Sanctions and resultant ripples throughout the Maritime Industry
I never thought I would write about the effects of recently imposed sanctions affecting trading for the CIRM member companies and the wider maritime world, but the issue became rather important on Wednesday last week when our company Bank rang up to say that unless we took positive action we would lose the account!
We had to confirm to them “as from today no longer intend to trade with Russia. CIRM will not undertake any form of financial transaction with the Russian Central Bank, the States Sovereign Wealth fund and Russia’s financial system as a whole” – not that we trade; CIRM is a not for profit Member Organization – but of course, some of our members do trade in that direction.
How grateful are we that we can operate normally with our bank – very – but our Russian member company is now withdrawn from all the access rights they had to our technical information and general membership benefits, plus I cannot return their newly paid membership fee to them either. They can rest assured that whenever matters return to some form of normality, we will presumably be able to reinstate them.
I was privileged to have access to yesterday’s webinar jointly hosted by Maritime London (an organisation promoting maritime professional services in the UK) and INCE (Legal and Business Services, Europe, the Middle East and Asia) entitled “War & Sanctions – immediate concerns for the shipping sector and how best to handle” and this prompted me think deeper on the evolving horror story concerning the current ‘conflict’ between Russia and the Ukraine and the effects on us all.
What insurance is in place for those who have been, are or have plans to trade with Russia? It seems that any insurance is unlikely to bear fruit due to sanctions imposed. However, I heard from presenters yesterday that absolutely every situation that a company might find itself in has to be explored to the finest detail. There is an even greater need to understand every word of every contract and the circumstances in the making of the contract matter; the spotlight is on every single detail and here’s a direct quote “there is no appetite on the part of marine insurers to break sanctions“.
When I informed our membership that we were actively showing that all ties were cut, a member company with a division in the UK simply could not believe my message. Was I sure? Their company did not seem to be reacting that way and their bank had not been in touch in a similar vein. It seems that they are still trading normally but all I could hear yesterday on the webinar was how important is due diligence, checking the ‘lists’ that are available and that if you really don’t know what you are doing, get professional advice and be sure to show you did your best or you will end up in a mess!
A useful piece of information given is that Windward (also CIRM member company) is offering their Data Analytics System free of charge to bone fide prospective users for the next two weeks or so.
Interested parties will still be vetted and will need to click on the terms of service; for optimum results this risk analysis tool and how the platform works is best understood if the user is talked through by the Windward team – something they are very willing to offer in this period. Free Trial Link below:- https://windward.ai/resources/visibility-and-confidence-when-you-need-it-most/
In January 2020, the UK stepped out of the EU, as we all know. The webinar consensus was that there is a possibility that the UK will work again with the EU on this crisis so all sanctions follow the same line. A sensible move. But I heard that we are still currently issuing our own sanctions and there are restrictions on sending technology to Russia – both air and maritime. Moreover, it was stated that in the last week the UK set a ban on Russian owned or controlled vessels, (plus the routes they take) calling at UK ports and that the EU has a resolution under way to impose a similar ban. As well as this, some older paperwork will not talk about the UK at all, as at the time of issuing the UK was part of the EU. It seems that we all have to be very careful on what we read and rely on at the moment. Remember that companies that have signed a finance arrangement with a European bank etc. will have to look again as there may be a technical default that creates a problem. Good documentation is paramount.
The (moderately) good news is that sanctions are not really directed at shipping at the moment… they are mainly applicable to Russian energy cargos; Insurers have worked through situations like this before, their experience is quite high and they have mature relationships with regulators (good for reducing the risks to the P & I Clubs).
The situation continues to change hour by hour and we must all be vigilant and help where we can.
Frances Baskerville is Secretary-General of CIRM, www.cirm.org with 20 years of experience in the Maritime regulatory affairs business. CIRM is made up of member companies worldwide, specialising in navigation and communications equipment manufacture, service, systems building, software development and related technology.
