Ukraine and Russia Conflict
In light of the events unfolding in Ukraine, we have created this dedicated page to address the impact this conflict is likely to have on our Membership and the shipping industry more widely. We hope that the content on this page will help provide guidance to our Members trying to navigate this rapidly evolving conflict. This page will be dedicated to IG and Club updates on the implementation of US, EU and UK sanctions, as well as practical guidance relating to crewing and any claims or legal disputes affected by or arising from the conflict.
Sanctions and your cover
In view of the fast-changing political crisis in Ukraine and the response taken by major states such as the US, EU and UK (among others), we strongly advise Members to carefully check sanctions lists and ensure there are no sanctioned parties or entities involved in their operations.
Members are reminded that Club cover is subject to the Rules of the Association. Cover may be cessed automatically (Rule 46.3H) or terminated by notice (Rule 45.4) where the Member or the provision of insurance to the Member may expose the Association or its Managers to the risk of being or becoming subject to any sanction, prohibition or adverse action by any State being a Major Power or by the United Nations or the European Union. Furthermore, Rule 32 provides a standard exclusion for the right of recovery for liabilities, cost or expenses due to a shortfall which cannot be recovered by the Association from any reinsurer or party to the pooling agreement by reason of sanctions laws and regulations. Similar provisions exist in our plain language policy wordings.
We urge Members to carefully assess the risks involved where their trade has any nexus to Russia, Belarus and/or Ukraine and contact the Club on queries related to the impact of cover.
The US, EU, UK among others have introduced a series of sanctions against Russia since their invasion into Ukraine.
The timeline below is intended to help keep track of the sanctions developments, and Members are advised to familiarise themselves on existing and new sanctions.
The information on our webpage is for general guidance only, and is not a replacement for Member’s own due diligence. We strongly recommend that Member’s carry out their own review of the sanctions that may be applicable, and check the parties involved and the activities they intend to carry out.
Following the IG Circular issued on our website on 9 December 2022, the Club’s Legal Team has recorded this podcast to provide Members with a snapshot of the Price Cap on Russian oil that came into effect on 5 December 2022.
On 16 December 2022 the EU adopted the 9th package of Russian sanctions. A number of Regulations and Decisions were published (full details can be found here) but of particular significance for members is Council Regulation (EU) 2022/2474 which further amends Regulation (EU) 833/2014 (the Regulation).
The EU, UK and US guidance and FAQs on the Oil Price Cap is available through the following links below. See also our IG circular issued on Friday 9 December 2022.
Legislation and guidance giving effect to the Price Cap Scheme has recently been published by the European Union, the United Kingdom and the United States and this circular describes the impact of the scheme on shipowners, charterers and cover for such trades by the International Group of P&I Clubs and its reinsurers.
The EU adopted an eighth package of sanctions on 6 October 2022 in response to Russia’s continued military aggression against Ukraine.
On 19 September 2022 the EU further amended its FAQS clarifying the application of provisions relating to the carriage of certain cargoes from Russia, including coal and other solid fossil fuels as well as certain types of fertilizer.
On 10 August 2022 the European Union (EU) published updated FAQs clarifying the application of provisions relating to the carriage of certain cargoes from Russia, including coal and other solid fossil fuels as well as certain types of fertilizer. As this Circular sets out, these clarifications will have a significant impact on the carriage of these commodities by EU entities and the provision of insurance for carriage to any entity regardless of their domicile.
The new restrictions include a ban on the import of Russian oil and coal into the UK and the export of key industrial goods to Russia. It also expands existing restrictions in relation to the provision of energy-related goods and services to Russia.
On 21 July 2022 the European Union published a Maintenance and Alignment Package. The package included amendments to Regulation (EU) No. 833/2014 which amongst other things clarified the circumstances in which the exceptions contained in Article 5 (aa) (3) may apply.
The UK has introduced amendments to its Russia Regulations, which impose prohibitions and requirements in relation to trade sanctions measures.
On 5 July 2022, the UK government introduced a new tranche of economic, trade and transport sanctions on Belarus in response to Lukashenko’s support of Russia’s invasion of Ukraine. These sanctions expand on the existing measures introduced against Russia to Belarus.
On the 3 June 2022 the EU published its 6th package of sanctions against Russia. This circular is not intended to be a comprehensive summary of the EU sanctions against Russia.
On 31 May 2022, the EU announced its 6th package of EU sanctions, which focuses on crude oil and petroleum products imported from Russia to EU Member States, with a temporary exclusion for crude oil delivered by pipeline to Hungary, Czech Republic and Slovakia. Sea-going imports of Russian crude oil into the EU are therefore prohibited. This agreement in principle means that 75% of Russian oil imports into the EU will be targeted, with 90% of imports covered by the end of 2022.
Members should be aware that included within the announcement is a ban on EU insurance and reinsurance of vessels carrying Russian crude oil. It has also been reported that the UK government are expected to announce a similar prohibition shortly.
US sanctions against Russian maritime sector
On 8 May, the US imposes further sanctions targeting Russian maritime companies and a number of associated vessels, which are alleged to have assisted with the resupply of Russian troops and the continued occupation of Crimea. The list of sanctioned shipping companies includes:
- SC South LLC, which is a subsidiary of Oboronlogistika;
- Northern Shipping Co, including 27 of their vessels;
- Transmorflot, including 16 of their vessels;
- M Leasing LLC;
- Marine Trans Shipping LLC; and
- Nord Project LLC Transport Co.
Further details can be found in Executive Order 14024, which is available on the US State Department website (https://www.state.gov/state-department-actions-to-promote-accountability-and-impose-costs-on-the-russian-government-for-putins-aggression-against-ukraine/)
UK imposes new trade sanctions
On 9 May, the UK announced a new package of trade sanctions. The sanctions focus on two key areas:
- New import tariffs on platinum and palladium; and
- Planned export bans intended to hit more than £250 million worth of goods in sectors of the Russian economy most dependent on UK goods, including certain chemicals, plastics, rubber and machinery.
A copy of the press release can be found here – UK punishes Putin with new round of sanctions on £1.7 billion of goods – GOV.UK (www.gov.uk)
On 4 May 2022 the EU adopted a sixth package of sanctions against Russia. Whilst many of the measures are unlikely to impact the shipping industry, we want to draw Members’ attention to the following provisions:
- The removal of Sberbank, Russia’s largest bank, and two other major banks from the SWIFT system; and
- An import ban on all Russian oil products.
The EU has been grappling with the issue of dependency on Russian energy, but particularly Russian oil. This sixth package of sanctions provides that Russian crude oil will be phased out within 6 months and the import of refined products by the end of 2022. This will bring the EU into line with the US, who banned the import of Russian oil in March.
European Sanctions: “If Russia invades Ukraine…” sanctions webinar recording