As the sanctions are on a rise, shipowners and operators have to be careful if they do not want to experience the consequences of sanctions, which vary from insurance, designation to impact on reputation.
Mette Kronholm Fraende, Communications Manager and Editor at BIMCO, citing Crowell and Moring law firm, notes that even with the best screening software in place it’s almost impossible to ensure that sanctions are not violated.
When it comes to insurance, a sanctioned company will potentially face the consequence of loss of insurance.
In the meantime, concerning indemnity insurance, hull insurance and the rest of the usual precautions in place, if a charterer is owned by a sanctioned person, they can also be impacted, meaning that they have violated sanctions as well.
Another consequence is designation, as one designated has no access to financial institutions. BIMCO adds that sanctions lead to damaged reputation.
In light of sanctions and their impact, North P&I Club issued its revised guide on evaluating the risk of sanctions, focusing on the application and scope of the U.S. and EU sanctions, in regards to their jurisdiction over companies; whether other sanctions apply to trading partners- such as banks, insurers or reinsurers or whether there are there any “party” related sanctions which impact on the ability to complete the contemplated trade, among other issues.