Sanctions Desk
The recent outbreak of international conflicts has triggered an expansion of sanctions regimes, with a significant impact on the shipping industry.
Sanctions may target individuals and entities operating in the port and maritime sector, as well as vessels involved in illegal activities. They include import and export bans; restrictions on transport, insurance, and brokerage services; price limitations (e.g. oil price cap) and reporting requirements (e.g. for the sale of oil tankers) for trade of listed goods.
Sanctions compliance is not only of utmost importance for all maritime stakeholders, since a sanction breach can have significant legal, financial, and reputational consequences, but also a major challenge considering the constantly changing regulations.
Through this Sanctions Desk and thanks to our extensive expertise in shipping, we aim to assist our Clients in complying with the new regulations by providing regular updates and legal analysis on sanctions impacting the shipping industry. Our team is also available to advise maritime operators on the drafting of relevant clauses and to represent them in any disputes regarding sanctions.
KEY CONTACTS:
Pietro Palandri
pietro.palandri@mordiglia.it
Chiara Raggi
chiara.raggi@mordiglia.it
Pietro Sanna
pietro.sanna@mordiglia.it
Camilla Del Re
camilla.delre@mordiglia.it
Lucy Nusbaumer
lucy.nusbaumer@mordiglia.it
New FAQs on the port transaction ban
Through the 16th round of sanctions against Russia issued on February 24, 2025, the EU introduced a new prohibition to directly or indirectly engage in transactions with some ports in Russia, such as the strategic ports of Ust-Luga, Primorsk, and Novorossiysk.
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The prohibition does not apply to some exempted transactions, including transactions which are strictly necessary for the direct or indirect purchase, import or transport of oil, including refined petroleum products, from or through Russia, as long as such transactions comply with the Price Cap framework.
The new ban raised some doubts, particularly about why, despite the EU's interest in securing coal supplies to third countries, there was no exception for coal shipments. The International Group of P&I Clubs seeked clarification from the EU Commission regarding whether this was a deliberate omission or not and, on March 20, 2025, the EU Commission published new FAQs that, among other matters, address the issue raised by the International Group.
The EU Commission clarified that, although the EU allows the transport of coal, including Russian coal, from Russia to third countries to secure energy security around the world, Russian coal cannot be loaded and transported through sanctioned ports. This means that EU operators cannot engage in transactions with the listed ports and shall divert to a non-listed port for this purpose.
On the contrary, sanctioned ports can be used for loading and transporting Kazakh coal to the EU or to third countries.
On top of the above, the EU Commission further clarified that EU operators can provide services (such as the provision of insurance coverage) to vessels which called to a sanctioned port, as such services are not considered to be “indirect transactions” with such port:
11. Does an EU operator engage indirectly with an entity targeted by Article 5ae if it provides services to a vessel calling into a port listed under Annex XLVII?
The provision of services to a vessel which called into a port listed in Annex XLVII is not prohibited under Article 5ae as the provision of services to such a vessel is not a direct or indirect transaction with the listed port.
Commission FAQs have already clarified for the transaction ban concerning state-owned entities in Art.5aa of Council Regulation 833/2014 that the provision of insurance to a vessel calling into a port owned by a listed entity is not a direct or indirect transaction with this entity (see Q.6 of G.5 of Consolidated FAQs). Like this, the provision of other services to a vessel calling at a listed port is not a direct or indirect transaction (e.g. providing bunkering services, loading/unloading cargo, etc.).
However, an EU-flagged vessel is prohibited to call at the listed ports as this would constitute a direct or indirect transaction (e.g. by paying anchoring fees to the port), unless one of the exemptions as proposed in Art. 5ae paragraph 3 applies, e.g. a vessel does an emergency port call or is engaging in legitimate trade with the listed port.
SLM is available for any assistance you may require on sanction-related topics.
EU sixteenth package of sanctions against Russia
On February 24, 2025, the European Union introduced its 16th sanction package against Russia, further intensifying pressure on the Russian economy and military capabilities. This package includes significant measures targeting various sectors, including energy, trade, transport, and infrastructure. The new package includes, amongst others, the following restrictive measures:
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Key Updates
The EU's latest sanctions list has expanded to include 48 individuals and 35 entities, all of whom are now subject to asset freezes and prohibitions on accessing funds and economic resources. This move is part of a broader strategy to cut off financial support to those contributing to Russia's military efforts. (COUNCIL IMPLEMENTING REGULATION (EU) 2025/389 of 24 February 2025)
Additionally, 74 vessels, identified as part of Russia's shadow fleet or contributing to its energy revenues, have been sanctioned, bringing the total number of sanctioned vessels to 153. (COUNCIL DECISION (CFSP) 2025/394 of 24 February 2025)
One of the notable aspects of this new package is the introduction of updated criteria for listing individuals and entities. These criteria specifically target those involved in the operations of unsafe oil tankers, emphasizing the importance of maritime safety and environmental protection. Furthermore, the sanctions extend to those connected to Russia's military and industrial complex, aiming to weaken the infrastructure supporting Russia's military activities. The updated criteria for listing now include travel bans, asset freezes, and prohibitions on making funds available to those involved in transporting Russian crude oil or petroleum products using high-risk shipping practices.
In terms of trade measures, the EU has imposed a direct import ban on Russian primary aluminium. This ban includes a quota mechanism that allows for the import of 275,000 metric tonnes over a 12-month period, ensuring that the market can adjust while still applying pressure on Russia. Additionally, the export restrictions on dual-use goods and technologies critical to Russia's military capabilities have been extended, further limiting Russia's access to essential resources.
To prevent sanctions evasion, the EU has introduced measures targeting the shadow fleet transporting Russian oil. This includes prohibitions on transactions with certain Russian ports and airports involved in transferring UAVs, missiles, or circumventing sanctions, namely: Astrakhan, Makhachkala, Us, Luga, Primorsk, Novorossiysk. Exemptions are in place:
- in the case of a vessel in need of assistance seeking a place of refuge, or in case of an emergency port call;
- to transactions which are strictly necessary for the direct or indirect purchase, import or transport of oil, including refined petroleum products, from or through Russia, as long as such transactions comply with the Price Cap framework;
- to transactions for the purchase, import or transfer of seaborne crude oil and of petroleum products listed in Annex XIII 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.
SLM is available for any assistance you may require on sanction-related topics.
European Court of Justice: ruling in the case EuroChem vs. EU Council (Case T-1111/23)
On October 21st, the European Court of Justice issued an order in the case EuroChem Group AG v. Council of the European Union (case T‑1111/23).
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Full text of the order is available at the following link.
The applicant EuroChem Group AG was seeking annulment of EU sanctions laws (particularly, Regulation (EU) 269/2014) in so far as, although they do not include it in the list of sanctioned subjects, they mention its name in the grounds for sanctioning Mrs. and Mr. Melnichenko, and Mr. Rashevsky:
Aleksandra Melnichenko is the wife of Andrey Melnichenko, a Russian industrialist who transferred his effective ownership and benefit of the major fertiliser producer EuroChem Group and the coal company SUEK to her on 9 March 2022. Aleksandra Melnichenko takes advantage of the fortune and benefits from the wealth of her husband. In March 2022, Aleksandra Melnichenko replaced her husband as the beneficial owner of Firstline Trust, managed by Linetrust PTC Ltd, a company which represents the ultimate owner of EuroChem Group.
Andrey Melnichenko is a Russian industrialist who continues to control major fertiliser producer EuroChem Group and coal company SUEK. Since 9 March 2022, Melnichenko transferred his interests in SUEK and Eurochem Group to his spouse, Aleksandra Melnichenko. He continues to benefit from the wealth he transferred to his wife. …
Vladimir Rashevsky is a member of the supervisory board of the Association Market Council and of the board of the Russian Union of Industrialists and Entrepreneurs (RSPP), chair of the RSPP Committee on Tax Policy and RSPP Commission on Mining, deputy chair of the Committee on Climate Policy and Carbon Regulation, and head of the Coordination Council for the Siberian District. He is also the former CEO and Director of EuroChem Group AG, one of the world’s largest producers of mineral fertilisers. …
According to EuroChem, by mentioning its name in the grounds for sanctioning these individuals, the EU had established a presumption under which the applicant was regarded as being owned or controlled by sanctioned subjects (and thus as sanctioned itself), with it having to rebut that presumption by proving the absence of such ownership or control. According to EuroChem, this situation also allows its contractual partners to escape liability for refusing to perform their contracts with it.
The Court found the appeal inadmissible, holding that the mention of EuroChem in Regulation (EU) 269/2014 does not necessarily require it to be deemed sanctioned:
… In that regard, the fact that a legal person or an entity is owned, held or controlled by a person whose name is included on the lists at issue must be established, in the case of the freezing of funds and economic resources, by the authorities of the Member States, and, where appropriate, in the case of the prohibition laid down in Article 2(2) of Decision 2014/145, as amended, and in Article 2(2) of Regulation No 269/2014, as amended, by the persons required to comply with those provisions.
… In those circumstances, contrary to what the applicant claims, the contested statements cannot be regarded as affecting its legal position by requiring the authorities of the Member States to freeze its funds and economic resources and by prohibiting EU economic operators from making funds and economic resources available to it or for its benefit.
… It follows from all of the foregoing that the contested statements, contained in the contested acts, do not produce legal effects which are binding on, and capable of affecting the interests of, the applicant by bringing about a distinct change in its legal position.
On the one hand, the Court acknowledges that what is stated in Regulation (EU) 269/2014 (i.e. that Aleksandra Melnichenko is EuroChem’s UBO, and that Mr. Andrey Melnichenko continues to control EuroChem) is not necessarily current and binding. On the other hand, it reaffirms that the determination of ownership and control is a factual matter that must be evaluated on a case-by-case basis by member states and operators - which may lead to challenges in business operations. As stated by the EU Commission in its FAQs on the implementation of sanctions regulations, operators need to exert the highest caution when dealing with persons or entities associated with designated subjects.
The EU Commission update on the notion of "Best efforts" as per Article 8a of Regulation 833/2014
On 22nd of November 2024, the EU Commission published an update to Russia Sanction FAQs and Answers providing a guidance on the notion of “best efforts” in the context of article 8a of Regulation 833/2014.
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Article 8a of the Regulation since June 2024 provides that “natural and legal persons, entities and bodies shall undertake their best efforts to ensure that any legal person, entity or body established outside the Union that they own or control does not participate in activities that undermine the restrictive measures provided for in this Regulation.”
The full text of the FAQs is available here. Moving on to a brief analysis of the FAQs that could have a specific impact in the shipping sector, we would point out the following.
FAQ no. 1 contains a definition of “best efforts”. The definition is actually the same as the one already contained in the EU Regulation and that we have already discussed.
On the one hand, the EU Commission clarifies that “best efforts should be understood as comprising all actions that are suitable and necessary to achieve the result of preventing the undermining of the restrictive measures in Regulation (EU) No 833/2014. Those actions can include, for example, the implementation of appropriate policies, controls and procedures to mitigate and manage risk effectively…”. On the other hand, the EU Commission provides that the best efforts should be understood as comprising only actions that are actually feasible for the EU operator: for example, the EU operator will not be liable for the actions of an entity it controls if it is unable to exercise control over that entity due to third country law.
Under FAQ No. 4, 6 and 7 the EU Commission clarifies that:
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inadequate risk assessment and management, coupled with risk-prone decisions of the EU operator, may be evidence that the EU operator has lost control over the non-EU company through its own fault, and is therefore responsible for it;
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being aware that a non-EU controlled entity undermine EU sanctions and accepting these circumstances amounts to a breach of Article 8a.
In the FAQ no. 5, the EU Commission clarifies that the scope of actions expected from each EU operator depends on the operator’s nature (e.g. market sector, risk profile etc.) and size, but also on other factual circumstance (e.g. even if an operator is relatively small in size, the fact that it operates in a highly regulated sector with abundant compliance resources may be considered as a tool enabling it to exercise more control over its related entities).
Although the means of ensuring compliance with Article 8a are many and must be evaluated on a case-by-case basis, the EU Commission lists some possible ones: internal compliance programs, systematic sharing of corporate compliance standards, newsletters and sanctions advisories, mandatory sanctions trainings for staff, mandatory procedures to report and react to sanctions violations.
The EU Commissions suggests that “the non-EU entity may consider publicly stating its intent not to engage in any activities that risk undermining EU sanctions or the compliance and governance policies of the EU operator that has ownership or control”.
Finally, under FAQ No. 7 and FAQ No. 9, the Commission confirms that the sale in or into Russia as well as the purchase in Russia of restricted goods, technology, intellectual property or trade secrets may give rise to liability on the part of the EU parent company to the extent that it has not made every effort to take measures to prevent the movement of such goods.
Updated Price Cap Coalition advisory for the maritime oil Industry: best practices in response to recent developments in the maritime oil trade
On October 21, 2024, the Price Cap Coalition (G7, European Union, Australia, and New Zealand) issued an updated advisory for the maritime oil industry, providing recommendations concerning best practices for operators involved in the maritime trade of crude oil and refined petroleum products.
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On October 21, 2024, the Price Cap Coalition (G7, European Union, Australia, and New Zealand) issued an updated advisory for the maritime oil industry, providing recommendations concerning best practices for operators involved in the maritime trade of crude oil and refined petroleum products.
The Advisory is aimed at preventing and combating the so-called “shadow trade,” i.e. trade in violation of international sanctions, while promoting the safe flow of oil on the market. The “shadow trade” poses safety and environmental risks to the general public, as well as economic and reputational risks to the operators involved.
The Price Cap Coalition has identified eleven Recommendations. The full Advisory is available at the following link. We report below a brief outline of the main recommendations implemented by the Coalition.
Firstly, the Coalition reiterates the importance of performing an appropriate and thorough due diligence on counterparties, especially when dealing with vessels that have undergone numerous administrative changes such as re-flagging, vessel name changes, and ownership changes, and when dealing with intermediary companies such as management companies, traders, brokers, that conceal their beneficial ownership or otherwise engage in unusually opaque practices. It also encourages operators to consider not only checking counterparties and vessels against national sanctions lists, but also “undertaking proactive investigations to ascertain sanctions exposure, including to understand whether their unsanctioned counterparties may have recently engaged with sanctioned entities”.
Furthermore, the Coalition highlights the importance of having an appropriately capitalised P&I insurance, with sufficient coverage for CLC liabilities: if an operator is engaging with a ship that is not insured by a legitimate insurance provider, it shall conduct sufficient due diligence to ensure that the insurer can cover all relevant risks. Operators are also encouraged to receive classification from a IACS member society and make sure that their counterparties receive classification from IACS members as well. In this regard, we recall and highlight that the Russian Maritime Register of Shipping has been expelled from the IACS.
The Coalition also outlines some best practices on the use of AIS, providing that ooperators should promote the continuous broadcasting of AIS throughout the lifetime of a voyage, in line with SOLAS requirements. Pursuant to the Advisory, if a ship needs to disable its AIS in response to a legitimate safety concern, the ship should document the circumstances that necessitated disablement.
Recommendations and best practices are a ‘soft law’ tool that, as such, does not prescribe mandatory behavior, but is rather developed to support operators by providing efficient and exemplary models of action. The Advisory represents a useful tool for operators to avoid violations of sanctions and should be implemented by each operator in the way that best suits its business.
Studio Legale Mordiglia can support operators in understanding and complying with international sanctions. Please contact us for any doubts or assistance.
Amendment of the notion of ‘ownership’ for the purposes of the application of sanctions and asset freezing measures
On 3 July 2024, the EU Council updated the EU Best Practices for the effective implementation of restrictive measures.
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The EU Best Practices contain guidelines for the interpretation and application by EU authorities and operators of sanctions imposed by the EU against natural and legal persons. They provide clarification on the designation and the de facto identification of designated subjects, as well as on the application of asset freezing measures.
Asset freezing measures apply to designated entities, but also to companies that are ‘owned’ by them or under their ‘control’. The EU Best Practices contain the definitions of ‘ownership’ and ‘control’ necessary to determine whether an entity, even if not expressly designated, should still be considered sanctioned.
With the update of the EU Best Practices, the EU Council changed the notion of ‘ownership’.
Until 3 July 2024, in fact, for the purposes of sanctions, a company was to be considered ‘owned’ by a natural or legal person when the latter owned more than 50 per cent of the former:
The criterion to be taken into account when assessing whether a legal person or entity is owned by another person or entity is the possession of more than 50% of the proprietary rights of an entity or having majority interest in it.
Differently, according to the new definition of ownership, owning 50 per cent or more of the shares is enough to integrate the concept of ‘ownership’ for the purposes of the application of sanctions:
The criterion to be taken into account when assessing whether a legal person or entity is owned by another person or entity is the possession of 50% or more of the proprietary rights of an entity or having majority interest in it.
As a result of this amendment, the number of companies to be considered sanctioned, and to which the asset-freezing measures will be extended, will increase.
On the other hand, no changes have been made to the notion of ‘control’ and the criteria to be used to assess whether or not a company is ‘controlled’ by a sanctioned natural or legal person:
The criteria to be taken into account when assessing whether a legal person or entity is controlled by another person or entity, alone or pursuant to an agreement with another shareholder or other third party, could include, inter alia:
(a) having the right or exercising the power to appoint or remove a majority of the members of the administrative, management or supervisory body of such legal person or entity;
(b) having appointed solely as a result of the exercise of one's voting rights a majority of the members of the administrative, management or supervisory bodies of a legal person or entity who have held office during the present and previous financial year;
(c) controlling alone, pursuant to an agreement with other shareholders in or members of a legal person or entity, a majority of shareholders' or members' voting rights in that legal person or entity;
(d) having the right to exercise a dominant influence over a legal person or entity, pursuant to an agreement entered into with that legal person or entity, or to a provision in its Memorandum or Articles of Association, where the law governing that legal person or entity permits its being subject to such agreement or provision;
(e) having the power to exercise the right to exercise a dominant influence referred to in point (d), without being the holder of that right;
(f) having the right to use all or part of the assets of a legal person or entity;
(g) managing the business of a legal person or entity on a unified basis, while publishing consolidated accounts;
(h) sharing jointly and severally the financial liabilities of a legal person or entity, or guaranteeing them.
If any of these criteria are satisfied, it is considered that the legal person or entity is controlled by another person or entity, unless the contrary can be established on a case by case basis.
The fulfilment of the above criteria of ownership or control may be refuted on a case by case basis.
EU fourteenth package of sanctions against Russia
The Council adopted new restrictive measures against Russia, through Regulation (EU).
The new package includes, amongst others, the following restrictive measures:
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- additional listings of individuals and entities subject to financial sanctions;
- further restrictions relating to the financial sector;
- restrictive measures to import/export sector:
- among others, helium (CN code 2804.29.10) and helium-3 (CN code 2845.40) have been listed in Annex XXI Reg. 833/2014;
- manganese and manganese ores (including waste and scrap) have been listed in Annex XXIII Reg. 833/2014;
- new restrictive measures on trade marks patents and intellectual property.
The measures of particular relevance for the shipping industry are the following:
Transports
For the first time, the EU sanctioned specific vessels contributing to Russia’s warfare against Ukraine, or violating or circumventing EU sanctions against Russia (e.g. transporting oil or petroleum products in complete disregard of the price cap framework).
The full list of sanctioned vessels can be found in Annex XLII of Council Regulation (EU) 2024/1745 (link).
Sanctioned vessels will be banned from entering EU ports, and EU operators will be prohibited from operating, crewing, insuring and providing assistance to such vessels, or making ship-to-ship transfers with them.
Furthermore, the EU widened the flight ban against Russia-related aircrafts. The prohibition to land in, take off from or overfly the EU territory has been extended to non-scheduled flights with regard to which a Russian subject is in a position to “effectively determine the place or time for its take-off or landing”. Aircraft operators shall provide, for non-scheduled flights, information needed for the purpose of verifying compliance with the newly introduced provision, including “credible and satisfactory information” regarding the actual ultimate beneficial owner of the aircraft/the aircraft charterer and official documents displaying the full details of all passengers and crew members.
Finally, the EU also extended the prohibition on the transport of goods by road within the territory of the EU so as to cover EU operators which are owned 25% or more by a Russian subject.
Energy
The new art. 3r Reg. 833/2014 prohibits reloading services in the territory of the Union for the purposes of transshipment operations of liquified natural gas (LNG) falling under CN code 2711 11 00, originating in Russia or exported from Russia. This covers both ship-to-ship transfers and ship-to-shore transfers, as well as re-loading operations, and does not affect import but only re-export to third countries via the EU. Moreover, the new disposition prohibits to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance related to reloading services of LNG.
New investments, as well as the provision of goods, technology and services for the completion of LNG projects under construction, such as Arctic LNG 2 and Murmansk LNG are prohibited. Import restrictions are introduced on Russian LNG through EU terminals not connected to the natural gas system.
Art. 3r Reg. 833/2014 shall not apply until 26 March 2025 for the execution of contracts concluded before 25 June 2024. Finally, it should be noted that the restrictive measures set for by the new art. 3r § 1 and 2 shall not apply to reloading services necessary for the bunkering of liquified natural gas fuelled vessels.
Three English judgements in sanctions-related disputes
English Courts have recently been very involved with disputes relating to the effects of the Russia sanctions regime on commercial transactions. Three cases appear to be of particular interest.
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1) UK Supreme Court 15.5.2024, RTI Ltd. C. MUR Shipping BV
A contract of affreightment had been concluded on 9 June 2006 between MUR (shipowner) and RTI (charterer). The contract provided for payment of freight in US Dollars. It also included a Force Majeure Clause defining a “Force Majeur Event” as an event or state of affairs which “is outside the immediate control of the Party giving the Force Majeure Notice” and “cannot be overcome by reasonable endeavours from the Party affected”.
In April 2018 RTI was included by OFAC in the list of sanctioned entities. MUR considered this to be a Force Majeure Event, as it prevented payment of freight in US Dollars. RTI offered payment in Euros, but this was refused by MUR.
The issue to be decided was whether accepting a non-contractual performance (i.e. payment in Euros instead if US Dollars) fell within the notion of “reasonable endeavours”. After contrasting decisions of the Commercial Court and of the Court of Appeal, the Supreme Court held that “the object of the reasonable endeavours provision is to maintain contractual performance, not to substitute a different performance”.
2) Commercial Court 10.5.2024, Barclays Bank v. VEB
Barclays Bank and VEB had concluded an International Swaps and Derivatives Association Master Agreement; the contract provided for disputes to be referred to arbitration in London. An Addendum to the Agreement indicated as termination events “VEB or any affiliate or any entity related to VEB has been designated as a Specially Designated National or named to an equivalent list of sanctioned persons” and “The imposition of any economic or financial sanctions … that make it illegal or impossible for any of the parties to perform their obligations”.
On 24 February 2022 VEB was included in the UK list of sanctioned entities; Barclays accordingly served a notice of early termination of the Master Agreement and maintained that the sanctions prevented any payment to VEB.
VEB issued proceedings in the Moscow Arbitration Court and Barclays reacted with an application for an anti-suit injunction on the ground that the Moscow proceedings were in breach of the London arbitration clause.
VEB argued that the London arbitration clause had become inoperative or incapable of performance and in any even should not be enforced as a result of the sanctions affecting VEB.
The Commercial Court however found that none of the difficulties which VEB would allegedly face was such as to make it impossible to have a proper defence in the London arbitration. In particular (i) whilst some law firms would decline instructions, others would be prepared to acceptable, (ii) payment of lawyers’ fees would require bureaucratic paperwork, but would eventually be possible, (iii) Russian witnesses could be examined by means of video conference.
3) Chancery Division 3.5.2024, Vneshprombank c. Bedzhamov
Mr. Bedzhamov was engaged in litigation with Vneshprombank (the “Bank”) and its bankruptcy trustee. The Bank had obtained funding for such litigation from a company named A1 LLC.
Mr. Bedzhanov’s position was that there was reasonable cause to believe that A1 was owned or controlled by designated persons, with the consequence that any payment resulting from litigation in favour of the Bank would also benefit A1 and therefore be illegal. The legal issue was whether, in order to trigger the operation of the sanctions regime, it was necessary to establish that A1 was actually owned or controlled by designated persons (as maintained by the Bank) or a “reasonable cause to suspect” was sufficient (as argued by Mr. Bedzhamov).
After careful consideration of the relevant English regulations, in particular Regulation 11 of Russia (Sanctions) (EU Exit) Regulations 2019, the Court found in favour of the Bank.
New rules criminalising the violation and circumvention of EU sanctions are coming into force
Following its approbation by the Council last month, the EU Directive 1226/2024 on the definition of criminal offences and penalties for the violation of Union restrictive measures and amending Directive (EU) 2018/1673 (the Directive) was published in the Official Journal on last 24 of April.
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The Directive will enter into force on the twentieth day following its publication. Member States will then have one year to incorporate its provisions into their national legislation.
The Directive aims at ensuring the effective application of EU sanctions by setting minimum common rules concerning (i) the conducts that shall be regarded as violations or circumventions of EU sanctions and (ii) the resulting penalties – which were both determined by domestic laws up to now.
The conducts constituting criminal offences are listed in Article 3 and include the sale/purchase/transfer/transport of goods subject to a specific prohibition or restriction, and the provision of services relating to those goods. If such criminal conduct is committed by serious negligence, this may also lead to penalties (Article 3(3)), which makes it crucial for maritime stakeholders to complete a proper due diligence before engaging in shipping operations.
Other examples of criminal offences include the failure to freeze assets, the breach of travel bans and arms embargoes, the provision of prohibited or restricted economic services and the concealment of frozen funds.
The Directive also establishes common standards regarding penalties for both individuals (Article 5) and companies (Article 7), including imprisonment of at least five years and fines of at least € 100’000 for certain offences. In cases involving companies, Member States may impose dissuasive measures, such as the judicial winding-up or the withdrawal of authorisations to pursue the relevant activities, as well as substantial fines in proportion to the gravity of the violation and the financial situation of the company. Member States have the discretion to base these fines on either the company's global turnover or set absolute maximum amounts.
Deadline to insert the ‘No Russia’ clause in commercial contracts under the EU’s 12th package
From 20 March 2024, EU exporters must insert a so-called ‘No Russia’ clause in export/sale/supply/transfer or similar contracts concluded with customers based in third countries.
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This new obligation was introduced by the 12th package of sanctions against Russia adopted by the Council of the European Union on 18 December 2023.
The clause at stake should prohibit the re-export of specific sensitive goods to Russia and provide for ‘adequate remedies’ in the event of a breach, in order to hinder the circumvention of EU export bans and more especially the re-export of such goods to Russia.
In particular, Article 12g of the Council Regulation (EU) No 833/2014 -as amended- requires EU exporters that sell, supply, transfer or export goods or technology to a third country to contractually ban their customers from re-exporting certain sensitive goods to or for use in Russia. Such goods are those referred to in the following Annexes:
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Annex XI (aviation and space items);
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Annex XX (jet fuel and fuel additives);
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Annex XXXV and Annex I to EU Regulation No. 258/2012 (firearms and ammunition); and
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Annex XL (‘Common High Priority’ items).
The ‘No Russia’ clause must be included in contracts between EU exporters and their customers based in third countries. However, contracts concluded with customers based in partner countries –i.e. US, UK, South Korea, Australia, Canada, New Zealand, Norway, and Switzerland- do not need to be amended since these countries are considered as having effective sanctions enforcement regimes in place that prevent re-exports to Russia.
As to the timeframe of the applicability of the measure, the date of entry into force of the 12thpackage of sanctions, i.e.19 December 2023, is relevant; accordingly:
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any contract concluded after 19 December 2023 must include a “No Russia” clause as of 20 March 2024;
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any contract already concluded before 19 December 2023 benefits from a one-year transition period until 19 December 2024 included (or until the contract’s expiry, whichever is earliest).
In light of the above, EU exporters are required to draft a model of ‘No Russia’ clause to be included in all relevant contracts or, as an alternative, to give notice to all relevant counterparties that a ‘No Russia’ clause will be in effect from the applicable date. In view of the lack of any specification on the proper wording of the clause, the contractual parties are free to agree on their own appropriate wording as long as the clause meets the legal requirements. In this respect, it is worth noting that on 22 February 2024 the EU published a guidance on Article 12g requirement, which provides for a ‘No Russia’ clause template. It can be a useful starting point for the concerned business operators.
See our insight “12th Package of EU Sanctions against Russia: Impact on Shipping”
EU thirteenth package of sanctions against Russia
On 23 February 2024, the Council of the European Union adopted the 13th package of sanctions against Russia. Trade restrictions have been tightened: 27 additional entities - including companies located in China, India, Sri Lanka, Serbia, Kazakhstan, Thailand, and Turkey - blacklisted and export ban extended to drone components.
See our news “EU thirteenth package of sanctions against Russia”
Price cap mechanism: entry into force of new compliance requirements
New compliance requirements – introduced by the 12th package of sanctions and aiming at further implementing the price cap mechanism – are coming into force today. For Russian oil or petroleum products loaded on or after 20 February 2024, shipowners, ship management companies, insurers and insurance brokers shall:
obtain per-voyage customer attestations in which the customer commits not to purchase Russian oil and petroleum products above the price cap; require their counterparties to share information on itemised ancillary costs (e.g. insurance and freight) upon request and be able to share such information to the competent authorities or other counterparties if required. The EU Commission suggested to embed such requirement in relevant contracts, for example incorporating an ‘access to records’ clause which would be activated if the actor needed to seek information about a particular voyage.Continue reading
See our news “New compliance requirements with the price cap mechanism entering into force on February 20, 2024”
EU twelfth package of sanctions against Russia
The EU adopted the 12th package of sanctions against Russia, which imposes additional import and export bans (e.g. on diamonds and dual-use/industrial goods) and aims at combating sanctions circumvention and close loopholes, notably as a response to Russia’s endeavors to evade the oil price cap.
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The measures of particular relevance for the shipping industry are the following:
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enforcement of oil price cap through:
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the collection by services providers of itemized price information for ancillary costs throughout the supply chain of Russian crude oil (as of 20 February 2024);
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the obligation to immediately notify any sale of tankers for the transport of Russian crude oil to third countries;
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the obligation to obtain prior authorization to sell tankers to Russian persons and entities;
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the strengthening of bilateral and multilateral cooperation to impede sanctions’ circumvention.
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obligation for EU exporters to contractually prohibit re-exportation to Russia or for use in Russia of certain goods (i.e. no-Russia clause, to be included in commercial contracts from 20 March 2024).
See our insight “12th Package of EU Sanctions against Russia: Impact on Shipping”
EU eleventh package of sanctions against Russia
The Council adopted new restrictive measures against Russia. The agreed package includes amongst others, measures to:
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- strengthen bilateral and multilateral cooperation with third countries to impede sanctions’ circumvention;
- prohibit the transit of goods and technology via Russia;
- tighten export restrictions.
The following restrictions are particularly relevant for the maritime sector:
- prohibition to provide access to ports and locks in the EU territory by any vessel performing ship-to-ship transfers during the voyage to the EU port, if the competent authorities have reasonable grounds to suspect that the vessel is in breach of the prohibitions on the transport of Russian oil;
- prohibition to grant access to ports and locks in the EU territory if a vessel does not notify the competent authority at least 48 hours in advance about a ship-to-ship transfer occurring withing the Exclusive Economic Zone of a Member State or within 12 nautical miles from the baseline of that Member State’s coast;
- prohibition to provide access to ports and locks in the EU territory by any vessel which the competent authority has reasonable cause to suspect of illegally interfering with, switching off or otherwise disabling its AIS when transporting Russian crude oil and petroleum products.
Moreover, the EU decided that the sale or supply of cruise ships, ferryboats and other vessels for the transport of goods and/or persons, as well as the related technical or financial assistance, to a Russian entity or for use in Russia may exceptionally be authorized under specific conditions.
Regarding individual restrictive measures, it shall be outlined that the scope of natural and legal persons targeted by sanctions has been extended to include those facilitating the infringements of the prohibition against circumvention of economic sanctions.
Finally, the Council clarified that the prohibition to make economic resources available to sanctioned parties does not apply to funds that are needed for the provision of pilot services to vessels in innocent passage.
EU tenth package of sanctions against Russia
The EU adopted the 10th package of economic and individual sanctions against Russia, which includes in particular:
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- restrictions on additional critical technology and industrial goods on import (e.g. asphalt and synthetic rubber) and export (e.g. specialised vehicles, machine parts, spare parts for trucks, jet engines, etc.);
- restriction on the possibility of Russian nationals to hold management positions in the governing bodies of EU critical infrastructure (i.e. infrastructure located in Member States which disruption or destruction would have a significant impact on at least two Member States);
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prohibition to provide gas storage capacity (with the exclusion of the part of LNG facilities) to Russian nationals.
In addition, the Council clarified that the prohibitions on providing technical assistance laid down in Regulation (EU) No 833/2014 shall not apply to the provision of pilot services to vessels in innocent passage.
Finally, customs authorities have been authorized to released sanctioned goods physically in the EU and presented to customs prior to 26 February 2023.
EU agrees on further price caps for seaborne Russian petroleum products
EU agrees on further price caps for seaborne Russian petroleum products.
On top of the price cap for crude oil in force since December 2022, the Council decided to set two price caps for petroleum products (CN code 2710) which originate in or are exported from Russia:
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- for “premium-to-crude” petroleum products (e.g. diesel, kerosene, gasoline), a maximum price of $100 per barrel;
- for “discount-to-crude” petroleum products (e.g. fuel oil, napthta), a maximum price of $45 per barrel.
These price caps will be implemented from 5 February 2023, including a 55-day wind-down period for seaborne Russian petroleum products purchased above the price caps, provided it is loaded onto a vessel at the port of loading prior to 5 February 2023 and unloaded at the final port of destination prior to 1 April 2023.
EU ninth package of sanctions against Russia
In response to Russia’s continuing war of aggression against Ukraine, the EU adopted a 9th package of sanctions, which includes bans on:
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- exports of drone engines, dual-use goods and technology;
- investment in the mining sector;
- transactions with the Russian Regional Development Bank;
- the provision of advertising, market research and public opinion polling services.
In addition to economic sanctions, the Council decided to adopt a comprehensive package of individual measures listing a very significant number of additional individuals and entities.
EU agrees on an oil price cap
The Council decided to set a price cap for the transport of crude oil and petroleum oils and oils obtained from bituminous minerals (CN code 2709 00) which originate in or are exported from Russia.
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As of 5 December 2022, the transport of Russian oil to third countries (and related insurance) is allowed provided that the oil was purchased at a price of $60 per barrel or less. This measure does not affect the transport of Russian oil to the EU, which, as a rule, is prohibited.
The EU made clear that shipping, freight, customs, and insurance costs were not included in the price cap and must be invoiced separately at commercially reasonable rates.
A transition period of 45 days has been foreseen for vessels carrying crude oil originating in Russia which was purchased and loaded on board prior to 5 December 2022 and unloaded at the final port of destination prior to 19 January 2023.
The Council also introduced an “emergency clause” which allows the transport of oil beyond the price cap to third countries if such transport is necessary for humanitarian or environmental purposes.
See our insight “Price cap on Russian oil- Obligations of the maritime operators”
EU eighth package of sanctions against Russia
Among the most relevant measures introduced by the 8th package of sanctions against Russia in the legal and maritime sector are:
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- the prohibition for EU vessels to transport to third countries crude oil (as of December 2022) and other petroleum products (as of February 2023) which originate in or are exported from Russia, with possible exemptions based on price caps;
- the prohibition for EU nationals to hold any posts on the governing bodies of certain Russian state-owned or controlled legal persons, entities or bodies;
- the prohibition to provide legal services (mostly extrajudicial) to legal persons and entities established in Russia, but with numerous exceptions (see amendments to art. 5n).
In addition, the Council decided to add to the list of state-owned entities that are subject to the transaction ban the Russian Maritime Register of Shipping. Such addition prohibits the provision of any sort of economically valuable benefit to the Russian Maritime of Shipping.
See our insight “Eighth Package of EU Sanctions against Russia: Impact on Shipping”
EU seventh package of sanctions against Russia
The Council adopted a further package of restrictive measures to tighten existing economic sanctions against Russia and strengthen their effectiveness. The most relevant measures introduced by the 7th package for the maritime sector are the following:
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- the prohibition to provide access to EU ports to vessels flying the Russian flag has been extended to locks from 29 July 2022, with the exception of access to locks for the purpose of leaving the EU territory (see amendments to art. 3ea).
- the exemption to the general prohibition to engage in transactions with listed companies (such as Rosneft, Transneft, Gazprom Neft, etc.) has been extended in order to cover transactions which are strictly necessary for the export of oil from or through Russia to third countries (and not only to the EU) (see amendments to art. 5aa).
- the exemption to the general prohibition to engage in transactions with listed companies has been extended to transactions which are strictly necessary for the export of pharmaceutical and agricultural products from Russia to the EU/third countries.
See our insight “7th round of EU sanctions against Russia”
EU sixth package of sanctions against Russia
The EU decided to adopt a 6th package of economic and individual sanctions targeting both Russia and Belarus. The economic sanctions particularly relevant for the maritime sector are the following:
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- a prohibition on the purchase, import or transfer into the EU of crude oil and petroleum products originating in or exported from Russia and on the insurance and reinsurance of maritime transport of such goods to third countries (with limited exemption such as imports by pipeline) (see art. 3m).
- a prohibition to provide a series of services (e.g. technical/financial assistance, brokering services, insurance) related to the transport (including transshipment) of Russian crude oil and petroleum products to third countries (see art. 3n).
Among the individual sanctions, it is worth noting that three additional Russian banks and the Belarusian Bank for Development and Reconstruction were excluded from SWIFT.
See our insight “Sixth round of EU sanctions: transport of oil by sea”
EU fifth package of sanctions against Russia
The EU adopted a fifth round of sanctions against Russia. To the prohibition to export goods and technologies suited for use in oil refining (in force since late February 2022), the Council added a ban on exporting those suited for liquefaction of natural gas.
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Additional bans on the export of goods to or for use in Russia have been introduced, such as bans on:
- exports of jet fuel and fuel additives;
- exports of goods which could contribute in particular to the enhancement of Russian industrial capacities as listed in Annex XXIII to any natural or legal persons in Russia.
Regarding the import into the EU of goods originating in Russia or exported from Russia, the following prohibitions can be mentioned:
- prohibition to import goods which generate significant revenues for Russia thereby enabling its actions destabilising the situation in Ukraine, as listed in Annex XXI, which includes among others cruise ships;
- prohibition to import coal and other solid fossil fuels.
The provision of services related to the above-mentioned goods is also prohibited.
In addition, the Council introduced a ban on all Russian vessels from accessing the EU ports as well as a ban on Russian and Belarussian road transport operators from entering the EU.
Finally, the EU also adopted sanctions against 217 individuals and 18 entities, including a full transaction ban on four key Russian banks, representing a 23% market share in the Russian banking sector.
See our insight “The fifth package of EU sanctions against Russia”
EU fourth package of sanctions against Russia
The EU imposed a fourth package of economic and individual sanctions, including the prohibition to:
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- import, purchase, transport into the EU iron and steel products originating in Russia or exported from Russia;
- sell, supply, transfer or export luxury goods to any natural or legal persons in Russia or for use in Russia;
- engage in any transaction with certain state-owned enterprises as listed in Annex X, with the exemption of transactions which are strictly necessary for the import of fossil fuels and specific ore from Russia into the Union;
- provide credit rating services, as well as access to any subscription services in relation to credit rating activities, to any Russian person or entity;
- invest in the Russian energy sector.
The EU also introduced sanctions on additional 15 individuals and 9 entities, including companies in the aviation, military and dual use, shipbuilding and machine building sectors.
EU third package of sanctions against Russia
The EU excluded from SWIFT seven Russian banks (Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank, Vnesheconombank (VEB), VTB Bank) and the ones they directly or indirectly own for more than 50%.
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The EU also introduced a ban on:
- investing, participating or otherwise contributing to future projects co-financed by the Russian Direct Investment Fund.
- selling, supplying, transferring or exporting euro banknotes to Russia or to any natural or legal person or entity in Russia.
EU third package of sanctions against Russia
The EU approved new measures in response to Russia’s invasion of Ukraine, which include a ban on:
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- the overflight of EU airspace and access to EU airports by Russian carriers of all kinds.
- transactions with the Russian Central Bank.
EU second package of sanctions against Russia
The EU agreed on further individual and economic measures, among which:
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the prohibition to sell, supply, transfer or export, directly or indirectly, to any natural or legal person, entity or body in Russia or for use in Russia, the following goods:
- “dual-use” goods and technologies (which are defined in: link);
- goods and technologies which might contribute to Russia’s military and technological enhancement, or the development of the defence and security sector, as listed in Annex VII;
- goods and technologies suited for use in oil refining, as listed in Annex X;
- goods and technologies suited for use in aviation or the space industry, as listed in Annex XI.
It shall be noted that the prohibition applies whether or not the goods are originating in the EU and that the provision of services related to the above-mentioned goods is also prohibited.
- restrictions on financial activities
EU first package of sanctions against Russia
The Council of the European Union adopted a package of measures in response to Russian’s invasion of Ukraine. The agreed package includes:
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- targeted sanctions against the 351 members of the Russian State Duma and an additional 27 individuals;
- restrictions on economic relations with the non-government controlled areas of Donetsk and Luhansk oblasts;
- restrictions on Russia's access the EU’s capital and financial markets and services.
Professionisti
Cultura giuridica, approccio pratico e apertura internazionale caratterizzano l’attività professionale di ciascuno degli avvocati dello Studio. Tutti i componenti dello Studio hanno svolto esperienze lavorative all’estero creando con Clienti e Colleghi rapporti non solo professionali ma anche di amicizia e fiducia.
