One of the most significant consequences of the armed conflict that began between Russia and Ukraine on February 24, 2022, and affected the entire world, was the emerging grain crisis. Due to the inability to load cargoes from Ukrainian ports, which are among the largest grain exporters in the world, due to the conflict, the world was faced with a grain shortage; consequently, grain prices had risen dramatically.
To find a solution to this issue, UN officials and Turkish diplomats, who had been coordinating efforts for two months, finally succeeded in facilitating a deal on grain shipment by bringing Russian and Ukrainian officials to the table in Istanbul on June 22, 2022. As UN President Guterres put it, this created “a ray of hope” in the Russia-Ukraine crisis.
In this context, the parties reached consensus on the following points:
• Russia will not target ships, especially those involved in transit loading, in Ukrainian ports.
• Ukrainian ships will provide guidance to cargo ships, including Russian vessels, navigating in the region, when passing through mined areas.
• Russia’s grain and fertilizer exports in the Black Sea will be facilitated.
• A coordination center will be established in Istanbul, where Turkish, Russian, and Ukrainian officials, along with UN representatives, will monitor compliance with the terms of the agreement, particularly ensuring that shipments are carried out according to the agreement’s conditions.
This agreement has the potential to eliminate the possibility of invoking force majeure due to the armed conflict, especially in grain sales contracts based on FOSFA and GAFTA. Therefore, it would be advisable to review the terms of contracts concerning grain sales, especially FOSFA and GAFTA type agreements, in light of the existing grain shipment agreement.
Additionally, although the agreement seems to have created a safe navigation zone for cargo ships in the armed conflict region in the Black Sea, the area in question is still considered to be under the risk of war under the Joint War Committee’s JWLA-030 and the circular dated April 4, 2022. Therefore, the conclusion of the agreement has not yet led to any changes regarding the inclusion of the war risk in club insurance coverage. However, insurers are looking into ways to bring the region back into the coverage scope in line with this agreement. Thus, it is considered important to pay attention to this issue and follow up on the current developments.
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