Shipping 2017
Newbuilding contracts
1. When does title in the ship pass from the shipbuilder to the shipowner? Can the parties agree to change when title will pass?
The parties are free to determine the time when the title passes from the shipbuilder to the shipowner. Under the Civil Code, unless otherwise provided by the contract, the risk of incidental loss of the new building passes from the shipbuilder to the shipowner at the time of acceptance.
3. Are there any remedies available in local courts to compel delivery of the vessel when the yard refuses to do so?
The shipowner may file a claim to oblige the yard to deliver the vessel. If the claim is granted by the court, it may be enforced with the assistance of bailiffs. In addition, the yard may be obliged to pay damages incurred as a result of unlawful detention of the vessel.
2. What formalities need to be complied with for the refund guarantee to be valid?
The guarantee must be made in writing and signed by the duly authorised signatory (general director of the guarantor or other persons authorised to sign on the basis of the corporate documents). Depending on the guarantor's corporate structure, approval of the board of directors or shareholders may be required. It is recommended to state the term of validity of the refund guarantee. In the absence of such a term, the guarantee would be valid within one year after the main obligation secured by the guarantee became due, or within two years after the guarantee was issued.
It should be noted that a guarantee is ancillary to the secured obligation. It must be made in the same form as the shipbuilding contract. Termination or invalidity of the shipbuilding contract leads to the termination or invalidity of the guarantee.
4. Where the vessel is defective and damage results, would a claim lie in contract or under product liability against the shipbuilder at the suit of the shipowner; a purchaser fromthe original shipowner; or a third party that has sustained damage?
The initial customer (party to the shipbuilding contract) will have a claim against the shipbuilder pursuant to the shipbuilding contract. A purchaser from the original shipowner has a claim against the seller, and may have a claim against the yard but only by way of assignment from the seller. As for the third party that has sustained damages, such party may claim recovery from the owner (bareboat charterer, operator) of the vessel.
Ship registration and mortgages
5. What vessels are eligible for registration under the flag of your country? Is it possible to register vessels under onstruction under the flag of your country?
The vessel is allowed to fly the Russian flag if she is registered in any of the following registers: the State Ships Register (SSR); the International Ships Register (ISR); the Bareboat Charter Register (BCR); or the Small Vessels Register (SVR). To be registered in the SSR the vessel has to be owned by a Russian legal entity or individual, or to be a state or municipal property. Registration in the BCR is temporary. The requirement for the BCR is that the vessel should be bareboat chartered by a Russian legal entity or individual for a period of at least one year. The ISR registration grants some tax, customs and similar exemptions but requires payment of annual fees for the confirmation of registration. The vessel is eligible for registration in the SVR if her length does not exceed 20 metres and the number of people she may take on board does not exceed 12. A vessel registered in the SVR may not be used for commercial purposes.
Vessels under construction are subject to registration in the register of ships under construction.
6. Who may apply to register a ship in your jurisdiction?
To be eligible for registration in a Russian ship register, a ship should be either owned or bareboat chartered by a Russian citizen or a Russian company. Such owners or bareboat charterers would normally act as applicants in the process of ship registration. There are no restrictions for a ship registration by Russian companies which are partly or solely owned by a non-Russian investor. Specific regulations are, however, provided for acquisition of more than 50 per cent of shares in fishing companies by a foreign investor. In the latter case a foreign investor should obtain consent from the Federal Anti-Monopoly Service of the Russian Federation.
7. What are the documentary requirements for registration?
Russian ship registers have different documentary requirements. The SSR registration requires a completed application form, ship documents, foundation documents of the company which applies, documents of title with regard to a ship, certificate confirming that a ship was deleted from any previous register. The BCR registration requires a decision on provisional granting to a ship of the right to fly the Russian flag. The decision is provided by the Federal Service of Supervision in the Sphere of Transport (FSSST) of the Ministry of Transport, or, in the case of fishing vessels, by the Federal Fishing Agency of the Russian Federation. After the decision is obtained, the bareboat charterer should collect and submit for BCR registration the documents as mentioned for the SSR registration and certain additional documents. These documents are:
• the bareboat charterer's foundation documents, state registration certificates;
• written consent from the owner and mortgagee(s), if any, to the bareboat charter registration; and
• a written confirmation from the underlying flag country that the ship's right to fly their flag has been suspended for the period of bareboat charter registration.
The ISR registration may be applied either by the owner or the bareboat charterer. If the ISR registration is required by the owner then the documentary requirements will be the same as for the SSR registration. If the ISR registration is required by the bareboat charterer then the applicant should collect and submit the same documents as mentioned with regard to the BCR registration. The SVR registration requires a completed application form, owner identification documents (with regard to a person), or foundation documents of a company, documents confirming the title of a ship, certificate confirming the deletion of a ship from any previous register, and the ship's technical documents.
It should be noted that registration authority may request additional documents and information if necessary. All the documents and information should be submitted in Russian or with a certified translation into Russian. If they originate from abroad, such documents should be legalised or apostilled.
8. Is dual registration and flagging out possible and what is the procedure?
Bareboat registration is allowed provided that the underlying registration is suspended. Permission to fly the Russian flag is issued by the harbour master to each particular vessel. Simultaneously with the issuance of permission, registration of the vessel in BCR is carried out by the harbour master of the maritime port chosen by the bareboat charterer. The list of documents required for registration includes a transcript from the underlying register and a confirmation that the underlying registration was suspended, written consent from the owner and any registered mortgagees, bareboat charter, certificates of tonnage, etc. Temporary flagging out requires permission issued by the Ministry of Transport. The list of required documents includes an application from the owner and written consents from all registered mortgagees.
9. Who maintains the register of mortgages and what information does it contain?
Mortgages are registered in the SSR and may also be registered in the ISR or the SVR. The existence of a mortgage may also be mentioned in the BCR, but unlike the first two cases, it would have no binding consequences and would be included for informational purposes only. All these registers are kept by the harbour masters of Russia's maritime ports. Mortgages are registered in a separate section of the register, which contains information on the mortgagor and mortgagee, a description of the document on the basis of which the mortgage was registered, the term of the mortgage, and the maximum amount of obligations secured by the mortgage.
Limitation of liability
10. What limitation regime applies? What claims can be limited? Which parties can limit their liability?
Russia is a party to the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the protocol of 1996 (the Convention). Russia has not ratified new limits taking effect in June 2015 and has not introduced respective changes to the national legislation. The limitation of liability is also governed by the Merchant Shipping Code. As follows from the respective articles of the Merchant Shipping Code, the limitation can be applied by a shipowner or salvor to the same claims as those established by the Convention except for:
• claims excepted by the Convention;
• claims provided in article 2, paragraphs 1(d) and 1(e) of the Convention (claims in respect of the raising, removal, destruction or the rendering harmless of a ship and in respect of the removal, destruction or the rendering harmless of the cargo of the ship), since Russia made reservation to exclude these claims from limitation in the national legislation;
• claims for loss of life or personal injury claims if the injured person and the shipowner or salvor are Russian nationals.
11. What is the procedure for establishing limitation?
Any person alleged to be liable may constitute a fund with the court or state commercial court in which legal proceedings are instituted in respect of claims subject to limitation. The fund shall be constituted in the sum of the amounts set out in the Convention as amended by the 1996 protocol applicable to claims for which that person may be liable, together with interest thereon from the date of the occurrence giving rise to the liability until the date of the constitution of the fund. For ships with a tonnage not exceeding 300 GT, the limit is one-sixth of the limit established for ships with a tonnage not exceeding 2,000 GT (except for personal injury claims).
The fund can be set up either by a cash deposit or by a bank guarantee or other kinds of financial security, such as a P&I club letter of guarantee, if the court finds it acceptable. Limitation of liability may also be invoked notwithstanding that a limitation fund has not been constituted. Upon the claimant's request, the shipowner or salvor shall be obliged to lodge security with the court.
The sum of the security shall be distributed on the same principles as the limitation fund. A limitation fund may be constituted with the court or state commercial court after the legal proceedings have been initiated.
12. In what circumstances can the limit be broken?
A person liable shall not be entitled to limit his or her liability if it is proved that the loss resulted from his or her personal act or omission, committed intentionally or through gross negligence.
13. What limitation regime applies in your jurisdiction in respect of passenger and luggage claims?
Russia is a party to the Athens Convention. The Merchant Shipping Code of the Russian Federation incorporates provisions similar to the Athens Convention, but establishes higher liability limits: 175,000 units of account for liability of the carrier for death and personal injury, 1,800 units of account for cabin luggage, 10,000 units of account for vehicles and 2,700 units of account for other luggage. The amounts of deductibles are also increased.
Port state control
14. Which body is the port state control agency? Under what authority does it operate?
The functions of the port state control are exercised by the harbour masters of sea ports. The status and functions of the port administration as a port state control authority are laid down in the Merchant Shipping Code, the Law on Maritime Ports in the Russian Federation and in the Regulations of the Ministry of Transport. Amendments recently introduced into the Merchant Shipping Code imply that a centralised system of port state control will be established.
15. What sanctions may the port state control inspector impose?
Harbour masters are authorised to impose administrative sanctions in accordance with the Code on Administrative Offences. These sanctions are fines of different amounts established for various kinds of offences. Among them are violation of rules of navigation, operation of a vessel without required documents, violation of rules of carriage of harmful substances, damage to navigation equipment and other port constructions, etc.
The harbour master can prevent any vessel from exiting a port in the following circumstances:
• unseaworthiness of the vessel, or other deficiencies in the vessel leading to violation of safety of navigation requirements or causing threat to the environment or health or life of people on board;
• inconsistency in the vessel's documents;
• by the order of the sanitary, migration, customs or other competent authorities;
• non-payment of port fees.
The port authorities have a right to detain the vessel for up to 72 hours at the request of a person having certain types of claims. These are claims connected with salvage, collision, damage to property of the port or other harm caused by the vessel. From a legal point of view such detention is not a sanction but rather a measure intended to secure interests of injured persons before they can obtain an attachment order from the court. Unless such order is obtained within 72 hours the ship must be released.
16. What is the appeal process against detention orders or fines?
A harbour master's rulings that impose penalties for administrative offences may be appealed either in a superior agency or in court. The superior agency is the FSSST whose decision on the appeal can be further appealed in court. Disciplinary measures against a harbour master can be taken by the Federal Agency of Sea and River Transport, which is responsible for the appointment of harbour masters. The rulings against companies should be appealed in state commercial courts and the rulings against individuals should be appealed in district courts of common jurisdiction within 10 days from the service of the ruling. The appeal is heard by the court in the presence of both parties in the order similar to hat in contentious proceedings. The court decisions can be appealed in superior courts. Any other acts or actions of the port authorities, including detention of the vessel or prohibition to exit the port, can be appealed by interested parties within three months in state commercial courts, or if such actions do not affect commercial activity, in district courts of common jurisdiction.
Classification societies
17. Which are the approved classification societies?
According to the Merchant Shipping Code, inspection and classification are carried out by the Russian classification body, that is, the Russian Maritime Register of Shipping (RMRS). Owners of vessels registered in the International Ships Register may choose between the RMRS or foreign classification societies approved by the Russian government. At present, Bureau Veritas and Rina Services S.p.A. are the only approved foreign classification societies. In practice, however, Russian authorities in some cases allow vessels registered in either the SSR or the BCR to reserve the class of a foreign classification society. All conventional documents are in any case issued by RMRS.
18. In what circumstances can a classification society be held liable, if at all?
RMRS is not exempt from liability and can be liable for breach of contract or in tort. However, general terms applied by RMRS limit their contractual liability to the amount payable under the contract and to the cases of RMRS's fault only.
Collision, salvage, wreck removal and pollution
19. Can the state or local authority order wreck removal?
A harbour master of a sea port may order wreck removal if there is a threat to the environment, safety of navigation or fishing activities, or if the wreck hampers activities in the port, including dredging activities. The Law on the Internal Seawaters, Territorial Sea and Contiguous Zone provides general powers of the Russian government to take any measures necessary to protect the environment and ensure safety of navigation in the course of wreck removal.
20. Which international conventions or protocols are in force in relation to collision, wreck removal, salvage and pollution?
Russia is a party to the International Convention on Salvage 1989, and the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels, 1910. The provisions of these conventions are implemented in the corresponding chapters of the Merchant Shipping Code. Russia is also a party to a major part of the IMO conventions on pollution, including the International Convention on Civil Liability for Oil Pollution Damage 1969, as amended by the protocol of 1992. In December 2008 Russia became a party to the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001. The Nairobi International Convention on the Removal of Wrecks 2007 is not in force for Russia.
21. Is there a mandatory local form of salvage agreement or is Lloyd's standard form of salvage agreement acceptable? Who may carry out salvage operations?
There is no mandatory form of salvage agreement. The parties are free to conclude an agreement on Lloyd's standard form. There are two recommended forms of salvage agreement in Russia. The first was drafted by the Maritime Arbitration Commission at the Chamber of Commerce and Industry of Russia, but this form has not been updated for a significant period of time and does not take into account the provisions of International Convention on Salvage, 1989 and the Merchant Shipping Code. The second was prepared by the Arbitration Court at the Central Agency for Transport, Moscow in 2001 in light of the latest developments in salvage law. Pursuant to article 16 of the Law on the Internal Seawaters, Territorial Sea and Contiguous Zones, all salvage operations in Russian internal waters and territorial seas should be carried out by ships and equipment of the Russian Federation. However, in accordance with Regulation No. 654, enacted by the Russian government in 4 September 2000, foreign salvors may be admitted to the Russian territory in exceptional cases with the approval of the Russian State Salvage Coordination Centre, unless otherwise provided by an international treaty.
Ship arrest
22. Which international convention regarding the arrest of ships is in force in your jurisdiction?
The Russian Federation is a party to the International Convention Relating to the Arrest of Seagoing Ships 1952 (Arrest Convention 1952). At the same time Russia's internal law – the Merchant Shipping Code of the Russian Federation – incorporates certain novelties introduced by the International Convention on the Arrest of Ships 1999.
23. In respect of what claims can a vessel be arrested? In what circumstances may associated ships be arrested?
A vessel can be arrested only if the party requesting arrest has a maritime claim. The vessel's flag or the law governing the merits of the claim do not make a difference. Likewise, a vessel can be arrested in Russia even if the claim on the merits is subject to consideration – by virtue of a jurisdiction clause (jurisdiction agreement) or an arbitration clause (arbitration agreement) – in a court or arbitration outside the territory of the Russian Federation. An associated ship or ships may be arrested if, at the moment of the beginning of the arrest procedure, the ships were in the ownership of the person who is liable for the maritime claim and who was, when the claim arose, the owner of the ship in respect of which the maritime claim arose, or the bareboat charterer of this vessel. Pursuant to article 3(4) of the Arrest Convention 1952, the same rules apply where the party liable under the maritime claim is not the owner of the ship. This results in incoherent judicial practice on the issue of the legal connection between the vessel and the party liable under the maritime claim that may give rise to an arrest of the vessel.
24. What is the test for wrongful arrest?
Russian law, inter alia, operates on the notions of 'unlawful' and 'unjustified' arrest. There are no definite tests provided by the law for either unlawful or unjustified arrest. Generally, it can be said that an arrest would be considered unjustified if it is later found to be unlawful by an act of the courts (for instance, by way of appeal). Arrest may also be found to have been wrongful in the case of the ultimate failure of the claim. If an arrest is effected in bad faith, for example, with the mere intention to disrupt the activity of the ship for the purpose of causing cash-flow problems for the shipowner, such arrest would be unlawful.
25. Can a bunker supplier arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than with the owner, of that vessel?
Yes. According to the Merchant Shipping Code, a vessel can be arrested if the party requesting arrest (ie, the bunker supplier) has a maritime claim for the price of bunkers supplied (article 389 of the Merchant Shipping Code). In respect to the bunker supply contract, the bunker supplier can arrest a vessel not only pursuant to a contract with the owner, but also pursuant to a contract with the bareboat or time charterer, operator, etc, provided that this person was liable under the claim both at the time when it arose and at the time the arrest was claimed. This, inter alia, follows from the provisions of the Arrest Convention 1952. However, the judicial practice on the issue of the legal connection between the vessel and the party liable under the maritime claim that may give rise to an arrest of the vessel is incoherent (see question 23).
26 Will the arresting party have to provide security and in what form and amount?
There are two types of arrest procedures.

A provisional security arrest
The claimant has a right to commence the provisional arrest procedure before filing a claim on the merits. Where a vessel calls at any Russian port, the Russian courts would have jurisdiction to grant an arrest order on the vessel, provided that the claim is prima facie proven. A counter-security in cash or in the form of guarantee or in any other acceptable form deposited at the court represents a strong 'argument' for the positive decision of the court. The amount of counter-security shall be equal to the amount of claim. In the event that the countersecurity is not provided, the court may ask the claimant to provide it. In such case the consideration of the arrest application can be suspended until the documents proving lodging of security are produced.

A security arrest within the scope of litigation (state commercial court proceedings)
Security measures may be granted at any stage of the proceedings, provided that the underlying claim can be qualified as a maritime claim. The court may, at the shipowner's request or at its own discretion, oblige the arresting party to provide counter-security in the form of bank guarantee, surety or deposit in money. The amount of countersecurity is at the discretion of the court but it cannot be less than 50 per cent of the amount of the claim.
In both cases counter-security may be changed at the claimant's motion and if the court considers such change possible and reasonable.
27. How is the amount of security the court will order the arrested party to provide calculated and can this amount be reviewed subsequently? In what form must the security be provided? Can the amount of security exceed the value of the ship?
Counter-security can be provided by the arrested party by way of depositing into the account of a commercial court funds in the amount stated by the plaintiff. Subsequently, that sum can be reviewed in the event that the claims change. Theoretically it is possible that the amount of security exceeds the value of the ship since the amount of security depends on the amount of the claim (which can exceed the value of the ship) and cannot be less than 50 per cent of it (as indicated in question 26).
28. What formalities are required for the appointment of a lawyer to make the arrest application? Must a power of ttorney or other documents be provided to the court? If so, what formalities must be followed with regard to these documents?
Power of attorney (PoA) shall be issued in favour of the lawyers in order to make the arrest application. The PoA shall contain passport details of the appointed lawyers, shall expressly entitle the lawyers to file arrest application. The PoA issued in Russia shall be executed in a simple written form. The PoA issued outside Russia shall be apostilled or legalised. Russia is a State party to Apostille Convention. It is also highly advisable to accompany the arrest application (if filed within the framework of provisional security arrest) with documents confirming the claim to be secured by the arrest. The documents supporting arrest application issued outside Russia shall be apostilled as well. If the PoA and other documents to be provided with the court are executed in the foreign language they shall be translated, the translation shall be certified by the signature of the translator which also should be certified by the notary public. The arrest application shall be filed with the court along with the PoA (or notarised copy thereof) in order to confirm the powers of the respective lawyer to sign and to file the application. The arrest application shall be filed with the court in a paper form (not electronically) corresponding to all above mentioned formalities. Depending on the amount of the supporting documents the application should be prepared on an ASAP basis.
29. Who is responsible for the maintenance of the vessel while under arrest?
There is no obligation on the arresting party to maintain the arrested vessel.
30. Must the arresting party pursue the claim on its merits in the courts of your country or is it possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere?
It is possible to arrest a vessel in the Russian Federation to obtain security and thereafter to pursue proceedings on the merits in other jurisdictions.
See also questions 23 and 26.
31. Apart from ship arrest, are there other forms of attachment order or injunctions available to obtain security?
The claimant may apply to the court with regard to other security measures apart from a ship arrest. The claimant may apply before the proceedings on the merits have started or during the proceedings. The security measures may include, inter alia, the arrest of monetary funds or other property owned by the defendant. The court may impose any other security measure or several measures at the same time with regard to the defendant.
32. Are orders for delivery up or preservation of evidence or property available?
If the party to the court proceedings cannot obtain the required evidence it may apply to the court with the respective motion. Based on the motion the court may issue a ruling and oblige the other party to provide the requested evidence. The claimant may likewise apply to the court and request the other party to perform certain actions or refrain from performing certain actions.
33. Is it possible to arrest bunkers in your jurisdiction or to obtain an attachment order or injunction in respect of bunkers?
Bunkers may be arrested like any other property. The party asking for the arrest should provide the evidence to the effect that the bunkers belong to the liable party.
Judicial sale of vessels
34. Who can apply for judicial sale of an arrested vessel?
One peculiarity of Russian law is that the rules on judicial sale are contained in the chapter of the Merchant Shipping Code dedicated to liens and mortgages, and not to ship arrest. Interpreted literally, the respective rule may be understood that in order to be able to apply for judicial sale of an arrested vessel, the claimant must have obtained a court judgment confirming that the mortgagor failed to perform its obligations secured by mortgage. The court practice, however, has allowed claimants to claim judicial sale and recovery of secured obligation simultaneously.
35. What is the procedure for initiating and conducting judicial sale of a vessel? How long on average does it take for the judicial sale to be concluded following an application for sale? What are the court costs associated with the judicial sale?
How are these costs calculated?
The court must notify the registration authority, all known mortgagees and the owner of the vessel at least 30 days prior to the judicial sale. The sale itself takes place according to the general legislation on enforcement procedures. The vessel is sold at a public auction. The court will appoint the organiser of such auction. The time frames may be estimated at several months, but in some cases may be reduced – this largely depends on the discretion of the court and the cooperation of various state authorities involved in the process. The costs are also determined at the discretion of the court, but on the basis of the confirming documents provided by interested parties (ie, the organiser of auction and others).
36. What is the order of priority of claims against the proceeds of sale?
Costs incurred in connection with the arrest and the judicial sale of the vessel shall be reimbursed at the first place. Then the priority, in brief, is as follows:
• claims secured by maritime lien;
• costs for removal of shipwreck;
• claims by shipyards secured by a lien;
• claims secured by mortgage; and
• any other claims.
37. What are the legal effects or consequences of judicial sale of a vessel?
Following a judicial sale all registered mortgages, except such mortgages as were accepted by the purchaser with the consent of the mortgagees, all liens and other encumbrances are terminated.
38. Will judicial sale of a vessel in a foreign jurisdiction be recognised?
Judicial sale of a vessel in a foreign jurisdiction is recognised by an express provision of law. The harbour master is obliged to delete the vessel from the registry upon presentation of satisfactory evidence of the vessel's judicial sale abroad. Nevertheless, deletion of the vessel is sometimes problematic because of the uncertainty as to the requirements for the evidence of judicial sale that needs to be provided.
39. Is your country a signatory to the International Convention on Maritime Liens and Mortgages 1993?
Yes. Russia became a member of this Convention in 1999.
Carriage of goods by sea and bills of lading
40. Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some variation in force and have they been ratified or implemented without ratification? Has your state ratified, accepted, approved or acceded to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea? When does carriage at sea begin and end for the purpose of application of such rules?
The Russian Federation has ratified the Hague-Visby Rules as amended by the protocol of 1979. The Hamburg Rules were not ratified. As for the Rotterdam Rules, there is little sign that Russia intends to ratify them in the near future. According to the Merchant Shipping Code, the carrier is liable for the cargo from the moment of its acceptance and until the cargo is released to the consignee.
41. Are there Conventions or domestic laws in force in respect of road, rail or air transport that apply to stages of the transport other than by sea under a combined transport or multimodal bill of lading?
There are a number of domestic laws that regulate these issues. The Code of Internal Waterways Transport contains a chapter on multimodal carriage, as does the Charter of the Railroad Transport. Rules governing multimodal carriage are also contained in the Merchant Shipping Code and a number of other acts. There is also a draft of a law on multimodal carriage, which has not yet been adopted or entered into legal force.
42. Who has title to sue on a bill of lading?
In line with the international custom, in Russia a bill of lading represents a negotiable document of title. Therefore, a holder of title under a bill of lading may validly bring a claim, and the relationship between a carrier and a consignee, who is not a party to the charter, is governed by the bill of lading.
43. To what extent can the terms in a charter party be incorporated into the bill of lading? Is a jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, binding on a third-party holder or endorsee of the bill?
The terms and conditions of a charter party are obligatory if the bill of lading contains reference to them. The terms and conditions of a longterm agreement on the carriage of goods by sea, which are not included into the bill of lading, are not obligatory for a third party if the third party is not the charterer.
44. Is the 'demise' clause or identity of carrier clause recognised and binding?
If the cargo should be carried on the vessel that is specified by the parties, the said cargo may only be loaded onto another vessel upon consent of the charterer or the shipper, except for a transhipment resulting from a technical necessity that may arise after the beginning of the loading of the cargo.
Update and trends.
As an instrument to mitigate the effect of the sanctions Russia is now willing to foster the development of the domestic shipbuilding industry. Mandatory Russian flag requirements for certain types of operations (including offshore exploration and production of hydrocarbons, marine export of oil) are being considered by the Russian parliament.
45. Are shipowners liable for cargo damage where they are not the contractual carrier and what defences can they raise against such liability? In particular, can they rely on the terms of the bill of lading even though they are not contractual
carriers?
At the outset it should be noted that Russian maritime law distinguishes the owner of the ship and the shipowner. The owner of the ship is a person having ownership rights on the vessel, whereas the shipowner is a person operating the vessel in his or her own name on a legitimate ground of any nature. If the shipowner is not a party to the contract of carriage of goods by sea, he or she will not be liable under such contract. The carrier, however, may raise a recourse claim to the shipowner, which should logically be done under the contract between the carrier and the
respective shipowner.
46. What is the effect of deviation from a vessel's route on contractual defences?
Under the Merchant Shipping Code the carrier is obliged to deliver the cargo within the time frames and in accordance with the route set up by the agreement between the parties to a contract. In the absence of the express provisions thereon the carrier is obliged to deliver it within the time frames, which can be reasonably expected from the careful carrier bearing in mind the circumstances given, and in accordance with the usual route. However, the legislation does not provide for any specific consequences of deviation on the contractual defences. In terms of the relationship between the parties to the shipping contract the deviation may be qualified as a simple non-fulfilment of one of the obligations of the carrier. Under the general provisions of the Russian Civil Code, such non-fulfilment would result in a right to claim damages. The insurance consequences of deviation are more detailed. The insured person or the beneficiary is obliged to inform the insurer on the deviation. Any type of deviation other than for the purposes of salvage or safe continuation of the voyage entitles the insurer to review the terms and conditions of the insurance contract or to claim additional insurance premium. If the insured person or the beneficiary fails to inform the insurer on the deviation, the insurer shall not be obliged to pay under the insurance contract, starting from the moment when the deviation began.
47. What liens can be exercised?
The consignee is under an obligation to remunerate the carrier for the expenses made by the carrier for the account of the cargo, to compensate for the delay in the port of discharge and, if provided for in the bill of lading or other document of carriage, to pay the charter hire and compensate the carrier for the delay in the port of loading, as well as to pay average contribution or security in the case of general average. At the port of discharge, the carrier has a lien on the cargo until he receives all the above payments in full.
A shipyard has a lien on the vessel for the cost of construction works or repairs. However, the lien is terminated as soon as the vessel leaves the yard. The law also provides a number of maritime claims that give rise to a lien on the vessel, such as salvage, wreck removal, wages of crew members, etc.
An operator of a marine transhipment terminal can exercise a lien on the cargo in case of failure to make payments provided by the transhipment agreement.
48. What liability do carriers incur for delivery of cargo without production of the bill of lading and can they limit such liability?
If the carrier delivers the cargo without presentation of the bill of lading made by the consignee, the carrier may be liable to compensate the true holder of the bill of lading for the full value of the cargo. No limitations of the carrier's liability are applicable in such situations. If the bill of lading is not issued and the terms and conditions are set out in a document that is not a document of title, the carrier is entitled to enter into agreement limiting its liability or excluding him from the liability. The conclusion of such agreement needs to be justified by the type of cargo or the time frames for delivery or by specific conditions of carriage.
49. What are the responsibilities and liabilities of the shipper?
The main responsibility of the shipper is to pay the freight, unless it is fully or partly payable by the consignee. The shipper is obliged to mark the cargo and provide true and accurate information on its type and special characteristics to the carrier. The shipper must also provide the carrier with all documents necessary for customs, police, sanitary and other controls. The shipper has a right to dispose of the cargo until it is released to the consignee, including the right to claim that the cargo is delivered back to the shipper.
In the case of hazardous cargo, the shipper can be liable for damages if he fails to disclose all necessary information related to the type of cargo. There is also a general rule whereby the shipper is liable for damages incurred by the carrier, unless the shipper proves that the damages were not due to the fault of the shipper or persons for whom shipper is liable.
Shipping emissions
50. Is there an emission control area (ECA) in force in your domestic territorial waters?
There is no ECA applicable within Russia.
51. What is the cap on the sulphur content of fuel oil used in your domestic territorial waters? How do the authorities enforce the regulatory requirements relating to low-sulphur fuel? What sanctions are available for non-compliance?
As per Russian technical regulations, the cap on the sulphur content in fuel oil is 1.5 per cent m/m. The cap has been applied from 1 January 2013. It is permitted, however, to use fuel oil with 3.5 per cent m/m sulphur content until 30 October 2017. The regulatory requirements with regard to low-sulphur fuel are enforced by the port state control inspectorate. The port state control inspectorate is accountable to the harbour master of the respective port. Non-compliance with the regulatory requirements is punished with administrative fines.
Jurisdiction and dispute resolution
52. Which courts exercise jurisdiction over maritime disputes?
Maritime disputes are subject to consideration by the commercial or 'arbitration' courts in Russia. The name of the courts is misleading since they have nothing to do with commercial arbitration, but are in fact state commercial courts having jurisdiction to consider, inter alia, commercial disputes.
53. In brief, what rules govern service of court proceedings on a defendant located out of the jurisdiction?
As a general rule, court proceedings are served through the Ministry of Justice of the Russian Federation. A different procedure may be provided by international treaties to which Russia is a member. There are a number of bilateral treaties between Russia and other countries providing different procedures for serving court proceedings abroad. Besides, Russia is a signatory to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.
54. Is there a domestic arbitral institution with a panel of maritime arbitrators specialising in maritime arbitration?
Yes, there is the Maritime Arbitration Commission at the Chamber of Commerce and Industry of the Russian Federation and the Arbitration Court at the Central Agency for Transport, both located in Moscow.
55. What rules govern recognition and enforcement of foreign judgments and arbitral awards?
Russia is a party to, inter alia, the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards and a number of bilateral treaties on mutual recognition and enforcement of judgments. As for internal legislation, the Arbitral Procedural Code (which generally governs proceedings in the commercial courts), as well as the Law on International Commercial Arbitration, should be mentioned first and foremost.
56. What remedies are available if the claimants, in breach of a jurisdiction clause, issue proceedings elsewhere?
If the proceedings in breach of a jurisdiction clause are commenced in Russia, such proceedings should be terminated by the respective court or arbitration by virtue of law.
If such proceedings are issued abroad, it would be a matter for the foreign court or arbitration to decide whether it has jurisdiction. Also, the defendant can, of course, institute proceedings in Russia on the basis of the jurisdiction clause.
57. What remedies are there for the defendant to stop domestic proceedings that breach a clause providing for a foreign court or arbitral tribunal to have jurisdiction?
See question 56.
Limitation periods for liability
58. What time limits apply to claims? Is it possible to extend the time limit by agreement?
The general limitation period under Russian law is three years. For many claims related to shipping the limitation period is shorter; for example, for marine insurance claims and claims arising out of collision, salvage or carriage of passengers on international voyages, the limitation period is two years. For claims arising out of towage, agency and brokerage agreements, voyage, time and bareboat charters and general average the limitation period is one year. The parties cannot extend or otherwise amend the limitation period by their agreement.
However, the law provides for some cases in which the limitation period is suspended. In addition, the court only applies limitation period at the request of a party to the proceedings. Therefore, if neither of the parties declares that the time limit has expired, the court would consider the case on the merits and render the judgment.
59. May courts or arbitral tribunals extend the time limits?
No.
Miscellaneous
60. How does the Maritime Labour Convention apply in your jurisdiction and to vessels flying the flag of your jurisdiction?
The Maritime Labour Convention (MLC) was ratified by the Russian Federation on 5 June 2012. Since the MLC came into force on 20 August 2013, the Russian Federation has become responsible for compliance with the MLC with regard to vessels flying the flag of the Russian Federation.
61. Is it possible to seek relief from the strict enforcement of the legal rights and liabilities of the parties to a shipping
contract where economic conditions have made contractual obligations more onerous to perform?
Pursuant to Russian law, the contract may be amended or terminated if there has been any substantial change of the circumstances related to the contract. The parties may amend or terminate the contract by mutual agreement or through the court.
62. Are there any other noteworthy points relating to shipping in your jurisdiction not covered by any of the above?
The vessel registration regime in Russia has certain traditional peculiarities. In accordance with the Civil Code marine vessels are included into the legal category of 'immoveable property', which means that stricto sensu they should be registered in accordance with the Law on State Registration of Immoveable Property. However, all the ships registers (see question 5) function in accordance with the Merchant Shipping Code and the registration is made by harbour masters, which is not in line with the said Law.
Reproduced with permission from Law Business Research Ltd. Getting the Deal Through: Shipping 2017, (published in September 2016; contributing editors: Kevin Cooper, Clyde & Co LLP) For further information please visit gettingthedealthrough.com