Ukraine: Ukraine closes the Crimean Sea Ports

On 15 July 2014 the Order of the Ministry of Infrastructure of Ukraine “On closure of sea ports” as of 16 June 2014 No.255 (the “Order”) came into force. The Order terminates the activity of five (5) sea ports located on the territory of Autonomous Republic of Crimea. In particular, the Order provides that as of 15 July 2014 the sea ports located in Kerch, Sevastopol, Feodosya, Yalta and Evpatoriya (“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 means that 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 be re-opened if the constitutional system of Ukraine is restored in the territory of the Autonomous Republic of Crimea. In these circumstances, the State Enterprise “Administration of the sea ports of Ukraine” may initiate re-opening of the Crimean Sea Ports, subject to the approval of the State inspection of Ukraine on security of sea and river transport.

The need to close the Crimean Sea Ports was raised in April 2014 when the Cabinet of Ministers adopted the Regulation “On certain questions regarding operation of sea and river transport” No.578-р. Pursuant to this Regulation, the Cabinet of Ministers of Ukraine instructed the Ministry of Infrastructure of Ukraine to proceed with the closure of the Crimean Sea Ports.

At the same time the issue of the Crimean Sea Ports was considered by the current government of the Autonomous Republic of Crimea. On 26 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 provides that the assets of the Crimean Sea Ports shall be transferred to the newly created State Enterprise “Crimean Sea Ports” (the “State Enterprise”). Furthermore, according to the Resolution, the existing agreements executed by the Crimean Sea Ports should be re-registered in the name of the State Enterprise (subject to certain exceptions) and the personnel of the Crimean Sea Ports transferred to the State Enterprise. The position of the Crimean authorities means that they intend to continue the operation of the Crimean Sea Ports, even though such activity is no longer allowed by Ukrainian law.