Over the last few years, sanctions have been increasingly utilised as a foreign policy tool. Many of these trade restrictions have greatly impacted the shipping industry directly and also through financial institutions and insurers, including P&l clubs.
Failure to adhere to sanctions can lead to:
- reputational damage
- loss of insurance cover
- foreclosure by mortgagees
- being shut out from the USA and other markets
- huge fines
The ambit and implementation of the EU and US sanctions regimes is discussed in our December 2010, August 2012 and July 2013 Sanctions Special Edition bulletins.
The club is able to provide members with preliminary information on the different sanction regimes and has a panel of specialist sanctions lawyers in England, the US and other key jurisdictions, whom it is able to recommend to members needing legal advice.
A key part of most sanctions measures is an assets freeze against named individuals, companies and other entities. Please note that US sanctions also apply to ‘entities directly or indirectly owned 50% or more in the aggregate by one or more blocked persons’, and the US Treasury ‘urges caution when considering a transaction with an entity ... in which one or more blocked persons have a significant ownership interest that is less than 50% or which one or more blocked persons may control by means other than a majority ownership interest’ (according to Guidance issued on 13 August 2014).
Similarly, the EU Council has issued guidelines on the criteria to be taken into account when assessing ownership or control by a sanctioned entity; and when considering whether a party is affected by asset freezes, read more here.
The current consolidated list of asset freeze targets designated by the UN, EU and UK under legislation relating to financial sanctions regimes, can be found on the HM Treasury website.
The current list of sanctioned entities (also known as Specially Designated Nationals or SDNs) in respect of US sanctions can be found on the US Treasury website.
Under many of the sanctions, there is a defence where a party does not know, or has no reasonable cause to suspect, that its actions would infringe restrictive measures. However, to protect themselves, owners and charterers need to have proper procedures in place to identify trades or other dealings that may put them in breach and to avoid these. Such due diligence issues, including protective sanctions clauses, are discussed in an article in the Standard Bulletin: Navigating the complex maze of sanctions.
Members should be aware of the club’s sanctions rules (i.e. P&I rule 4.8, 6.22 and 17.2(5) or their equivalent) which are set out in full in the club’s rule books here.
We urge all of our members to ensure that their sanctions compliance procedures are up to date, robust and proactive. If members have any questions in relation to sanctions, they may contact either their usual club contact or the club’s sanctions team on Sanctions.Pandi-SanctionsTeam@ctplc.com. This team includes representatives in our London, New York and Singapore offices familiar with applicable likewise sanctions in their respective regions
North Korea - read more here
Venezuela - read more here
Other useful web links
Consolidated list of persons, groups and entities subject to EU financial sanctions
Restrictive measures factsheet
Update of the EU Best Practices for the effective implementation of restrictive measures
Recommendations for working methods for EU autonomous sanctions
Guidelines on implementation and evaluation of restrictive measures (sanctions) in the framework of the EU Common Foreign and Security Policy
Guidelines on implementation and evaluation of restrictive measures (sanctions) in the framework of the EU Common Foreign and Security Policy - new elements
European Parliament recommendation to the Council of 2 February 2012 on a consistent policy towards regimes against which the EU applies restrictive measures, when their leaders exercise their personal and commercial interests within EU borders
Commission Guidance note on the implementation of certain provisions of Regulation (EU) No 833/2014
Financial sanctions: consolidated list of targets
Current arms embargoes and other restrictions
Bureau of industry and security FAQs
OFAC Sanctions list
Specially Designated Nationals List (SDN)
Useful lawyer websites
European Sanctions blog
Clyde & Co