Recent changes in trading contracts in Ukraine

Summary:

In this interview, Iryna Moroz, a partner at AGA Partners, speaks about the recent changes in Ukrainian agribusiness from a legal perspective. Iryna highlights the challenges faced by Ukrainian exporters due to legislative changes, such as the suspension of the grain corridor and the introduction of a new verification system. She discusses amendments to export contracts, including disputes arising from CIF, FOB, and DAP contracts, particularly regarding demurrage, payment terms, and quality disputes. Additionally, she addresses recent changes in contracts between resident counterparties, focusing on delivery to Ukrainian deep-water ports like Odesa, Pivdenny, and Chornomorsk. Iryna emphasizes the importance of contractual protections amid war risks and temporary corridor suspensions. She concludes by highlighting the significant changes observed in DAP contracts, especially concerning delivery to Odesa port, and the need for caution and negotiation to mitigate risks for sellers.

The key points of the interview are:

Legislative Changes Impacting Exporters: Legislative changes, including the suspension of the grain corridor and the introduction of a verification system by the Ukrainian government, have presented challenges for exporters in Ukraine.

Amendments to Export Contracts: Export contracts have been amended in response to legislative changes, leading to new types of disputes. These include demurrage disputes, damage claims from ship owners, lien claims, and buyer refusals to pay for cargo.

Payment Terms in DAP Contracts: Payment terms have evolved in DAP (Delivered at Place) contracts, particularly concerning deliveries to western borders. Sellers may face difficulties in receiving payment for delivered goods due to changes in payment order.

Quality Disputes: Quality disputes are common, especially in DAP contracts where quality inspection typically occurs upon delivery rather than loading. Sellers need to ensure proper documentation and quality inspection procedures to protect themselves from potential claims.

Changes in Contracts for Port Deliveries: Contracts for deliveries to Ukrainian deep-water ports have undergone changes, particularly after the suspension of the grain corridor. Buyers seek increased protection, including risk and property passing clauses, and payment terms tied to cargo loading and custom clearance completion.

Mitigating Risks for Sellers: Sellers must negotiate contract terms to protect themselves from risks such as port closures or corridor suspensions. They need to understand and address potential liabilities in arbitration or litigation proceedings.

Importance of Caution and Negotiation: Sellers are advised to be cautious and negotiate terms that provide them with adequate protection against unforeseen circumstances, ensuring a successful trade despite challenging legal and economic conditions.