the Russian naval forces and the fact that it is not officially declared (let aside any
further countermeasures likely to be adopted if the condition worsens) has a major
impact on existing fixtures and the involved parties are left to assess whether such
event would trigger any compliance risk. Obviously, when it comes to a discussion
of the safety of ports, the key element is the establishment of “foreseeability” as
adopted in The Evia (No.2) and the consideration of the prevailing circumstances
which would be the main factor in determining whether charterers have breached
any legal obligation or not.
Ultimately, and from a compliance perspective, this analysis must conclude with
an appraisal of existing contractual solutions: At least for Time Charters, sanctions
clauses (as, for example, proposed by BIMCO, the International Group of P&I Clubs
or the International Association of Independent Tanker Owners (Intertanko) give
ship owners the right not to comply with politically sensitive charterers’ orders and
to refuse proceeding to a discharging port if, in their “reasonable judgment”, the
vessel might be exposed to the risk of sanctions.
69 In such situation, ship owners are
required to advise charterers promptly of their refusal to proceed as ordered and
charterers will have the obligation to provide an alternative nomination within 48 h
of being notified by owners. In circumstances where charterers fail to issue alternative orders, owners will be entitled to discharge any cargo on board at any port they
deem safe (at charterers’ costs). In any case, and also applying for the Crimean
situation, the insertion of reasonably drafted sanctions clause can save ship owners
from having to bear the legal and factual consequences of sanctions non-compliance
in a nominated port. Since 2014, shipping companies are well-advised to place
enhanced focus on sanctions compliance and to exercise increased caution when
doing business with both Russia and Ukraine. In particular, it is advisable not to
carry out any business in the area without enhanced due diligence checks. The
inclusion of specific liability and termination clauses in charter parties is advisable
as well.
References
39 U.S.C. 1701 et seq
50 U.S.C. 1601 et seq
8 U.S.C. 1182(f)
Brauneck J (2015) Ukraine-Krise: Zu viel und zu wenig Rechtsschutz gegen
EU-Wirtschaftssanktionen. EuR Europarecht 50:498–520
Burri J (1998) Introductory paper, Expert Seminar on targeting UN financial sanctions 11. https://
www.seco.admin.ch/seco/de/home/Aussenwirtschaftspolitik_Wirtschaftliche_
Zusammenarbeit/Wirtschaftsbeziehungen/exportkontrollen-und-sanktionen/sanktionenembargos/smart-sanctions%2D%2Dgezielte-sanktionen/dokumente-zu-sanktionen.html
Case concerning the detention of three Ukrainian naval vessels (Ukraine v. Russian Federation),
Provisional Measures, ITLOS Case No. 26
69 See also Kharchanka (2014), p. 139 et seq.
Sanctions Compliance Risks in International Shipping: Closure of Five. . .
307
further countermeasures likely to be adopted if the condition worsens) has a major
impact on existing fixtures and the involved parties are left to assess whether such
event would trigger any compliance risk. Obviously, when it comes to a discussion
of the safety of ports, the key element is the establishment of “foreseeability” as
adopted in The Evia (No.2) and the consideration of the prevailing circumstances
which would be the main factor in determining whether charterers have breached
any legal obligation or not.
Ultimately, and from a compliance perspective, this analysis must conclude with
an appraisal of existing contractual solutions: At least for Time Charters, sanctions
clauses (as, for example, proposed by BIMCO, the International Group of P&I Clubs
or the International Association of Independent Tanker Owners (Intertanko) give
ship owners the right not to comply with politically sensitive charterers’ orders and
to refuse proceeding to a discharging port if, in their “reasonable judgment”, the
vessel might be exposed to the risk of sanctions.
69 In such situation, ship owners are
required to advise charterers promptly of their refusal to proceed as ordered and
charterers will have the obligation to provide an alternative nomination within 48 h
of being notified by owners. In circumstances where charterers fail to issue alternative orders, owners will be entitled to discharge any cargo on board at any port they
deem safe (at charterers’ costs). In any case, and also applying for the Crimean
situation, the insertion of reasonably drafted sanctions clause can save ship owners
from having to bear the legal and factual consequences of sanctions non-compliance
in a nominated port. Since 2014, shipping companies are well-advised to place
enhanced focus on sanctions compliance and to exercise increased caution when
doing business with both Russia and Ukraine. In particular, it is advisable not to
carry out any business in the area without enhanced due diligence checks. The
inclusion of specific liability and termination clauses in charter parties is advisable
as well.
References
39 U.S.C. 1701 et seq
50 U.S.C. 1601 et seq
8 U.S.C. 1182(f)
Brauneck J (2015) Ukraine-Krise: Zu viel und zu wenig Rechtsschutz gegen
EU-Wirtschaftssanktionen. EuR Europarecht 50:498–520
Burri J (1998) Introductory paper, Expert Seminar on targeting UN financial sanctions 11. https://
www.seco.admin.ch/seco/de/home/Aussenwirtschaftspolitik_Wirtschaftliche_
Zusammenarbeit/Wirtschaftsbeziehungen/exportkontrollen-und-sanktionen/sanktionenembargos/smart-sanctions%2D%2Dgezielte-sanktionen/dokumente-zu-sanktionen.html
Case concerning the detention of three Ukrainian naval vessels (Ukraine v. Russian Federation),
Provisional Measures, ITLOS Case No. 26
69 See also Kharchanka (2014), p. 139 et seq.
Sanctions Compliance Risks in International Shipping: Closure of Five. . .
307