By Marina Aliferopoulou, Lawyer, LL.M. Mediator. Member of Wista Hellas, PhD candidate, University of the Aegean, Department of Shipping, Trade and Transport
I. Introduction.
Meaning of Sanctions.
Sanctions are an essential tool in the EU’s common foreign and security policy (CFSP), through which the EU can intervene where necessary to prevent conflict or respond to emerging crisis;
EU restrictive measures are not punitive, they are intended to bring about a change in policy or activity by targeting non-EU countries, as well as entities and individuals, responsible for the malign behaviour at stake 1 , 2 .
Implementation. The EU applies sanctions in order to:
Promote international peace and security.
Prevent conflicts.
Support human rights.
Defend international law.
The sanctions may target governments of non-EU countries, as well as companies, groups, individuals through:
Travel Bans.
Embargoes.
Asset freeze.
Restrictions on imports/exports.
(Competent Directorate).
1 Overview of sanctions and related tools (europa.eu).
2 Sanctions tools, EU Sanctions Tool (europa.eu): EU sanctions map, Financial Sanctions Consolidated List, Due Diligence Help Desk-Iran, EU sanctions tool-Iran.
The proposals for Regulations on sanctions for adoption by the Council of the European Union are prepared by the Directorate General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA).
II. The applicable regime.
(Regulation).
The European Council’s Regulation (EU) no. 833/2014 concerning restrictive measures in view of Russia’s actions destabilizing the situation in Ukraine 3 is in force, as it is amended 4 , 5 and is currently (10 October 2022) consolidated (“the Sanctions Regulation”):
The Regulation provides, among others, that:
(Article 3ea):
It shall be prohibited to provide access, after 16 April 2022, to ports and, after 29 July 2022, to locks in the territory of the Union, to any vessel registered under the flag of Russia, with the exception of access to locks for the purpose of leaving the territory of the Union.
The prohibition shall also apply, after 8 April 2023, to any vessel certified by the Russian Maritime Register of Shipping. Also, it shall apply to vessels that have changed their Russian flag or their registration. 6
The above prohibitions shall not apply in the case of a vessel in need of assistance seeking a place of refuge, of an emergency port call for reasons of maritime safety, or for saving life at sea.
However, by way of derogation from the above, the competent authorities may authorize a vessel to access a port or lock, under such conditions as they deem appropriate, after having determined that the access is necessary for: (a) import or transport into the Union of natural gas and oil, including refined petroleum products, titanium, aluminium, copper, nickel, palladium and iron.
3 EUR-Lex - 32014R0833 - EN - EUR-Lex (europa.eu)
4 The amendments and implementing regulations are the following: Council Regulation (EU) no 960/2014 of 8 September 2014, Council Regulation (EU) no 1290/2014 of 4 December 2014, Council Regulation (EU) 2015/1797 of 7 October 2015, Council Regulation (EU) no 2017/2212 of 30 November 2017, Commission Implementing Regulation (EU) 2019/1163 of July 2019, Council Regulation (EU) no 2022/262 of 23 February 2022, Council Regulation (EU) no 2022/328 of 25 February 2022, Council Regulation (EU) 2022/334 of 28 February 2022,
Council Regulation (EU) 2022/345 of March 2022, Council Regulation (EU) 2022/394 of March 2022, Council Regulation (EU) 2022/428 of 15 March 2022, Commission Implementing Regulation (EU) 2022/595 of 11 April 2022, Council Regulation, Council Regulation (EU) 2022/879 of 3 June 2022, Council Regulation (EU) 2022/1269 of 21 July 2022, Council Regulation (EU) 2022/1904 of 6 October 2022.
5 See also, the presentation of Bruce Paulsen, Seward & Kissel, Sanctio ns Related to the Russian Oil Price Cap, at the Marine Money event, 13 October 2022, at Stavros Niarchos Lighthouse. Timeline of events: “June 3, 2022, EU passes its sixth sanctions package which includes a prohibition for EU operators to insure or finance the transport of crude oil or petroleum products from Russia to third countries, going into effect Dec. 5 2022 for crude oil and February 5, 2023 for petroleum products. September 2, 2022, G7 issues a statement announcing the price cap and maritime services exception. September 9, 2022: OFAC issues a Preliminary Guidance on the implementation of the maritime services ban and price cap exception. September 29, 2022, EU proposes 8 th sanctions package against
Russia which includes a Russian oil price cap. October 6, 2022, EU approves 8 th sanctions package which marks the beginning of the implementation of the price cap within the EU”.
6 A ‘vessel’ means: (a) a ship falling within the scope of the relevant international conventions; (b) a yacht, of 15 meters in length or more, which does not carry cargo and carrying no more than 12 passengers; or (c) recreational craft or personal watercraft as defined in Directive 2013/53/EU of the European Parliament and of the Council.
ore, as well as certain chemical and iron products as listed in Annex XXIV 7 ; (b) the purchase, import or transport of pharmaceutical, medical, agricultural and food products, including wheat and fertilizers, whose import, purchase and transport is allowed under the Regulation;
(c) humanitarian purposes; (d) transport of nuclear fuel and other goods strictly necessary for the functioning of civil nuclear capabilities; or (e) the purchase, import or transport into the Union of coal and other solid fossil fuels, as listed in Annex XXII 8 , until 10 August 2022.
Also, by way of derogation from the above, the competent authorities may authorize vessels that have changed their Russian flag or their registration to the flag or register of any other State prior to 16 April 2022, to access a port or a lock, under such conditions as they deem appropriate, after having determined that: (a) a Russian flag or registration was required by contract; and (b) the access is necessary for the unloading of goods strictly necessary for the completion of renewable energy projects in the Union, provided that the import of such goods is not otherwise prohibited under the Regulation 9 .
(Article 3i):
It shall be prohibited to purchase, import, or transfer, directly or indirectly, goods, which generate significant revenues for Russia thereby enabling its actions destabilizing the situation in Ukraine, as listed in Annex XXI 10 of the Regulation, into the Union, if they originate in Russia,
or are exported from Russia· also, it is forbidden to provide relevant to the above technical assistance, or brokering services 11 , 12 .
7 Article XXIV-List of Goods as referred to in article 3ea(5)(a).
8 Article XXII-List of coal and other products as referred to in Article 3j.
9 Also, by way of derogation from the above, the competent authorities may authorize, under such conditions as they deem appropriate, a vessel to access a port or lock provided that the vessel: (a) has flown the Russian Federation flag under a bareboat charter registration initially effected prior to 24 February 2022, (b) has resumed its right to fly the flag of the underlying Member State registry before 31 January 2023, and (c) is not owned, chartered, operated or otherwise controlled by a Russian national or any legal person, entity or body incorporated or constituted under the law of the Russian Federation.
10 Annex XXI-List of Goods and Technology referred to in Article 3i.
11 However, by way of derogation from the above, the competent authorities may authorize the purchase, import or transfer of the goods listed in Annex XXI of the Regulation, or the provision of related technical and financial assistance, under such conditions as they deem appropriate, after having determined that this is necessary for the establishment, operation, maintenance, fuel supply and retreatment and safety of civil nuclear capabilities, and the continuation of design, construction and commissioning required for the completion of civil nuclear facilities, the supply of precursor material for the production of medical radioisotopes and similar medical applications, or critical technology for environmental radiation monitoring, as well as for civil nuclear cooperation, in particular in the field of research and development.
12 As of 10 July 2022, the above prohibitions shall not apply to the import, purchase or transport, or the related technical or financial assistance, necessary for the import into the Union, of: (a) 837 570 metric tonnes of potassium chloride of CN 3104 20 between 10 July of a given year and 9 July of the following year; (b) 1 577 807 metric tonnes combined of the other products listed in Annex XXI under CN 3105 20, 3105 60 and 3105 90 between 10 July of a given year and 9 July of the following year. The import volume quotas set out shall be managed by the Commission and the Member States in accordance with the management system for tariff-rate quotas provided for in Articles 49 to 54 of Commission Implementing Regulation (EU) 2015/2447. The Member State concerned shall inform the other Member States and the Commission of any authorization granted under paragraph 3c within two weeks of the authorization.
(Article 3j):
It shall be prohibited to purchase, import or transfer, directly or indirectly, coal and other products, as listed in Annex XXII of the Regulation into the Union, if they originate in Russia, or are exported from Russia. It shall be prohibited to: (a) provide technical assistance, brokering
services or other services related to the goods and technology referred to above and to the provision, manufacture, maintenance and use of those goods and technology, directly or indirectly in relation to the prohibition referred to above; (b) provide financing or financial
assistance related to the goods and technology referred to above for any purchase, import or transfer of those goods and technology, or for the provision of related technical assistance, brokering services or other services, directly or indirectly in relation to the prohibition referred to above. The above prohibitions in shall not apply to the execution until 10 August 2022 of contracts concluded before 9 April 2022, or ancillary contracts necessary for the execution of such contracts 13 .
(Article 3m):
It shall be prohibited to purchase, import or transfer, directly or indirectly, crude oil or petroleum products, as listed in Annex XXV 14 , if they originate in Russia or are exported from Russia. It shall be prohibited to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance or any other services related to the above prohibition. The prohibitions shall not apply: (a) until 5 December 2022, to one-off transactions for near-term delivery, concluded and executed before that date, or to the execution of contracts for the purchase, import or transfer of goods falling under CN 15 2709 00 concluded before 4 June 2022, or of ancillary contracts necessary for the execution of such contracts, provided that those contracts have been notified by the relevant Member States to the Commission by 24 June 2022 and that the one-off transactions for near-term delivery are notified by the relevant Member States to the Commission within 10 days of their completion; (b) until 5 February 2023, to one-off transactions for near-term delivery, concluded and executed before this date, or to the execution of contracts for the purchase, import or transfer of goods falling under CN 2710 concluded before 4 June 2022, or of ancillary contracts necessary for the execution of such contracts, provided that those contracts have been notified by the relevant Member States to the Commission by 24 June 2022 and that the one-off transactions for near-term delivery are notified by the relevant Member States to the Commission within 10 days of their completion; (c) to the purchase, import or transfer of seaborne crude oil and of petroleum products listed in Annex XXV of the Regulation, where those goods originate in a third country and are only being loaded in, departing from or transiting through Russia, provided that both the origin and the owner of those goods are non-Russian; (d) to crude oil falling under CN 2709 00 which is delivered by
13 See also, The London p&i club, “Ukraine-EU Sanctions-EU adopts Eight Package of Sanctions against Russia”, 12 October 2022; Britannia p&i club, “EU sanctions-updated FAQs published by the EU on the carriage of certain Russian cargoes including coal and fertilizers”, 31 October 2022; West of England, Tony Paulson, “Ukraine Conflict-EU adopts eighth sanctions package against Russia; North p&i club, “EU Sanctions-clarification Published on the Carriage of Certain Russian Cargoes”, 21/09/2022; Gard p&i, “EU sanctions-updated FAQs published by the EU on the carriage of certain Russian cargoes including coal and fertilisers”, member circular n.8/2022, September 2022.
14 Annex XXV-List of crude oil and petroleum products referred to in articles 3m and 3n of the Sanctions Regulation.
15 CN=Combined Nomenclature.
pipeline from Russia into Member States, until the Council decides that the prohibitions in paragraphs 1 and 2 shall apply. If the supply of crude oil by pipeline from Russia to a landlocked Member State is interrupted for reasons outside the control of that Member State, seaborne crude oil from Russia falling under CN 2709 00 may be imported into that Member State, by way of an exceptional temporary derogation from paragraphs 1 and 2, until the supply is resumed or until the Council decision referred to in paragraph 3(d) applies with regard to that member State, whichever is the earliest. As of 5 December 2022, and by way of derogation from paragraphs 1 and 2, the competent authorities of Bulgaria may authorize the execution until 31 December 2024 of contracts concluded before 4 June 2022, or of ancillary contracts
necessary for the execution of such contracts, for the purchase, import or transfer of seaborne crude oil and of petroleum products listed in Annex XXV of the Regulation originating in Russia or exported from Russia. As of 5 February 2023, and by way of derogation from paragraphs 1 and 2, the competent authorities of Croatia may authorize until 31 December 2023 the purchase, import or transfer of vacuum gas oil falling under CN 2710 19 71 originating in Russia or exported from Russia, provided that the following conditions are fulfilled: (a) no alternative supply of vacuum gas oil is available; and (b) Croatia has notified the Commission, at least two weeks prior to the authorization, of the grounds on which it considers that a specific authorization should be granted, and the Commission has not objected within that period. The goods imported following a derogation granted by a competent authority under paragraph 5 or 6 shall not be sold on to buyers located in another Member State or in a third country. The transfer or transport of crude oil delivered by pipeline into Member States as referred to in paragraph 3(d) to other Member States or to third countries, or its sale to purchasers in other Member States or in third countries, shall be prohibited 16 , 17 , 18 .
(Article 12).
16 All consignments and containers of such crude oil shall be clearly marked as 'REBCO: export prohibited'. As from 5 February 2023, where crude oil has been delivered by pipeline into a Member State, it shall be prohibited to transfer or transport petroleum products falling under CN 2710 which are obtained from such crude oil to other Member States or to third countries, or to sell such petroleum products to purchasers in other Member States or in third countries
17 By way of temporary derogation, the prohibitions referred to in the third subparagraph shall apply as from 5 December 2023 to the import and transfer into Czechia, and to the sale to purchasers in Czechia, of petroleum products obtained from crude oil which has been delivered by pipeline into another Member State as referred to in paragraph 3(d). If alternative supplies for such petroleum products are made available to Czechia before that date, the Council shall terminate that temporary derogation. During the period until 5 December 2023, the volumes of such petroleum products imported into Czechia from other Member States shall not exceed the average volumes imported into Czechia from those other Member States over the same period during the previous five years.
18 The prohibitions shall not apply to purchases in Russia of goods listed in Annex XXV of the Regulation, which are required in order to meet the essential needs of the purchaser in Russia or of humanitarian projects in Russia. Member States shall report to the Commission by no later than 8 June 2022 and every three months thereafter on the amounts of crude oil falling under CN 2709 00 imported by pipeline, as referred to in paragraph 3(d). Such import figures shall be broken down per pipeline. In the event that the exceptional temporary derogation referred to in paragraph 4 applies with regard to a landlocked Member State, that Member State shall report to the Commission every three months on the amounts of seaborne crude oil falling under CN 2709 00 which it imports from Russia, for as long as that derogation applies. During the period until 5 December 2023, Member States shall report to the Commission every three months on the amounts which they export to Czechia of petroleum products falling under CN 2710 obtained from crude oil which has been delivered by pipeline as referred to in paragraph 3(d).
It shall be prohibited to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent prohibitions in this Regulation.
(Article 13).
This Regulation shall apply:(a) within the territory of the Union; (b) on board any aircraft or any vessel under the jurisdiction of a Member State; (c) to any person inside or outside the territory of the Union who is a national of a Member State; (d) to any legal person, entity or body, inside or outside the territory of the Union, which is incorporated or constituted under the law of a Member State; (e) to any legal person, entity or body in respect of any business done in whole or in part within the Union.
III. Impact on Ports- Trade & Insurance.
Access to Ports.
The access to ports is monitored via the Union Maritime Information and Exchange System 19 , which also links to EQUASIS 20 . All EU Member States have access to this system. Any attempt to circumvent the sanctions by the change of the flag of the vessel could be identified by the port authorities through a check of the IMO number of the vessel· in addition, under SOLAS, the ships are also obliged to keep on board the synopsis report with the history of change of flags. Also, port authorities have access to the above monitoring system. Furthermore, ship-to-ship operation can occur between a Russian flagged vessel and a third country flagged vessel in international waters, a ship-to-ship operation between Russian and EU-flagged vessels, and a Russian flagged vessel and third-country flagged vessel in territorial waters of a Member State.
If a ship-to-ship operation takes place with the objective to circumvent the prohibition of article 3ae of the Regulation, such an operation is caught by the non-circumvention clause of Article 12. The determining element is that such ship-to-ship operation is orchestrated in order for a vessel that is not subject to the port access ban to call in an EU port, where otherwise a Russian flagged vessel could not call in. Where a vessel has been authorized to call on a port in order to unload goods subject to derogation, it must obtain a separate authorization. Russian flagged recreational ships that were berthed in the port of a Member State before 16 April 2022 do not fall under the scope of the prohibition since their sole presence does not amount to access into a Union port; however, leaving a Union port, any request to return would result in calling into a Union port and be prohibited under Article 3ea 21 .
Oil imports-Reporting obligations under the oil import restrictions-Export restrictions on maritime navigation goods and technology-Export related restrictions.
Article 3m of the Regulation prohibits, subject to certain exceptions and derogations, imports of goods set out in Annex XXV, if such goods originate from Russia 22 . It is therefore necessary to determine, if the product originates from Russia. EU operators and national authorities must conduct appropriate due diligence before purchasing goods listed in Annex XXV from other
19 UMIES, was established under Directive 2002/59/EC.
20 Electronic Quality Shipping Information System.
21 Access to EU ports (europa.eu), Frequently Asked Questions-as of October 2022.
22 Oil imports (europa.eu), Frequently Asked Questions- as of 8 November 2022.
Member States, which benefit from the exceptions laid down in Article 3m(3)(d) (crude imports by pipeline), or from specific derogations (for Bulgaria and Croatia). When purchasing such goods, they should do the necessary checks to ensure that such goods do not originate from
Russia, are not exported from Russia or are not petroleum products (CN 2709 10), which are obtained from crude oil originated or exported from Russia. However, the purchase of Russian seaborne crude oil by an EU company is allowed, when the goods are exported from Russia towards a third country and are not transiting Union territory. Furthermore, the aim of the reporting obligation included in Art. 3m(3) is to monitor the flows of oil still entering the EU after the ban on seaborne oil established with the 6 th sanctions package adopted on 3 June 2022 23 .
The data provided by Member States will remain confidential except for some high level aggregated numbers referring to the total EU level of oil imports. It is prohibited to sell, supply, transfer or export certain maritime navigation goods and technology (paragraph 1 of Article 3f of
the Sanctions Regulation), related technical assistance, brokering services or other services related to those above, directly or indirectly, to any natural or legal person, entity or body in Russia, or for use in Russia (paragraph 2(a) of article 3f of the Sanctions Regulation)·however, if the intended end-use of the marine navigation and radio communication equipment falls under the scope of maritime safety, the exporter may apply for an authorization and a case-by case assessment is made by the competent authority of the Member State in which the exporter is resident or established· this is also applicable for the related technical or financial assistance. As far as Export-related restrictions are concerned, it shall be prohibited to sell, supply, transfer or export, directly or indirectly, dual-use goods and technology, whether or not originating in the Union, to any natural or legal person, entity or body in Russia or for use in Russia 24 , 25
The Sanctions Regulation has expanded the scope of the export restrictions (since 2014, the restrictions applied to the military sector and now to civilians end-users or uses, with very limited exceptions and derogations). The Sanctions Regulation also prohibits the export of
additional “Advanced Technology” items to limit the enhancement of Russia’s military and technological capacity in sectors and lasers marine, chemicals that could be used in the process of manufacture of chemical weapons, special materials and related equipment, manufacturing equipment and other sensitive items, such as those used by law enforcement bodies. Finally, the Sanctions Regulation identifies entities connected to Russia’s defence and industrial base, on whom even tighter export restrictions are imposed.
Insurance & Reinsurance.
It shall be prohibited to provide insurance and reinsurance, directly or indirectly, in relation to goods and technology listed in Annex XI of the Sanctions Regulation to any person, entity or body in Russia or for use in Russia 26 . After a wind down period of 6 months, during which
contracts signed before 4 June 2022 can still be executed until December 5, EU operators will be prohibited from insuring and financing the maritime transport of goods set out in Annex XXV to third countries 27 , 28
23 Oil reporting obligation (europa.eu), Frequently Asked Questions-as of 26 August 2022.
24 In particular, see articles 2, 2a, 2aa, 2c, 2d, 2b, 3 of the Sanctions Regulation 833/2014, as it is in force.
25 Export restrictions on maritime navigation goods and technology (europa.eu), Frequently Asked Questions-as of
26 April 2022. Export Related restrictions (Europa.eu), Frequently Asked Questions-as of 10 October 2022.
26 See Article 3c (2) of the Sanctions Regulation.
Execution of Contracts & Claims.
No claims in connection with any contract or transaction the performance of which has been affected, directly or indirectly, in whole or in part, by the measures imposed under the Sanctions Regulation, including claims for indemnity or any other claim of this type, such as a claim for compensation or a claim under a guarantee, notably a claim for extension or payment of a bond, guarantee or indemnity, particularly a financial guarantee or financial indemnity, of whatever form, shall be satisfied, if they are made by: (a) legal persons, entities or bodies listed in the Annexes to this Regulation or legal persons, entities or bodies established outside the Union whose proprietary rights are directly or indirectly owned for more than 50 % by them; (b) any other Russian person, entity or body; (c) any person, entity or body acting through or on behalf of one of the persons, entities or bodies referred to in points. In any proceedings for the enforcement of a claim, the onus of proving that satisfying the claim is not prohibited, shall be on the person seeking the enforcement of that claim 29 , 30 .
27 Insurance and reinsurance (europa.eu), Frequently Asked Questions-as of 26 August 2022.
28 Skuld, Insight Russia sanctions, 10 October 2022: «Insurance Cover. The Association’s Rules contain a standard exclusion for liability for liabilities, costs or expenses where payment by the Association or the provision of cover may expose the Association to the risk of being subject to a sanction, prohibition or any adverse action (Rule 30.4.6). Liability is also excluded when there is a shortfall due to an inability to recover reinsurance or pool contributions from other insurers or P&I Clubs which are themselves unable to pay due to sanctions legislation
(Rule 32.6). the Association is also able to terminate cover where a Member has exposed or may expose the Association to the risk of being or becoming subject to a sanction, prohibition, restriction or other adverse action by a state or international organization or competent authority (Rule 3.3.2a). Similar provisions exist in the Terms & conditions for non-mutual covers…».
29 See article 12 of the Sanctions Regulation.
30 The term “contract” refers to a binding commitment between the parties. An “ancillary contract” is a contract necessary for the execution of another (principal) contract, that is, a contract without which the main contract cannot be executed, such as insurance, financing etc. Execution of contracts and claims (europa.eu), Frequently Asked Questions-as of 26 August 2022.
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