 (14 March 2022) emphasized a crisis in the security of ships and crews. Lloyd's Joint War Committee (JWC) included all ports in Russia, and certain sea areas in the Black Sea and the Sea of Azov have been included in the latest revision to the list of Hull War, Piracy, Terrorism, and Related Perils Listed Areas (JWLA-030), which was last revised on April 4 2022. The Warlike Operations Area Committee (WOAC), comprising of the UK Chamber of Shipping, Nautilus International, and the RMT union, has declared all Ukrainian, Russian, and International Waters north of 44°North in the Black Sea as a "warlike operations area" since February 24 2022 (War in Ukraine - impact on maritime situation, 2023; Warlike Operations Area Committee Agrees Protections for Seafarers, 2022).

It should be noted that shipping contracts generally provide for the possibility of military threats. Most time-charterparties contain so-called "War Risks” clauses, and some have "War Cancellation" clauses. In particular, BIMCO recommends using the latest editions of its War Risks clauses - CONWARTIME 2013 for time-charters and VOYWAR 2013 for voyage-charters. Furthermore, it suggests the BIMCO War Cancellation Clause 2004, which provides mutual cancellation rights in the event of a conflict between two or more named countries agreed by the parties (Stuhrmann, 2022). As for the charter-parties' forms, the NYPE form 1993 and 2015, for example, does not contain a specific war risks clause. However, the parties routinely amend the standard form to incorporate the BIMCO CONWARTIME War Risks Clause in either the 1993, 2004, or 2013 versions. NYPE 93, NYPE 2015, and BALTIME 1939 (as revised in 2001) all contain express war clauses. NYPE 2015 incorporates the CONWARTIME 2013 War Risks Clause, and BALTIME 1939 includes the CONWARTIME 1993 clause. Both the 1976 and 1994 forms of the GENCON charter provide owners with an express right of cancellation if it appears, before the commencement of loading, that the performance of the charter will be subject to the vessel to "war risks" (as defined). GENCON 2022 includes BIMCO War Risks Clause for Voyage Chartering (VOYWAR 2013).

The NORGRAIN form does not contain such an express right of cancellation. Although many of the war risks clauses in charter-parties contain broadly similar provisions, the definition of "war risks" may be subtly different. The NORGRAIN 89 War Risks clause, for example, refers to the situation where the Master considers entry into a port is dangerous "owing to war, hostilities, warlike operations, civil war, civil commotions, revolutions, or the operation of international law". The VOYWAR 1993 clause, however, is wider as it refers to "any war (whether actual or threatened), act of war". The VOYWAR 2004 and 2013 clauses provide that war risks "shall include any actual, threatened or reported: war; act of war".

Black Sea shipping risks remain heightened as the insurance industry faces unprecedented total loss scenarios from trapped vessels and cargo. Owners and operators cannot access trapped vessels for maintenance or repairs, whereas insurers cannot assess loss. Over time, this causes salvage values to decline. The one-year mark is an essential trigger for marine insurance policies. Under a marine war risk policy, a vessel could be considered a total loss when trapped or blocked for a defined period, typically one year for a hull policy but as little as six months for cargo (Safety and Shipping Review 2023, p. 29). Sea shipping risk insurance in the Black Sea has become a stumbling block for business. Insurance rates rose due to rumors of the Russian Invasion which began in early 2022. IMO's Legal Committee (March 21-25, 2022) approved a circular on Guidance on the impact of the situation in the Black Sea and the Sea of Azov on insurance or other financial security certificates. (LEG.1/Circ.12). The circular, among other things, recommends that if a State Party to the following Conventions has issued certificates under Article VII of the 1969 Civil Liability Convention, Article 7 of the 1992 CLC Protocol, Article 7 of the 2001 Bunkers Convention, Article 12 of the 2007 Nairobi WRC, and Article 4bis of the 2002 Athens Protocol, the issuing State or its designated authority should ensure that it cancels the certificate following the conventions if or when they receive notification of termination of the insurance or other financial security.

Conditions of most insurance companies and P&I Clubs have a particular clause regulating insurance against war risks ("War Risks Clause"). This clause incorporates the list of insured war risks that could arise during the usual operation of the vessel (Volkov, 2022). The rules frequently contain standard military threat exclusion rules (for example, Rule 58, "War risks" of Gard Rules for Ships 2023). Due to the situation in shipping in the Black Sea, from 2022, Gard has changed the standard rules of marine insurance: the maximum indemnity limit has been reduced (GARD: Additional amendments to Rules 2023), and changes have been made to the Notice of Cancellation for War Risks (Gard, 2022). Skuld adopted similar rules (Skuld, 2023). Only Lloyd's of London agreed to insure grain cargo under the Grain Initiative 2022 (Topchii, 2022). On December 28, 2022, ship insurers announced they were canceling war risk cover across Russia, Ukraine, and Belarus, following reinsurers' exit from the region in the face of steep losses. The withdrawal of cover for Ukraine and Russia applies to some but not all types of policy offered by the P&I clubs (Cohn & Saul, 2022). However, it does include the basic ones necessary for maritime transportation - shipowner's risks related to war (Kravchenko, 2023).

Given the problematic situation with the insurance of military risks for maritime transport, on May 26, 2023, the Cabinet of Ministers of Ukraine approved the procedure for providing compensation guarantees of for damages caused to charters, operators, or owners of sea vessels and inland navigation vessels as a result of the armed aggression of the Russian Federation. In particular, it compensates for damage during the stay of such vessels in the territorial sea of Ukraine when they are heading to/from open Ukrainian seaports for cargo transportation. At the same time, the guarantees do not apply to vessels owned by citizens or legal entities of Russia and Belarus; Ukrainian legal entities whose shareholders, members, or ultimate beneficiaries are citizens or legal entities of Russia and Belarus; and persons to whom sanctions and other restrictive measures have been applied by the Law on Sanctions. The Ukrainian Parliament allocated funds of UAH 20 billion for these purposes (Law of Ukraine on the State Budget of Ukraine for 2023). At the same time, Lloyd's insurance program, specifically designed to cover cargo shipped through the Black Sea Grain Initiative (Reuters, 2022b), operated without a rate increase as the product was created so that participating insurers shared risks without reinsurance (Ports of Ukraine, 2023).

The Russo-Ukrainian War has been continuing for eighteen months at the time of writing, and the question of compensation for losses is a principal one for states, legal entities, and individuals whose property interests are violated by this armed conflict or its consequences. After February 24, 2022, a new judicial practice emerged regarding compensation for damage caused by the actions of the aggressor state and quasi-state entities formed on the territory of Ukraine. For example, the Commercial Court of Kyiv ruled on Russia's obligation to pay the shipowner almost UAH 30 million for the ship "Saint Anna” (IMO 8980696) sunk by missiles in the Nikopol River Port. Despite the difficulties, all the necessary evidence was collected, and the Register of Shipping of Ukraine, the Maritime Administration, and representatives of the port were notified of the event; furthermore, information on the criminal offense committed by unidentified Russian military personnel was submitted to the Security Service of Ukraine, and an expert survey of the vessel was conducted (Interlegal, 2023). In general, judicial practice follows the path of meeting the plaintiffs' demands, and the number of such decisions is increasing over time and in line with the endless missile attacks on the territory of Ukraine.



Conclusions

War risks in the Black Sea-Azov region have become a new reality for coastal states and the maritime industry. The formation of contractual and judicial practice demonstrates a bold desire to respond to military escalation appropriately; provide the most effective mechanism for countering military threats; and establish, to the extent possible, the uninterrupted execution of contracts, a system of insurance, and compensation for damage.



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