Frozen fee: why the ice campaign in Mariupol is expensive

November 5, 2020 · Publications

How the cost of ship enters in Mariupol increases in winter, and what unwelcome surprises await shipowners, Tatyana Marchenko Legrant lawyer tells in her article for Ports of Ukraine.

The high cost of ship entry in Ukrainian seaports is being increased for one more reason in the Sea of Azov. The matter is the only icebreaker in the country "Kapitan Belousov" is based in Mariupol. As usual, the maintenance cost is paid by clients. But if they pay something approved at the legislative level – it’s one thing. But state enterprises charging something at their own initiative is something quite different. And such actions look at least strange in the context of military and political events in the Azov region.

So, let us get to the point. Let's set the feasibility of the service called “ensuring of icebreaking” aside and take it for granted. Moreover, it is formalized in the order No. 1059 by the Ministry of Infrastructure dated December 26, 2013, and has its own cost. And here is where the most interesting part starts.

According to the mentioned above order, if there is favorable weather for ship entries until January 31 in the Sea of ​​Azov, then a shipowner/shipping agent pays $ 0.29 / cubic meter of the vessel volume at each entry and exit from the water area within 30 days from February 1. But if the water area is constrained by frost, and an ice campaign is announced, then the rate increases to $ 0.5 per cubic meter and is charged exclusively during the period of the campaign. But after its completion, the order by the Ministry of Infrastructure does not charge any fees.

Despite the document, in practice, everything looks a bit different. Consider a case from the life of shipowners/shipping agents. Weather conditions in Mariupol require the ice campaign, which the port captain announces on February 3. So, the vessels that entered or departed to/from the waters on February 1 and 2 should pay for the provision of icebreaking operations at a rate of $ 0.29. This is exactly what our clients did, whose vessel arrived in Mariupol on February 2. The ice campaign lasted for only two days and ended safely on February 4. This means that any vessel that would have arrived or departed to/from the port on February 3-4 would have paid at the rate of $ 0.5. However, the ship we have chosen to illustrate left the waters on February 6, when, according to the law, no fee should be charged for this service.

There is nothing extraordinary at first sight, but at the end of March, the shipping agent received invoices from the Ukrainian Seaport Administration (USPA), in which the state monopolist demanded to pay for the ensuring of icebreaking service for the period after the end of the ice campaign (after 04.02.). Well, things happen sometimes. Perhaps there was a technical error: the charging was made for the wrong vessel or the periods were mixed. Unfortunately, the reality turned out to be different: without receiving payment on these bills, the Mariupol branch of the USPA applied to the court.

The desire to provide money to the budget by any means encourages the state-owned enterprise to be more inventive in its arguments. Let us refer to the first paragraph of point 2.3 of the tariffs approved by Order No. 1059 sets a fee of $ 0.29 from February 1 for 30 days in case the ice campaign is not announced before January 31. The second paragraph says that if the ice campaign is announced after February 1, before its announcement, during this period, you should pay $ 0.29. During the ice campaign the rate increases to $ 0.5. But absolutely nothing is mentioned about the period after the end of the campaign. Accordingly, there are no grounds for calculating a service fee after the end of the ice campaign. The USPA, in its turn, is trying to prove to the court that these two paragraphs only complement each other. Therefore, the monopolist considers it legal to charge a fee for "ensuring icebreaking" after the end of the ice campaign.

But it is not so easy to convince judges that a free interpretation of a normative act by USPA is correct. Having considered the arguments of the USPA, the court found it absolutely unfounded and refused to satisfy the claims of the state-owned enterprise. However, in this case, the problem was solved only locally for a particular shipping agent, particular ships, and period. But the register of court decisions shows that this is not a single incident. In addition to the Legrant’s client, five shipping agents are "fighting off" identical groundless claims of the USPA for the collection of payments for the service to ensure the icebreaking in the total amount of 327 thousand dollars.

What shall we do? Obviously, the problem requires a solution at the state level. The Ministry of Infrastructure should monitor how the actions of the state-owned enterprise under its jurisdiction are compliant with its orders. For now, there is a lot of litigation and a decrease in the attractiveness of the Mariupol seaport as the result. Besides, the viability of the service raises questions. It is one thing - the work on ice-breaking, which is paid as part of the ice collection, another matter is subtle "ensuring", which, most likely, should be covered by the ship tax. It is the question of the constituent elements of the service for ensuring icebreaking that is another urgent topic for public professional discussion.