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UK imposes prohibition on port entry and UK registration to Russian linked shipping

News / / London

In a development that will have a potentially wide-ranging impact on shipping, the UK has introduced a prohibition on Russian-connected ships from (i) using UK ports and (ii) being registered in the UK.

In summary, the UK, by virtue of Statutory Instrument “The Russia (Sanctions) (EU Exit) (Amendment) (No.4) Regulations 2022”, has further expanded the scope of the sanctions against Russia, with these restrictions entering into force on 1 March 2022.

The new restrictions prohibit a person, including the Master or pilot of a ship, from providing a ship with access to a UK port, if the person knows, or has reasonable cause to suspect, that the ship:

  1. Is owned, controlled, chartered or operated by a designated person;
  2. Is owned, controlled, chartered or operated by persons connected with Russia;
  3. Is Russian flagged;
  4. Is Russian registered; or
  5. Is otherwise a specified ship.

A port barring direction (i.e. the direction prohibiting a ship from entering a port) may also be given by the Secretary of State or harbour authority to the master or pilot of a specified ship and further steps can be taken to restrict the movement or detain such ships.

A person connected to Russia includes:

  1. An individual who is, or an association or combination of individuals who are, ordinarily resident or located in Russia; and
  2. A person, other than an individual, which is incorporated or constituted under the law of Russia or domiciled in Russia.

Furthermore, a person is owned or controlled, directly or indirectly, by another person if either one or both of the following two conditions are met:

  1. The person holds directly or indirectly more than 50% of the shares, voting rights or holds the right, directly or indirectly, to appoint or remove a majority of the board of directors;
  2. It is reasonable, having regard to all the circumstances, that the person, if they chose to, would be able in most cases or in significant respects, by whatever means and whether directly or indirectly, to achieve the result that the affairs of the other person are conducted in accordance with that person’s wishes.

In addition to the port restrictions, the UK Registrar must refuse to register a ship, if on the basis of information given to the Registrar by the Secretary of State or accompanying the application for registration, the ship appears to the Registrar to be owned, controlled, charterer or operated by (a) designated persons, or (b) persons connected with Russia. The Secretary of State may also direct the Registrar to terminate the registration of such ships or a specified ship.

As the restrictions have just entered into force, there are likely to be implications for ships due to call at UK ports, particularly where bills of lading have been issued requiring delivery in the UK. It remains to be seen how such restrictions will be enforced in practice and, indeed, whether other countries will take similar steps. We would advise parties dealing with these issues to carefully consider the steps they take, particularly those shipowners who will owe duties not only to charterers under their chartering arrangements but also under the bill of lading to cargo interests. These interests may not be aligned.

Ince offer a comprehensive sanctions risk and advice service utilising some of the most sophisticated data analytics systems available. We also have an arrangement with New York sanctions specialists Seward & Kissel and are able to provide complete coverage on UK, USA and EU sanctions. Please contact Fionna Gavin, Julian Clark or James Rose for further information.
Fionna Gavin

Fionna Gavin Partner

James Rose

James Rose Managing Associate

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