Miller Magazine Issue: 153 September 2022

88 ARTICLE MILLER / SEPTEMBER 2022 the guidelines developed by the Joint Coordination Cen- tre. These guidelines contain navigational and operational rules for ship operators and ship owners as well as estab- lish additional security requirements for vessels and their itinerary. The Joint Coordination Centre publishes on the web- site of the United Nations all the information regarding the shipments carried out under the Grain Export Deal. It reports on the results of the inspection of vessels, type of commodity carried on their board, quantity of the goods and details of the vessels’ route. It is important that the duration of the Grain Export Deal initially runs for 120 days and ends on 22 October 2022. Nonetheless, it will be automatically extended for the same period, unless one of the parties decides to termi- nate or modify it. CONTRACTUAL SAFEGUARDS SHOULD BE INTRODUCED Should your company decide to procure the goods through the Grain Export Deal, it is essential to adapt the contract to the peculiarities of this specific delivery as it might involve additional, non-conventional risks. The properly drafted amendments might create a s afe har- bour for the importers of grain amidst the storm raging in the Black Sea and enable them to use the opportunities created by the Grain Export Deal. While the specific clauses to be added to the con- tract will largely depend on the particular terms of your template, it might be useful to consider supplementing the agreement on the delivery of the goods from the Ukrainian ports with the following clauses. 1. Failure to pass inspection. The entire deal on the resumption of Ukrainian grain exports is based on the inspection of vessels during their voyage. If the nominat- ed vessel fails to pass such an inspection, the contract execution might be put at significant risk. For this reason, we suggest stipulating in your template the consequenc- es of the vessel’s failure to pass the inspection – for in- stance, the buyer’s right to substitution of the vessel and/ or termination of the contract. 2. Delays/demurrage/detention on the seller. Inspec- tions and transit through the maritime corridor combined with the hostilities in southern Ukraine create lots of uncertainty and might lead to delays in the delivery of the goods. If the timely delivery of the goods is of the essence for your company, it might be useful (a) to stip- ulate strict time limits for shipment of the goods or (b) to incorporate a standard extension clause in your contract which would establish the period of acceptable delay and provide for the discount in price for each day of de- lay. Such clauses will entitle your company to terminate the contract in case the seller does not ship goods within the agreed period. Buyers of Ukrainian grain should also specify in the con- tract that the seller will be liable in damages for any costs arising from the delay caused by the accomplishment of the procedures required under the Grain Export Deal, including any demurrage/detention of the vessel. 3. Transfer of risk. Since the main challenges are connected with the transit of the vessel through the Ukrainian territorial waters, an effective contractual tool might be to amend the typical distribution of risks used in overseas deliveries (when risk passes upon shipment of the cargo). Parties may stipulate in their agreements that risks will be transferred once the vessel leaves the territorial waters of Ukraine and the insurance certificate starts to cover the war risks. Such a clause might protect buyers of Ukrainian grain from the effect of the possible hostilities in the Black Sea. 4. War risk clause. Another contractual mechanism that might be beneficial in this situation is a war risk clause which will specifically cover the events connect- ed with the transit of the vessel through the maritime corridor and her entry into the Ukrainian ports. In this regard, the war risk clause should provide your compa- ny with a rather broad scope of remedies – for instance, with the right to termination of the contract in the case of not only actual but also threatened or reported acts of war affecting its execution. It is important to note that specific legal mechanisms must be developed taking into account the way your business is conducted (for instance, clauses for FOB and CIF deliveries might differ). In any event, the provisions mentioned above should fit in the contract well so that no contradiction with other terms arises. With new opportunities comes the revision of contracts! It goes without saying that the deliveries under the Grain Export Deal involve additional risks connected with the Russian invasion of Ukraine. Nonetheless, the proper analysis of your template contract and its upgrade with the clauses addressing the challenges indicated above might minimize the risks your company will bear in such a transaction. It is therefore crucial for all the importers of Ukrainian grain to adapt their contracts to the peculiari- ties of the Grain Export Deal.