UK top 50 and leading Scottish law firm Brodies LLP has advised on a first-of-its-kind war risk insurance that enables Ukraine's international exports to be shipped across the Black Sea.
Acting for Ukraine's Export Credit Agency (the ECA), Brodies advised on an insurance facility that places relevant funds in accounts at Ukrainian state banks – Ukrgasbank and Ukreximbank - enabling them to issue corresponding irrevocable letters of credit, each confirmed by DZ Bank AG. This provides shipowners and vessel charterers with cover for the transport of goods through the Black Sea and supports the reimbursement of underwriters in the event of payment of claims.
The agreement was formalised by a Reimbursement Framework Agreement between the ECA and a group of underwriters at Lloyd's of London, with Marsh Limited as arranger and Ascot Underwriting Limited as lead underwriter.
The insurance facility is approved by the Ukrainian Government, and it is anticipated that the precedent-setting agreement could also be applied in areas affected by other international conflicts, to assist with the continued movement of essential goods.
Brodies' banking and finance partner, Michael Stoneham, and legal director, Ben Powell, acted alongside colleagues specialising in relevant shipping, marine insurance and regulatory law to provide the ECA with English law advice on the drafting and negotiation of the documentation. The firm also worked closely with a team from Asters, Ukraine's largest law firm; led by senior partner Armen Khachaturyan. Norton Rose Fulbright acted for Marsh Limited.
Michael Stoneham said: "This first-of-its-kind war risk insurance mechanism marks a significant step in ensuring that those vessels that export food and other critical supplies from Ukraine to the rest of the world can continue to do so, while providing the insurance underwriters with a route to reimbursement in the event of any claims being paid out.
"We're delighted to have advised the ECA and collaborated with others to make this facility possible, including Asters' partner Yaroslav Petrov who is on secondment with us. This project is testament to the law's ability to empower and enable in times of challenge. It is hoped that this insurance framework could be applied in other situations of conflict, if necessary, with a view to preserving international trade."
