THIS year has seen legislative developments in Ukraine coming thick and fast, with major new legal reforms at least every month affecting a wide range of activities including shipping and insurance.
According to Arthur Nitsevych, a lawyer with local law group International Law Offices, the country has adopted many laws "that show that this country is open and this country is going to the world market".
A new law enacted on November 7 which amends Ukrainian law on insurance is expected to have a "tremendous impact on the development of the Ukrainian insurance market."
The law essentially gives foreign investors the opportunity of participating in Ukrainian insurance companies, Mr. Nitsevych says. Previously the share of foreign participants could not exceed 49%, "now is it possible to have a subsidiary insurance company in the Ukraine".
The 49% maximum shareholding needed to be amended because it was in conflict with various international obligations, including commitments given by the country under its partnership and co-operation agreement with the European Community.
"Ukrainian insurance companies cannot take big risks because they are not financially strong enough. This law gives the opportunity of building a new generation of strong insurance companies."
There are at least two groups of foreign insurance and reinsurance companies that are interested in establishing a presence in Ukraine. One is a former Soviet group including Ingosstrakh. The second group is western companies which mainly deal through brokers at the moment.
Following the acquisition of a majority stake in Okean shipyard by Damen, further opportunities for overseas investors to get controlling stakes in Ukrainian shipyards may also be on the cards.
Another important development is the introduction of a new Land Code, an issue that has been outstanding for 10 years, Mr. Nitsevych says.
"Now we have a new law that regulates land questions. It is a very big step towards market activity for Ukraine."
The Land Code will allow land to be privatized and again the European Union has been pushing hard for the Ukraine to introduce this legislation. Sales of land will be possible starting from January 1, 2005.
The court structure has also been changed this year. "We now have another court structure in Ukraine. Formerly we had two parallel court structures, a civil court structure and an arbitration structure. Now these structures are combined."
Henceforward the commercial court system will be comprise local commercial courts, commercial courts of appeal, the High Commercial Court of Ukraine and the Supreme Court. "According to the law, parties to a dispute, after the case is heard in the local court, may file an appeal to the respective court of appeal, or a cassation petition directly to the High Commercial Court of Ukraine," Mr. Nitsevych says. The law also introduced changes with respect to arbitration expenses.
The benefits of the new legal procedures is they make it easier to go to court to protect one's commercial interests, Mr Nitsevych believes.
"This structure is transparent now". Last year many investors who came to Ukraine could not understand how the court system worked, he adds. Now, the system resembles that operated in other European countries.
Maritime arbitration is also an area Ukraine is keen to develop further. "For the last two years international commercial arbitration has become a real institution."
The number of commercial arbitrations is on the increase, Mr. Nitsevych says. Maritime arbitration is a big part of that. "We have a maritime arbitration commission at the Chamber of Commerce of Ukraine."
International Law Offices has represented clients at arbitrations there three times this year and around 20 maritime arbitrations take place in a year, which is not a bad figure for a new institution.
"Former state-owned companies like Udasco now prefer to arbitrate in the maritime arbitration commission of the chamber of commerce, not in London, not in Paris but here," Mr. Nitsevych says.
He adds there is enough specialist knowledge available locally, proceedings are cheaper and meet all the demands of international commercial arbitration.
He adds there is enough specialist knowledge available locally, proceedings are cheaper and meet all the demands of international commercial arbitration.
"Many investors that come to Ukraine prefer to have arbitration at that arbitration court because to protect their interests and to enforce the court decision it is much easier to have the arbitration in the Chamber of Commerce".
Other legislation coming into force this year included major changes to tax administration procedures, a harmonization on customs tariffs for imports, a law regulating money transfers within the country, and new regulations regarding intellectual property rights to name but a few new rules.
International Law Offices had a total of 14 lawyers plus 10 associates working out of two offices in Kiev and Odessa. They handled cases covering maritime, corporate, tax and investment law.
More than 50% of the group's clients are connected to shipping and include Ukrainian Danube Shipping Company (Udasco), Black Sea Shipping Company (Blasco), Ukrainian Shipping Company and it works closely with the ministry of transport representing the ministry interests of Ukraine on matter relating to Blasco's financial problems.
