The team of Ilyashev & Partners’ Odesa Office secured the lifting of the foreign vessel’s arrest, imposed under the petition of the Odesa Regional Prosecutor’s Office in the interests of the State, represented by the State Environmental Inspectorate of the South-Western District (Mykolaiv and Odesa Regions) following the pollution of Ukrainian inland sea waters while performing cargo operations at Pivdennyi Port.
The vessel was arrested by the Commercial Court of Odesa Region upon petition of the Odesa Regional Prosecutor’s Office acting for the State Environmental Inspectorate in order to secure a maritime claim against the Turkish shipowner following water pollution with palm oil. Based on the results of the environmental protection measures taken by the State Environmental Inspectorate of Ukraine, a claim for damages of over USD 2 million was brought against the shipowner.
To lift the vessel's arrest, the shipowner provided the State Environmental Inspectorate with his P&I Club's letter of undertaking (LOU) to secure a maritime claim. However, the State Environmental Inspectorate bodies flatly refused to accept the P&I Club’s LOU, citing the absence of relevant legal regulations as well as negative experience dealing with Club’s LOUs in other similar matters. The shipowner suffered significant losses as a result of the vessel’s prolonged detention, which could have negative consequences for Ukraine’s image and investment attractiveness, primarily as a maritime state.
In order to protect the client’s interests, Ilyashev & Partners’ attorneys initiated and conducted complex negotiations with Ukrainian and foreign banks, which agreed to provide a payment guarantee to the State Environmental Inspectorate securing the environment damage claim. Upon providing a bank guarantee, the attorneys urgently filed a motion to remove the arrest in order to release the vessel.
Based on the legal position of Ilyashev & Partners’ attorneys, the Commercial Court of Odesa Region accepted the bank's payment guarantee as adequate security for a maritime claim filed by the State, and finally cancelled interim relief with the arrest of the vessel.
The case was complicated by the fact that the Dobroslav District Prosecutor's Office of Odesa Region also initiated criminal proceedings in response to the incident. The prosecutor's office demanded three times that the vessel be permanently detained as material evidence in a criminal case before the investigating judge so that proceedings could be conducted directly on board. The attorneys achieved partial satisfaction of the first two motions and the court arrested the vessel only for a certain limited period. When considering the third motion, the attorneys refuted all the prosecutor's arguments, and the investigating judge of the Yuzhnyi Town Court of Odesa Region dismissed the arrest motion in full.
Ilyashev & Partners’ Odesa Office team proved in court the violation of reasonable time for conducting an investigation by the pre-trial investigation body, the ineffectiveness of the pre-trial investigation and excessive interference of the State in the shipowner’s property rights, since the vessel’s arrest completely ceased business activities of the foreign company, which has obligations to its counterparties, resulting in negative consequences and significant material damage.
Disagreeing with the decision of the court of first instance, the Dobroslav District Prosecutor’s Office of Odesa Region appealed the dismissal decision of the vessel’s arrest petition to the Odesa Court of Appeal.
At the appeal hearing, Ilyashev & Partners’ attorneys once again proved that there were no grounds for arresting the vessel. Thus, the Odesa Court of Appeal declined the prosecutor’s appeal.
Thanks to Ilyashev & Partners' team, the vessel with 20 crew members onboard was able to leave the port.
“We obtained a fair court judgment based on our well-supported legal position. When the authorities refuse to accept the LOU of the leading P&I Clubs as appropriate security for a maritime claim, it causes damage not only to shipowners, but also to Ukraine and its image as a maritime state, – Sergey Nedelko, Attorney at Law, Counsel, Ilyashev & Partners’ Odesa Office Head, notes. – To prevent prolonged detention, shipowners are forced to settle disputed claims by public authorities as the current legal regulation does not provide for the mechanism for securing a maritime claim by providing a P&I Club’s LOU in Ukraine, whose effectiveness has already been proven by world practice. At the same time, our experience shows that these types of cases are often resolved in favor of shipowners.”
In 2020, Ilyashev & Partners were the first in Ukraine to secure the acceptance by the State Environmental Inspectorate of Ukraine of the P&I Club’s letter of undertaking as the sole and appropriate security for a maritime claim filed against the shipowner. As a result, the vessel was able to quickly depart from the port, and the shipowner subsequently proved his innocence in court.