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Practical advice on taking steps in case of property destruction

25.07.2022

An Odesa-based company purchased construction materials by pre-order from its counterparties and temporarily stored them in warehouses near Kyiv. As a result of military operations in February, warehouses and imported building materials were destroyed. The applicant's counterparties began demanding from him to return funds paid for the undelivered construction materials destroyed by the Russian military. As a result, the company found itself in a difficult financial situation.

As it is known, on March 20, 2022, the Cabinet of Ministers adopted the Resolution No. 326 approving the Procedure for determining damage and losses caused to Ukraine as a result of Russia's aggression. Clause 14 of the Order attributes economic losses of enterprises, particularly the destroyed property, to losses caused as a result of the armed aggression of the Russian Federation. The investigator consulted the applicant, explained the essence of the norms approved by the CMU in Resolution No. 326, and provided practical advice on recording damages caused to him.

The Council also recommended that the enterprise obtain a certificate from the Ukrainian Chamber of Commerce and Industry confirming that breach of obligations to the counterparty occurred as a result of force majeure. The said UCCI certificate will make it possible to confirm the fact of force majeure and release the Applicant from liability breaching contractual obligations to counterparties (imposition of fines, penalties, etc.).
The written and oral consultations provided by the Council allowed the company to continue negotiations with its counterparties to find a mutually beneficial solution in the circumstances that arose as a result of force majeure.