UK & Europe
The UK has implemented new sanctions restricting entry into British ports and enabling the detention of certain Russian linked vessels.
The Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2022, which amend the Russia (Sanctions) (EU Exit) Regulations 2019 (the Regulations) prevent certain vessels from entering British ports as well as authorising the Secretary of State for Transport to give directions to harbour authorities to restrict the movement of vessels (directing them to proceed to certain areas of a port or remain where they are) and the detention of vessels and restriction on registration of certain ships in the UK.
Vessels targeted by the new sanctions include vessels flying the Russian flag, registered in Russia or which are owned, controlled, chartered or operated by a designated person or by “persons connected with Russia”.
It is fairly easy to determine whether a vessel is Russian flagged or even beneficially owned by a designated person. Less clear is what is meant by the targeting of vessels “connected with Russia”. A person is defined as being connected with Russia if they are a person (other than an individual) who is domiciled or incorporated or constituted under the laws of Russia or if they are an individual or association or a combination of individuals who are ordinarily resident in Russia or located in Russia. This is potentially a broad category of persons and given that the vessel only has to be chartered by such a person the due diligence requirements might be considerable.
The Regulations also give the Secretary for State the power to “specify” a ship as being subject to such sanctions. The grounds for “specifying” a ship is that the Secretary for State considers it involved in an activity whose object or effect is to contravene or circumvent of the UK’s Russia Regulations.
This appears to introduce a new category of sanctions designation under British sanctions law. The Secretary of State must specify a ship by reference to its IMO number (or if not available, by reference to any other means the Secretary of State considers appropriate). It is not clear from the amendments to the Regulations where such specifications / designations will be publicised and whether this will be through a different listing to those persons subject to financial sanctions and whose details are published on the UK’s List of Consolidated Sanctions Targets.
These sanctions raise a number of questions for the shipping / commodity industry. There is no derogation for vessels that are already laden and bound for UK ports, in similar ways to the limited derogations that sometimes arise from asset freezes. This could lead to difficulties with cargoes being transhipped in order to enter British ports. Even then, any Russian chartering connection may still prove problematic. Similarly there are no derogations or exceptions provided in instances where an urgent port call is necessary to preserve life or prevent environmental damage. The knock on effect of these restrictions on the commodity industry generally is also unknown. The larger unknown is the extent to which these sanctions, which the UK has been able to implement outside the EU following Brexit, are complemented by similar restrictions within the EU.