Ukraine closes the Crimean Sea Ports

CMS Cameron McKenna, 
Kyiv, Ukraine, Thursday, July 17, 2014

On 15 July 2014 the Order of the Ministry ofInfrastructure of Ukraine “On closure of sea ports” as of 16 June 2014 No.255(the “Order”) came into force. TheOrder terminates the activity of five (5) sea ports located on the territory ofAutonomous Republic of Crimea. In particular, the Order provides that as of 15July 2014 the sea ports located in Kerch, Sevastopol, Feodosya, Yalta andEvpatoriya (“Crimean Sea Ports”)shall be closed with simultaneous liquidation of their local governing bodies(the administrations of the sea ports). Closure of the Crimean Sea Ports meansthat the business activity, which used to be performed in the Crimean Sea Ports(e.g. transhipment and storage of cargos), shall be terminated.

According to the Order, the Crimean Sea Ports may bere-opened if the constitutional system of Ukraine is restored in the territoryof the Autonomous Republic of Crimea. In these circumstances, the StateEnterprise “Administration of the sea ports of Ukraine” may initiate re-openingof the Crimean Sea Ports, subject to the approval of the State inspection ofUkraine on security of sea and river transport.

The need to close the Crimean Sea Ports was raised inApril 2014 when the Cabinet of Ministers adopted the Regulation “On certainquestions regarding operation of sea and river transport” No.578-р. Pursuant tothis Regulation, the Cabinet of Ministers of Ukraine instructed the Ministry ofInfrastructure of Ukraine to proceed with the closure of the Crimean Sea Ports.

At the same time the issue of the Crimean Sea Ports wasconsidered by the current government of the Autonomous Republic of Crimea. On26 March 2014 the State Council of Republic of Crimea adopted the Resolution“On State Enterprise “Crimean Sea Ports” No.1865-6/14 (the “Resolution”). The Resolution providesthat the assets of the Crimean Sea Ports shall be transferred to the newlycreated State Enterprise “Crimean Sea Ports” (the “State Enterprise”). Furthermore, according to the Resolution, theexisting agreements executed by the Crimean Sea Ports should be re-registeredin the name of the State Enterprise (subject to certain exceptions) and thepersonnel of the Crimean Sea Ports transferred to the State Enterprise. Theposition of the Crimean authorities means that they intend to continue theoperation of the Crimean Sea Ports, even though such activity is no longerallowed by Ukrainian law.

Authors:

NataliaKushniruk, Senior Associate,natalia.kushniruk@cms-cmck.com

YuliyaZemskova, Associate, yuliya.zemskova@cms-cmck.com