On 21 July 2022 the European Union published a “Maintenance and Alignment Package” in respect of its sanctions programme against Russia. The package includes amendments to Regulation (EU) No. 833/2014. The changes of most relevance to shipping are in relation to dealings with Russian State-owned entities in the context of the carriage of Russian oil to non-EU destinations.
On the 3 June 2022 the EU published its 6th package of sanctions against Russia. It focuses on:
- The measures in the 6 the package of sanctions which impact on the transport and insurance of oil and petroleum products;
- The prohibitions on transacting with Russian state-owned enterprises subject to the Article 5aa restrictions and as listed in Annex XIX of the Regulation.
EU Sanctions do not apply extra-territorially. Article 13 of the Regulation provides that they apply:
- Within the territory of the EU;
- On board any aircraft or any vessel under the jurisdiction of a Member State;
- To any person inside or outside the territory of the EU who is a national of a Member State;
- To any legal person, entity, or body, inside or outside the territory of the EU, which is incorporated or constituted under the law of a Member State;
- To any legal person, entity, or body in respect of any business done in whole or in part within the EU.
Transport to the EU
Transport to the EU of Russian oil and petroleum products is now generally prohibited subject to the exemptions set out in Article 3m. “Transfer” is a broad concept which encompasses not only the movement of goods through customs controls but also the transport of goods. Russian oil transported together with oil of other origin in a mixed fashion is subject to these prohibitions.
Insurance of the transport into the EU
Insurance (or reinsurance) of the transport into the EU of these goods is also prohibited subject to the exemptions in Article 3m as “financial assistance” is defined to include “all types of insurance and reinsurance”.
If an operator can rely on any of the exceptions, then an insurer subject to EU jurisdiction can also provide insurance for such voyage, subject to applicable terms and conditions, as insurance would be deemed as being a necessary ancillary contract.
Transport to a third country
The EU has clarified that Article 3m of the Regulation prohibits only the purchase, import, and transfer where the cargo is destined for import into Member States. It does not prohibit the transport of crude oil or petroleum products when exported from Russia to a third country.
A company incorporated or constituted under the law of a Member State is still therefore generally permitted to transport Russian crude oil and petroleum products to a third country. Caution should however be exercised to ensure that sanctioned entities are not involved in the trade. Further, as explained below, the insurance and reinsurance of this trade by an insurer or reinsurer that is subject to the jurisdiction of the EU is generally prohibited.
Transacting with Russian state-owned entities
Pursuant to Article 5aa of the Regulation it is prohibited for anyone subject to EU jurisdiction “to directly or indirectly engage” in any transactions with certain Russian state-owned entities listed in Annex XIX of the Regulation.
The prohibitions extend to any legal person, entity or body established outside the EU whose proprietary rights are directly or indirectly owned for more than 50 % by an entity listed in Annex XIX; and to any legal person, entity or body acting on behalf or at the direction of an entity referred to.
EXPLORE MORE AT BRITANNIA’S CIRCULAR ON EU SANCTIONS
