Ukraine sanctions - Update 14th March 2014
The Club has continued to monitor the ongoing state of affairs in the Ukraine and Crimea closely. At present the situation remains in the balance pending the result of the general referendum on the future status of Crimea, to be held on the 16th March 2014. At this stage it is difficult to predict what effect the result of the referendum will have on the ongoing crisis.
Over the past week, since the coming into force of Council Regulation (EU) No. 208.2014 and the signing of the US Executive Order by President Obama, we have had a number of enquiries from our Members about the risks and issues arising out of trading to the Ukraine under the present conditions.
We hope that the following FAQs will assist our Members with their more general concerns:
- What is the current situation at the major Ukrainian ports?
At the main ports, outside of the Crimea, Odessa, Ilyichevsk, Yuzhny, Nikolayev, Dneprobugskiy, Oktyabrsky and Kherson, little to no disturbance has been reported. Regular updates from the Club's local correspondent indicate that all of the port facilities, customs, tugs and pilots are operating normally.
Similarly, the situation at Sevastopol appears to be calm for the time being. At the Crimean ports of Kerch and Theodosia, it has been reported that the local customs, and other government offices, are being run by the Crimean government and that consequently there may be some disturbance to ordinary operations at these ports. However, to-date no specific disturbances have been reported.
- Does the situation in Ukraine have any implications for war risk insurance cover, or charterparty war risk clauses?
The Lloyd's Market Association Joint War Committee has not declared Ukraine to be a war-risk area. However, Members are advised to check with their war risk underwriters, prior to undertaking voyages to Ukrainian ports, if they have any concerns regarding their war risk cover.
Although the situation is currently reasonably stable, shipowners are also advised to check the terms of their charterparty war-risk clauses as the effects of such clauses may not be limited to designated war-risk areas, and may include provisions for areas where there are 'war-like activities or hostilities'.
- Do shipowners need to take any precautions in relation to the EU Sanctions?
The EU sanctions are targeting certain individuals associated with President Yanukovych's regime in Ukraine. At the moment the sanctions are limited in scope and are only directed at 18 people.
However, as these individuals are reported to have extensive political and economic interests in the Ukraine, shipowners trading to the Ukraine are advised to seek legal advice if there are concerns about any of the individuals, companies or other entities involved with the vessel's call, specifically the following:
• The terminal
• The Shippers/Receivers
• Stevedoring companies
• The Vessel's agents
- What effect does the US Executive Order have on the sanctions regime?
The Executive Order gives the US Government the authority to impose sanctions, with immediate effect, upon individuals that are responsible for, or are involved in, directly or indirectly;
- undermining democratic processes or institutions in Ukraine;
- threatening the peace, security, stability, sovereignty or territorial integrity of Ukraine; or
- misappropriating Ukrainian state assets or assets of a economically significant entity in Ukraine
The sanctioning powers given to the US Government effectively mirror the effects of the EU sanctions regime currently in place.
To-date the US Government has not published a list of persons sanctioned under the Executive Order, the effects and implications of the Order for shipowners trading to the Ukraine are therefore not clear at this stage.
The Club will continue to monitor the situation closely and will report any significant changes in the current situation.
Ukraine Sanctions- 06/04/2014
As part of the response to the ongoing tensions in the Ukraine and Crimea, the EU yesterday issued Council Regulation (EU) No 208/2014, which imposed limited sanctions targeted at individuals associated with the regime of President Yanukovich. The EU regulation came into force on 06/04/2014.
HM Treasury has issued a notice explaining the effect and implications of the EU regulation. The US Department of the Treasury has also issued a Bulletin in relation to the signing of an Executive Order authorising the US Government to impose sanctions on a similar basis.
Club Contacts for any further enquiries:
Links to the EU Regulation, HM Treasury Notice and the US Treasury Bulletin attached at the head of this webpage can be found below:
Council Regulation (EU) No 208/2014
HM Treasury Financial Sanctions Notice
US Department of the Treasury Bulletin