Ukrainian Export Credit Agency will be able to insure investments against war and political risks

On 1 January 2024, the Law of Ukraine No. 3497-IX came into force, which authorized the Export Credit Agency (the "ECA") to insure investments in Ukraine against war and political risks. To implement the changes provided for by this Law, on 9 April 2024, the Cabinet of Ministers of Ukraine approved the list of war and political risks, as well as the terms and procedure governing their insurance by the ECA.

1.              List of war and political risks

War risks include the following insurance risks:

(i)              military conflict, including war and armed conflict, armed aggression, hostilities, mass riots;

(ii)             violent change or overthrow of the constitutional order or seizure of state power;

(iii)            terrorist acts and/or sabotage;

(iv)           occupation, annexation.

At the same time, the following insurance risks are classified as political risks:

(i)              compulsory alienation/seizure of property of a business entity by the Ukrainian state authorities (deprivation of property rights);

(ii)             unsubstantiated (illegal) revocation of a licence by a regulatory body or forced termination (suspension) of a business entity's activities by state authorities, as determined by a court ruling, unless such termination is caused by the business entity's failure to comply with the law;

(iii)            failure or refusal of the state to fulfil its obligations under the law, strategic or programme documents and/or the investment contract, provided that the business entity has the right to demand fulfilment of such obligations;

(iv)           the implementation of a payment ban (payment embargo, moratorium) by the state;

(v)             the inability of currency conversion or transfer of currency abroad by a business entity, except in cases specified by the law.

2.              Terms and procedure for insuring war and political risks

Investments and investment loans can be insured against war and political risks subject to the following requirements:

·                the investment object (facilities and infrastructure for which an investment loan is granted) is located on the territory of Ukraine, except for areas where military operations are ongoing as of the insurance contract date and territories temporarily occupied by the Russian Federation, according to the order of the Ministry of Reintegration of Temporarily Occupied Territories of Ukraine;

·                the purpose of the direct investment (investment loan) is to create facilities and infrastructure necessary for the development of the processing industry and export of goods (works, services) of Ukrainian origin;

·                the goods to be exported as a result of the investment are fully produced or sufficiently processed in Ukraine in accordance with the criteria established by the Customs Code of Ukraine (subject to exceptions); and

·                works and services to be exported as a result of the investment are performed and provided by Ukrainian resident business entities (subject to exceptions).

An insurance contract can cover one or multiple war and/or political risks. The ECA determines the insurance tariff for each individual contract according to its tariff policies. Other terms of the insurance contract are agreed upon by the parties, subject to the provisions of the law and the ECA's insurance policies.