Domestic regulatory authorities are inventing new ways to create problems for businesses—sometimes in quite creative ways.
Let me tell you about a recent precedent involving the interaction between a major cargo owner and the State Environmental Inspection of Ukraine.
Initial Scenario
Imagine you are the owner of a large cargo— in this case, corn grain. Your counterparty on another continent is already expecting delivery.
According to current legislation, this type of cargo is not subject to environmental control at customs if the checkpoints are equipped with automated systems for monitoring the movement of radioactive substances and nuclear materials. Radiological control of such goods is only conducted if they emit radiation while passing through the scanning frame.
If your cargo successfully passes through the automated control system at the port—the “frame”—it means your goods are not radioactive and, therefore, cannot be subject to claims, at least on that basis. Your cargo is on the vessel, and you are calmly waiting for its departure.
“Radioactive Cargo”
Suddenly, the inspection service marks the shipping documents (manifest) with a note indicating negative results from the radiological control, stamping it with “Radiological control import/export prohibited.” As a result, customs refuses to process the shipment.
The cargo owner is baffled—how did a ban on export due to radiological control failure appear on the manifest when the cargo had already passed inspection during loading? On top of that, the shipowner starts demanding compensation for downtime losses, and counterparties send formal complaints due to delays in corn delivery.
Only after the cargo owner officially inquired with the State Environmental Inspection about the grounds for the radiological control failure stamp did the situation begin to clear up. It turned out that the State Environmental Inspection had no actual claims against the cargo. Instead, the export ban stamp was placed because the vessel carrying the goods allegedly violated environmental protection laws. According to the regulatory authority, the ship had polluted the country’s territorial waters. In short: “The inspection has no claims against the cargo, but since there are environmental concerns regarding the vessel, we placed this stamp.”
This issue was handled as a dispute between the shipowner and the cargo owner, but it did nothing to resolve the main problem—the vessel remained stuck in port, while both the cargo owner and the shipowner suffered enormous losses.
One must give credit to the “ingenuity” of the environmental inspection. In order to detain the vessel, they skillfully manipulated terminology, ensuring that customs had no legal right to release the cargo from Ukraine.
“Creative” Manipulation of Concepts
In Ukraine, the State Environmental Inspection conducts several types of control. The first is radiological control, which was formally carried out in our case and directly concerned the cargo. The second is environmental control of the vessel, which has no relation to the radiological inspection of the cargo. Failure to pass this control should in no way result in a “Radiological control import/export prohibited” stamp in the corn owner’s manifest.
Under current legislation, the State Environmental Inspection has the right to check territorial and maritime waters for compliance with permissible pollution concentration standards. Such an inspection is only justified if, during the discharge of isolated ballast from a vessel, visible floating particles or traces of oil, oil-containing substances, or other pollutants appear in the discharge area.
In our case, the environmental inspection conducted a ballast discharge inspection near our vessel without any visible cause, seemingly to block cargo shipment. Following this, in the presence of a port representative, inspectors compiled an act of water sample collection. Notably, the port representative stated in the act that no visible oil particles or traces were observed, meaning the document itself was baseless and unlawful.
Based on this act, officials drafted a protocol with measurements of water composition and characteristics, claiming that the collected samples exceeded permissible limits for iron and petroleum products. The legality of this inspection and the presence of actual pollution are highly questionable, and ultimately, only a court can decide on this matter.
However, the fact remains that the act was issued, and nothing could be done about it in the short term. Yet, this document merely confirmed a violation of environmental laws by the vessel. This should have only resulted in an administrative violation protocol and an environmental damage assessment—not a cargo export ban or a restrictive stamp.
It was clear that the State Environmental Inspection’s goal was not to compensate the state for environmental damage but to detain the vessel and impose financial losses on all parties involved. As for other, more obvious but unspoken motives—everyone could read between the lines.
Understanding that time was our main adversary, we carefully considered which tools would allow us to resolve the situation as quickly as possible. And we found one. I can’t disclose the details, but I will say this—we did not go to court, as that would have been inefficient. Any legal proceedings would have dragged the conflict out for months.
Although we managed to get the ship released in three days, even this short delay resulted in huge losses for our client. It is highly doubtful that customs officials were unaware of this “Operation Barbarossa” plan, and by refusing to process the cargo, they were simply “following orders.” Everything pointed to coordinated actions among the involved agencies.
Unfortunately, we must acknowledge that the system of regulatory authorities has not changed—it still operates against businesses. Personal interests continue to take precedence over the country’s economic development and investment potential.
