Influence of martial status in Ukraine on interaction with contractors

On November 26^th, 2018 Law of Ukraine No. 9338 approved Order of the President of Ukraine “On Introducing Martial Status in Ukraine”.

The martial status was launched from 2:00 p.m. on November 26^th, 2018 for the period of 30 days till 2:00 p.m., December 26^th, 2018 in the following oblasts: Vinnytsia, Luhansk, Mykolaiv, Odesa, Sumy, Kharkiv, Chernihiv, Donetsk, Zaporizhzhia and Kherson, as well as in inland waters of Ukraine of Azov-Kerch water area.

For the years of independence of Ukraine it is the first time of martial status introduction. It makes it impossible to predict clearly all practical consequences of its introduction.

Businesses should pay attention to possible abuses of the new legal condition by bad faith contractors which are on the mentioned territories. Usually contracts prescribe force-majeure circumstances (insuperable force) relieving you and your contractor from liability for non-performance of contract. Such circumstances can include martial status too.

One should understand that such exemption is not unconditional. Law prescribes (Article 617 of the Civil Code of Ukraine) that a contractor referring to force-majeure (insuperable force) should prove influence of such circumstances on ability to perform obligations.

Such circumstances can be proved on conditions agreed by contractors, for example, if the contract provides that force-majeure must be confirmed by special organizations, for example, Chamber of Commerce of Ukraine and regional chambers of commerce authorized by it through issuance of a corresponding certificate, as well as by court.

Therefore we recommend you, in case your contractor violates its obligations referring to martial status, to require document proofs of such circumstances influence on immediate performance of contract.