In February-March 2014, Ukraine was mired in a series of appalling events of international significance: the overthrown of corrupted pro-Russian President Yanukovich followed by Russian invasion and subsequent annexation of Crimea and Sevastopol. Ukraine was totally ambushed. In April, Ukrainian Parliament (Verkhovna Rada) amended Criminal Code of Ukraine introducing a new punishable crime – a breach of the rules governing entry to and exit from temporarily occupied territory of Ukraine, including Crimea and Sevastopol. As a further step, Ukrainian government decided to close seaports of Crimea and Sevastopol in July 2014. From this moment onwards, any business of ships with Crimean seaports has been treated by Ukrainian authorities as illegal and could produce unfavorable consequences for shipowners and crew. What does it really mean in practice?
Five years afterward – time for a first assessment
In November 2018, a spokesperson of State Border Service of Ukraine announced that 15 foreign ships were held accountable for illegal entry to the seaports of occupied Crimea. However, this number is not that high, if compared to a general number of ships having unlawfully entered Crimean seaports during 2014-2018 – 940. However, according to the spokesperson, a vast majority of 940 ships are those which technically support the functioning of Crimean ports themselves and only a small amount of them are commercial ships of foreign owners.
Apparently, these 15 ships already subject to Ukrainian measures are counted from the very first day of the port closure in 2014. It seems that most of these ships were affected by legal sanctions only recently, since there are only five ships that have their cases brought before Ukrainian courts and thus, their stories were publicly revealed: Aliot, Kanton, Nefterudovoz 45M, Nord and Sky Moon.
Each of them has its own story: most fell under criminal jurisdiction, while Sky Moon was subject to customs proceeding. Aliot and Nefterudovoz 45M were arrested, detained, but ultimately released and now they continue to sail. On the other hand, Kanton is detained in Kherson port since April 2015, was reported to be there in April 2017 and is most likely still detained. Nord and Sky Moon are now confiscated and transferred to Ukrainian law enforcement agencies (Sky Moon) or being sold at an auction (Nord).
As time passes, we continue to follow the stories of the rest 10 ships which are claimed to be prosecuted but still have no record of any legal procedures in their regard.
Legal dimension of the problem
As it frequently happens, the system started with failures. The amendments to Criminal Code of Ukraine introduced in 2014 referred to rules governing entry to and exit from temporarily occupied territory of Ukraine. However, the rules themselves were adopted by Ukrainian government only almost a year after the port closure – in June 2015. This fact undermines the lawfulness of any measure regarding the ships which dealt with Crimean ports during July 2014 – June 2015, because legal certainty and nulla poena sine lege considerations prescribe that a person cannot be punished for a breach of rules if the very rules did not exist at the time of the breach. This issue presents significant importance since two of five ships (Kanton and Aliot) were arrested for the entry to Crimean ports in 2014 and while Aliot managed to get free, Kanton's fate remains unclear.
The second thing to note concerns confiscation of ships. As mentioned above, two of five ships were not only arrested and detained but subsequently confiscated meaning that their owners were stripped of their ownership rights. Each of these two ships underwent its unique way.
On May 21, 2018 vessel Nord was transferred to National Agency of Ukraine for finding, tracing and management of assets derived from corruption and other crimes (ARMA) based on Article 100 of Code of Ukraine on Criminal Procedure. The latter prescribes that an exhibit of value above 200 hundred minimum subsistence can be transferred to ARMA upon a decision of a court and sold out (in case of a ship, if it is deemed to be more appropriately).
The initial wording of the article of Criminal Code of Ukraine concerning illegal entry to Crimean ports prescribed for a penalty in form of vessel confiscation. However, it was removed in 2016 as a part of legislative reforms aimed to improve arrest of property procedure and to introduce a special confiscation. Now, the confiscation is regulated by Article 100 of Code of Ukraine on Criminal Procedure. In practice, it means that any vessel that is involved in a criminal proceeding regarding illegal entry to Crimean ports can now be confiscated on a pre-trial or trial stage. Before, the confiscation was impossible until a conviction has entered into legal force.
Moreover, a criminal proceeding is not an only way to confiscate a vessel: it can be also done through customs regulations. For instance, vessel Sky Moon was accused of illegally entering the closed port of occupied Sevastopol, being loaded with technical sodium and leaving the port without Ukrainian customary clearance i.e. in violation of customs regulations of Ukraine. Then it headed to a Moldovan port and was stopped on the way by State Border Service of Ukraine. By an order of a district court of Odesa, upheld by Odesa Court of Appeals, a Sky Moon captain was found guilty of violation Code of Customs of Ukraine and the vessel was confiscated alongside the cargo based on Article 482 of the Code.
Ukrainian sanction regime – how it is relevant
Ukrainian sanctions legal framework has just marked four and a half year of its history – on August 14, 2014, the Law of Ukraine “On Sanctions” was adopted by Verkhovna Rada. Introduced in response to the well-known developments in Crimea and Eastern Ukraine, the sanctions were meant to effectively address various threats to Ukrainian sovereignty and territorial integrity by hitting Russian economy and welfare of those companies and individuals who support Russia’s malicious actions.
Although Ukrainian sanctions, if applied, are not directly related to a vessel's activity, the link between them can still be traced.
Contrary to abovementioned situations, if a vessel gets blocked based on the Law of Ukraine "On Sanctions", it does so because its owner is listed as the one to whom restrictive measures (sanctions) apply. In other words, a vessel itself might not have breached Ukrainian blockage of Crimean ports, but it can still be apprehended and detained due to illicit activities of its owner. At the same time, the vessel’s business with the closed port of Crimea may result in the imposition of the sanctions on the vessel’s owner.
The most recent and famous example concerns "Mekhanik Pogodin" vessel detained in Kherson Port since August 2018. While the case is still pending in Kherson Court of Appeals, it can be safely speculated that the further scenario remains extremely vague since Ukrainian sanction legislation does not prescribe for any way in which a vessel blocked under sanction regime can be sold or used in any other way. The chances of Ukrainian sanctions to be annulled are also miserable which is a topic of another discussion.
Lessons to be drawn
During these almost five years, Ukrainian authorities have been only learning how to implement the system created in 2014 in response to the annexation of Crimea. This is proven by the fact that Ukrainian law enforcement agencies demonstrated different approaches in seemingly similar cases and it was often difficult to see any logic in their actions: some of the vessels were ultimately released after several months or even years of detention (Nefterudovoz 45M and Aliot), while one vessel is still under arrest and deprived of any possibility to be effectively used (Kanton). Two of the vessels were confiscated and there is a semblance of their meaningful use. In one case (Nefterudovoz 45M), the vessel continued to be detained for several months even after an order of the court to release the vessel. The situation with vessels blocked under the Law of Ukraine "On Sanctions" is even worse, since there is no, at least formal, way by which such vessels can be subsequently transferred.
These observations lead only to one obvious conclusion: any shipowner should think twice before dealing with Crimean seaports, especially if the shipowner considers entering Ukrainian ports afterward – once stopped and boarded by State Border Service of Ukraine, a vessel can be detained for a long period of time with dire predictions. During one of the last public appearances in November 2018, a spokesperson of State Border Service of Ukraine assured that Ukrainian authorities are gradually learning to employ the tools granted by Ukrainian legislation with regards to those who breach Ukrainian blockage of Crimea seaports and the recent rise in the number of arrested vessels prove trustworthiness of these words.