Although aid to Israel, Ukraine, and Taiwan made headlines last month when President Biden signed H.R. 815, the law also significantly expanded the scope of agencies’ enforcement authority under two key national security laws: the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA). Both now have 10-year civil and criminal statutes of limitations, rather than five.

IEEPA and TWEA are the basis for many of the sanctions programs maintained and enforced by the Office of Foreign Assets Control (OFAC). IEEPA is also the statutory authority for certain export controls under the Export Administration Regulations.

As a result of the amendment, the statute of limitations under most of OFAC’s sanctions programs is now 10 years. This includes the Belarus, Cuba, Iran, North Korea, Russia, and Syria sanctions.

Although the extension of the criminal statutes of limitations may face challenges under the Constitution’s Ex Post Facto Clause, the limitations imposed by that clause are unlikely to impact the expanded civil enforcement authority. Civil enforcement is also more common. Civil penalties under IEEPA are currently $364,992 per violation; under TWEA, they are $108,489.

Practical implications

Although OFAC may issue guidance on the extended statute of limitations, companies should begin considering the following:

  • Recordkeeping: Currently, OFAC’s regulations only require companies to maintain transaction- and license-related records for five years. Even if OFAC does not amend its regulations, companies should consider updating internal policies and procedures to adopt a 10-year recordkeeping requirement to ensure the company has the information it needs if OFAC brings an enforcement action.
  • Internal audit policies and procedures: Companies should also consider revising investigations and internal audit policies and procedures to assess compliance over the past 10 years.
  • Acquisition-related due diligence: To address successor liability risks, if a buyer will acquire 10 years’ worth of the target’s liability for sanctions (and to a lesser extent, export control) violations, the lookback and disclosure period should cover more than the typical three to five years. Sellers are unlikely to want a longer lookback and disclosure period though, which may create friction in the negotiating process.
  • Pending disclosures or enforcement actions: Companies should evaluate the extent to which the extended statutes of limitations may create additional penalty exposure in current enforcement actions or pending voluntary self-disclosures. In many cases, the company may not have examined potential violations outside the five-year statute of limitations.  

Last fall, the Bureau of Industry and Security (BIS) paused its issuance of new export licenses involving certain firearms, related “parts,” “components,” and ammunition. On April 30, BIS will publish an interim final rule tightening controls of exports of these items. The interim final rule will take effect on May 30.

The interim final rule amends the Export Administration Regulations (EAR) by:

  • Adding four new Export Control Classification Numbers (ECCNs) to better track exports of firearms and related items. The new ECCNs are 0A506 (semi-automatic rifles previously controlled under 0A501), 0A507 (semi-automatic pistols previously controlled under 0A501), 0A508 (semi-automatic shotguns previously controlled under 0A502), and 0A509 (certain “parts,” “components,” “devices,” “accessories,” and “attachments” for items controlled under 0A506, 0A507, and 0A508).
  • Revaluating the controls for existing 0x5zz ECCNs, which includes rifles, pistols, shotguns, ammunition, and related “parts,” “components,” “accessories,” “attachments,” “software,” and “technologies.” The changes implement new license requirements for the export or reexport of certain shotguns to certain countries and end users.
  • Adding an import certificate requirement for license applications involving exports or reexports to Organization of American States (OAS)[1] member countries and any other destination where an import certificate is required under local law. Previously, exporters were not required to submit import certificates from non-OAS member countries that required one.
  • Revising certain unique license application requirements,including requiring a purchase order be submitted for exports and reexports of firearms and related items to non-A:1 countries. The purchase order must be dated within one year of the application’s submission date. Applicants should review all license requirements before submitting a license application.
  • Adding an import certificate requirement for shipments under a license exception for items controlled under ECCNs 0A501, 0A502, 0A504, 0A505, 0A506, 0A507, 0A508, or 0A509.
  • Limiting the use of License Exceptions LVS and BAG. License Exception LVS which will no longer be available for the export of items controlled under ECCNs 0A501, 0A502, 0A504 (except 0A504.g), 0A505, 0A506, 0A507, 0A508, and 0A509 when they are destined for countries in Country Group B, Country Group D:5, or CARICOM nations.[2] License Exception BAG will no longer be available for exports destined for Country Group D:5 (except Zimbabwe) or CARICOM nations. Additionally, U.S. citizens will be limited to three firearms or shotguns on any trip when using License Exception BAG.
  • Implementing new license review policiesof denial for the license applications involving exports or reexports of firearms and related products classified under:
    • ECCNs 0A501, 0A502, 0A505, 0A506, 0A507, 0A508, or 0A509 that are destined for countries in Country Group D:5.
    • ECCNs 0A501, 0A502, 0A504, 0A505, 0A506, 0A507, 0A508, 0A509, 0B501, 0B505, 0D501, 0D505, 0E501, 0E504, or 0E505, or any 9×515 ECCNs destined for China or countries in Country Group E:1.
  • Limiting new licenses to a 12-month validity period for items controlled under ECCNs 0A501, 0A502, 0A504, 0A505, 0A506, 0A507, 0A508, and 0A509. Licenses for longer terms may still be issued by BIS under limited circumstances (e.g., intracompany transfer, government contracts).
  • Revoking or modifying certain existing licenses for the export or reexport of firearms and related items.
    • Effective July 1, BIS will revoke existing licenses for the export and reexport of firearms and related items to non-government end users in the high-risk destination identified in the new Supplement No. 3 to Part 742 of the EAR. The high-risk destinations include the Bahamas, Bangladesh, Belize, Bolivia, Burkina Faso, Burundi, Chad, Colombia, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Indonesia, Jamaica, Kazakhstan, Kyrgyzstan, Laos, Malaysia, Mali, Mozambique, Nepal, Niger, Nigeria, Pakistan, Panama, Papua New Guinea, Paraguay, Peru, Suriname, Tajikistan, Trinidad and Tobago, Uganda, Vietnam, and Yemen.
    • Effective May 30, BIS will modify the validity period of certain licenses to non-government end users to make the license invalid on May 30, 2025. These modifications will not affect licenses to non-government end users in Country Group A:1, Israel, Ukraine, or the high-risk destinations whose licenses will be revoked.
  • Implementing a presumption of denial for license applications involving exports and reexports to the high-risk destinations listed in Supplement No. 3 to Part 742.
  • Requiring Electronic Export Information (EEI) filings to meet the conventional arms reporting requirements, including item-level classification or other item-level descriptors.

BIS is also seeking public comment on the interim final rule. Comments must be received by July 1.


[1] In addition to the U.S., the OAS member countries are Antigua and Barbuda, Argentina, the Bahamas, Barbados, Belize, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Cuba*, Dominica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, Trinidad and Tobago, Uruguay, and Venezuela.

[2] CARICOM nations include Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Lucia, Suriname, St. Kitts and Nevis, St. Vincent and the Grenadines, and Trinidad and Tobago; associate members: Anguilla, Bermuda, British Virgin Islands, Cayman Islands, and Turks and Caicos, as well as any other state or associate member that has acceded to membership in accordance with Article 3 or Article 231 of the Treaty of Chaguaramas for members or associate members respectively.

In recent years, the sanctions clause has become a “must have” contractual clause. Any company that engages in activity involving high-risk goods or services, or relating to or in connection with high-risk jurisdictions, should incorporate clear and robust sanctions clauses in its contracts. Businesses face complex issues when interpreting and drafting sanctions clauses, requiring an analysis of the business intent, the business’ ancillary obligations, its global footprint and its concerns about reputation, amongst other things.

To ensure they stand up to frequently changing geopolitical circumstances and sanctions regimes, sanctions clauses should include a degree of flexibility. Parties must also remember that what is acceptable in one transaction, may be very different to sanctions clauses which suit other transactions. There is no one-size-fits-all position, so it is crucial for businesses to comprehend the key elements of a sanctions clause to be able to assess any “non-negotiable” points.

Our lawyers examine the key elements of a sanctions clause, the relevant risks that they cover, and the pros and cons of different approaches to sanctions clauses in their latest client alert.

On October 15, 2023, following an accord with the Maduro regime in Venezuela, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) issued General License 44, “Authorizing Transactions Related to Oil or Gas Sector Operations in Venezuela,” which temporarily authorized transactions related to oil and gas sector operations, including transactions involving PdVSA. This was described in the Reed Smith update, which may be found here. Prior to the issuance of General License 44, U.S. persons were prohibited from engaging in virtually all oil and gas-related transactions in Venezuela, as well as with any Venezuelan state-owned entity or Venezuelan Specially Designated National (“SDN”) such as PdVSA. Furthermore, non-U.S. persons were exposed to secondary sanctions if providing material support to PdVSA or if OFAC found that a non-U.S. entity was “operating in the oil sector of Venezuela”. General License 44, now set to expire on April 18, 2024, temporarily suspended these U.S. sanctions against PdVSA and the Venezuelan oil and gas sector.

Continue Reading OFAC issues wind-down license for Venezuelan oil

To expand the reach of U.S. sanctions, the Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) on March 21 to require a license for the export, reexport, or transfer (in-country) of all items “subject to the EAR” when a party to the transaction is blocked under one of 14 U.S. sanctions programs. Items “subject to the EAR” include all U.S.-origin items and certain foreign-produced items that incorporate more than a de minimis amount of controlled U.S.-origin commodities, are direct products of U.S.-controlled technology, or are manufactured in plants that are direct products of U.S.-controlled technology. Relevant parties to the transaction include the purchaser, intermediate consignee, ultimate consignee, and end-user.

The new end-user controls reach transactions over which the Office of Foreign Assets Control (OFAC) does not exercise jurisdiction (e.g., deemed exports and deemed reexports) or that otherwise do not involve U.S. persons or U.S. financial institutions. These controls affect exports, reexports, or transfers (in-country) involving parties on the Specially Designated Nationals and Blocked Persons List (SDN List) with the following identifiers:

Russia-related

  • [BELARUS-EO14038]
  • [BELARUS]
  • [RUSSIA–EO14024]
  • [UKRAINE–EO13660]
  • [UKRAINE–EO13661]
  • [UKRAINE–EO13662]
  • [UKRAINE–EO13685]

Terrorism-related

  • [FTO]
  • [SDGT]

Weapons of mass destruction-related

  • [NPWMD]

Related to narcotrafficking or other criminal networks

  • [ILLICIT DRUGS–EO14059]
  • [SDNT]
  • [SDNTK]
  • [TCO]

To avoid redundancies between the agencies, transactions authorized under a general or specific license from OFAC or exempted under the applicable regulations do not require a separate license from BIS. License exceptions are not available for transactions subject to these new controls. License applications will also be subject to a presumption of denial.

Companies outside the U.S. that trade in items subject to EAR should screen the parties to their transactions against the SDN List to ensure compliance with these end-user controls.

In a previous update posted on our Trade Compliance Resource Hub on 13 February 2024 (The 12th package of EU sanctions against Russia: impact on the tanker S&P market), we explored the introduction of Article 3q restrictions on tanker sales as part of the EU’s 12th package of sanctions against Russia. In that update, we flagged a number of ambiguities over how Article 3q may be interpreted.

After various delays, on 19 February 2024 the EU Commission issued its FAQ guidance on Article 3q of Council Regulation (EU) No. 833/2014 (as amended). The FAQ document provides some key clarifications sought by the market. However, some uncertainties remain.

Recap – Article 3q

Article 3q imposes two obligations on EU tanker sellers:

  1. To notify authorities of all tanker sales to non-EU persons; and
  2. To apply for authorisation for tanker sales to persons in Russia or “for use in Russia”, which are otherwise prohibited.

The notification requirement had retrospective effect on sales from 5 December 2022 onwards which would otherwise have required notification or authorisation further to points 1 and 2 above. This notification requirement for retrospective sales was due before 20 February 2024.

Notification – sales to non-EU persons

The key clarifications are as follows:

·  Who is obliged to notify (FAQ 3)

  • It is common for tankers to be owned by SPVs in non-EU jurisdictions. A key question was whether there was a notification requirement in respect of sales of these tankers. Where the ultimate beneficial owner is an EU person, the EU has now clarified that the notification requirement applies to that person.
  • Additionally, FAQ 3 clarifies that the use of non-EU intermediaries (such as brokers or managers) to carry out the sale of the tanker does not relieve EU persons of the obligation to notify the sale. This is a part of the anti-circumvention provisions.
  • However, the flag state is not relevant to the question of whether notification is required (FAQ 4).

·  What types of transactions?

  • A broad approach should be taken to the meaning of “transfer of ownership” (FAQ 2).
  • However, long term charterparties are explicitly from the scope of the Regulation, including bareboat charters (FAQ 12).

Authorisation – sales to persons in Russia or “for use in Russia”

The key clarifications are as follows:

·  “For use in Russia

  • Probably the greatest uncertainty over Article 3q was the meaning of the words “for use in Russia”. The EU has provided some clarification on this point.
  • It is clear that “for use in Russia” includes international voyages which call at Russia (i.e. it is not limited to Russian cabotage). This is implicit in FAQ 8, which refers to authorisation applications in the context of vessels performing Russian price cap business (which by definition are international in nature). This is also consistent with the stated purpose of the regulation as a means of preventing evasion of the price cap. To further to support this conclusion, FAQ 8 includes an “intention to regularly access Russian territorial waters” in a list of factors which a competent authority may consider in its decision concerning authorisation. The inclusion of this wording in the list of factors is suggestive of when an application may be required.
  • The FAQ is silent on whether the possibility of occasional, irregular voyages to Russia would require an application for authorisation.

·  Due diligence still vital

  • FAQ 9 is clear that a seller may dispense with an application where it is “not aware of any reason why the tanker would be used in Russia”. This appears to set quite a low threshold for applications. 
  • FAQ 9 goes on to say that an application should only be made where due diligence has revealed that the sale is to the benefit of a Russian person or for use in Russia.
  • The burden is on the seller to perform due diligence to determine whether the buyer will use the tanker in Russia, including by seeking documents from the buyer. A seller may choose to make a declaration, along with its notification, that it has performed such due diligence and on the basis of the information received, has determined that no authorisation is required.
  • That said, it is clear from the above, and the various price cap guidance released by the EU, UK and U.S. authorities that reasonable and proportionate due diligence remains a central tenet to the price cap regime and the restrictions related to it, including Article 3q.
  • A Russian trading history or the need for authorisation does not doom a tanker sale. Generally, FAQ 9 recommends that authorisation can be granted where the vessel will be used to trade Russian oil and petroleum products in compliance with the price cap. Conversely, authorisation is likely to be refused where there is evidence of price cap evasion.

·  What types of transactions?

  • A broad approach should be taken to the meaning of “transfer of ownership” (FAQ 2).
  • The requirement for authorisation does not apply to long term charterparties, including bareboat charters (FAQ 12).

Whilst some ambiguity remains, the market is moving forward with implementing this regime. We have already assisted in several authorisation applications to EU competent authorities and are well positioned to assist sellers or buyers to navigate this process in connection with the overall S&P transaction.

In a previous update posted on our Trade Compliance Resource Hub on 20 December 2023 (Christmas comes early for G7 operators – EU adopts 12th package of sanctions against Russia, changes to the Price Cap Model), we explored the EU’s latest package of sanctions against Russia in general terms.

One of the key novelties in this package, introduced by way of article 3(q) of Council Regulation (EU) 2023/2878 (the “Regulation”), that we want to focus on in this briefing is the introduction of an obligations framework around the sale of tankers, and more specifically “for the transport of crude oil or petroleum products”. The self-declared aim of the Regulation is to introduce “transparency” into the sale of this asset class by implementing both back-looking (for any transfer having occurred between 5 December 2022 and 19 December 2023) and forward-looking notification requirements and, in some cases, a pre-approval requirement.

That tankers have been used in circumventing trade-oriented sanctions is beyond dispute, and the widespread references made to the activities of the “dark fleet” is testimony to that. While the purpose of the policy is well understood, the devil is in the detail and the Regulation raises several issues in relation to its practical application and effectiveness.

The policy purports to apply to any owner of such tanker which is an “EU person” in the usual meaning of the term. The applicability of the Regulation to EU registered corporate ship owners is obvious, and merely theoretical in relation to natural persons. A non-EU corporate body being the registered owner is more frequent in practice and some may be tempted, taking a narrow interpretation of the Regulation, to hide behind the corporate veil to disregard the Regulation completely. Based on the EU’s history of intolerance towards, in the context of other article 3 restrictions, and especially in relation to Russian seaborne oil, arguments that a vessel is not an EU vessel but merely beneficially owned or managed by EU persons, this would probably not be prudent. Also note that the EU has clarified through published FAQs that such restrictions apply to vessels “owned, chartered and/or operated by EU companies or nationals”.

In terms of the transactions encompassed by the Regulation, the first point to note is that there is uncertainty in the semantics, as the concepts of “sale” and “transfer of ownership” are used interchangeably throughout article 3(q) when they actually refer to two distinct stages of a sale and purchase transaction (S&P), the former being the entry into a memorandum of agreement (MOA) and the latter, the delivery of the vessel pursuant to the MOA. Also, while the restrictions obviously apply to a sale contract (on usual BIMCO or Nipponsale forms), a transfer of ownership following the exercise of a purchase option in the context of the tail-end of a financial bareboat chartering would also fall within the scope of article 3(q). Where the bareboat charters do not contain the appropriate forward-looking sanctions wording; the owners could find themselves in a difficult spot.

The Regulation also prohibits sales where the vessel is “for use in Russia”, notwithstanding the nationality of the prospective buyer. This is a more complex issue to address in day-to-day sale and purchase transactions. Pending further clarification from the EU, ship owners should insist on including appropriate buyers’ representations and warranties in their MOAs as to the intended use of the vessel and ideally receive a full indemnity from the buyers in case of breach of the representation. Such wording should be carefully drafted, for example so as to include any new sanctions packages between signing of the MOA and delivery.

Another uncertainty will result from the number of different sanctions monitoring entities involved across the EU. The requirements in article 3(q), resulting from an EU regulation, should be uniform across all EU jurisdictions. However, in practice, we expect there to be potential divergence between jurisdictions on the approach to notification requirements. A good example is the Maltese notification template, which requires the resident entity to complete the information required by article 3(q)(4) specified above. But it also requires a “brief explanation regarding the merits of the case/transfer”, which is not explicitly part of the Regulation. As member states continue to implement new monitoring templates, ship owners may face delays when ensuring compliance – the list of information to provide could differ between flag states. Again, inclusion of an information undertaking, or even a wider assistance one, from buyers to help sellers comply with their obligations under the Regulation should be considered.

Clarifications on the practicalities of the Regulation are awaited and our sanctions team have raised these issues with the relevant actors at the EU level. The deadline set as 20 February 2024 for the “looking back” report period is fast approaching. In the meantime, ship owners looking to dispose of their tankers should take a prudent approach, run enhanced Know Your Client checks (KYCs) and include appropriate wording in any MOA to minimize sanctions-related risks, given these are not covered in the standard BIMCO/Nipponsale forms.

Continue Reading The 12th package of EU sanctions against Russia: impact on the tanker S&P market

On 14 December 2023, the two EU co-legislators, the Council of the EU and the European Parliament, provisionally reached an agreement on the Corporate Sustainability Due Diligence Directive (CS3D). In essence, the Directive sets out an obligation for companies to comply with human rights and environmental due diligence and provides for an enforcement mechanism with penalties and civil liabilities for non-compliance. The Directive will apply to both EU and non-EU companies that meet certain thresholds with respect to turnover and number of employees. Below, we explain the key elements of the provisional agreement.

Background

On 23 February 2022, the European Commission presented a legislative proposal of CS3D. The Council adopted its General Approach on 1 December 2022 and the Parliament adopted its position on 1 June 2023. Following intensive inter-institutional negotiations, the two EU co-legislators, the Council and the Parliament, reached a provisional agreement regarding certain thorny issues, as explained below, on 14 December 2023. However, since technical negotiations on the final details are still ongoing, certain elements of the Directive may change. The legal text is not publicly available at the time of writing this alert. 

Key elements of the agreement

Scope (companies): The Directive will apply to both EU companies and non-EU companies that meet certain thresholds with respect to turnover and number of employees.

  • EU companies incorporated under the laws of EU member states:
    • EU companies with more than 500 employees and a net worldwide turnover of more than €150 million (large companies).
    • EU companies with over 250 employees and a net worldwide turnover of more than €40 million if at least €20 million is generated in one or more high-risk sectors (e.g., textiles, agriculture).
  • Non-EU companies incorporated under the laws of a non-EU country: Non-EU companies with a netEU-wide turnover of more than €150 million. The Directive will only become applicable to these companies three years after the entry into force of the Directive, and the Commission must publish a list of the non-EU companies that fall under the scope of the legislation.

Small and medium-sized enterprises (SMEs) remain excluded from the scope of the Directive, but could be indirectly affected by the due diligence conducted by the companies under the scope.

Scope (chain of activities): Due diligence obligations will apply to companies’ own operations, those of their subsidiaries, and those of their business partners. In other words, the Directive covers chain of activities that companies engage in themselves or through upstream and downstream partners. Due diligence on downstream partners seems to be limited to transport, storage and disposal of products with the exemption of the sale of products.

Financial sectors: Financial sectors are covered by the Directive, but only with respect to their upstream partners. The agreement temporarily excludes financial services from conducting due diligence on downstream partners (i.e., customers). However, as a compromise, a review clause was added to be able to include downstream partners in financial sectors in the scope based on a “sufficient impact assessment”.

Climate change: Companies will have to adopt and put into effect, through best efforts, a transition plan for climate change mitigation to ensure that their strategy is compatible with limiting global warming to 1.5°C. Companies with more than 1,000 employees could link additional financial incentives, such as variable remuneration, to the fulfilment of the climate change mitigation plan.

Civil liability:  Companies will be liable for breaching due diligence obligations and victims will have the right to be compensated for damages. However, the liability will be limited to where damages were caused by companies’ intent or negligence. Those concerned by adverse impacts, including trade unions or civil society organisations, may bring claims within five years. The provisional agreement limits the disclosure of evidence, injunctive measures and costs of proceedings for claimants.

Penalties: EU Member States will designate a supervisory authority for the enforcement of the Directive. The national authorities will exchange best practices and cooperate at EU level within the European Network of Supervisory Authorities established by the Commission. They will be able to launch investigations and impose penalties on non-compliant companies, including “naming and shaming” and fines of up to 5% of their net worldwide turnover. If a company fails to pay fines, several injunction measures could be taken.

Public procurement: Compliance with the Directive could be qualified as a criterion for the award of public contracts and concessions.

Directors’ duties: The directors’ duties, which were stipulated in Article 25 (Directors’ duty of care) and Article 26 (Setting up and overseeing due diligence) of the Commission proposal, have been deleted.

Looking ahead

After technical negotiations, the Council and the Parliament will officially adopt the final text, which is expected to take place in the first quarter of 2024. Once the Directive enters into force (i.e., 20 days after its publication in the Official Journal of the European Union), the EU Member States will have two years to transpose the Directive into national law.

Mandatory supply chain due diligence in the EU

Various supply chain due diligence schemes already govern the placing of goods on the EU market, and several more are currently being adopted by the EU. In the context of the EU Green Deal, Carbon Border Adjustment Mechanism (CBAM), Deforestation Regulation and Battery Regulation entered into force in 2023. The EU is also currently working on Forced Labour Regulation. Other supply chain due diligence schemes are already in force, including Conflict Minerals Regulation, Timber Regulation,  Forest Law Enforcement, Governance and Trade (FLEGT) Regulation and Kimberley Process Certification Scheme for conflict diamonds. All of these schemes have one important thing in common: they all require manufacturers to obtain detailed information from their suppliers and from importers to know how the products they place on the EU market have been manufactured and be able to present documentary evidence to demonstrate it.

Selected list of our publications on due diligence

Any questions? Please do not hesitate to get in touch with Reed Smith’s trade, environment and ESG teams in Brussels or Munich Office, or your usual contact at Reed Smith. 

On 18 December, the EU announced their 12th round of sanctions targeting Russia. This comes against the backdrop of a flurry of Russia sanctions related activity; namely, widely reported price cap investigations by the G7; release of the U.S. updated quint-seal guidance on maritime sanctions compliance; and a number of designations of third country actors believed to be engaged in price-cap circumvention.

In coordination with the EU, the UK and the U.S. have also updated their respective Oil Price Cap Guidance, materially altering the attestation model adopted to date. It is anticipated that the U.S. will follow, shortly.

The full text of the EU 12th Package can be found here, the updated Oil Price Cap Guidance for the UK can be found here, and the updated Oil Price Cap Guidance for the U.S. can be found here. The main takeaways are as follows:

Continue Reading Christmas comes early for G7 operators – EU adopts 12th package of sanctions against Russia, changes to the Price Cap Model

International efforts to seize assets of sanctioned Russian oligarchs and dispose of them in a timely fashion continue to face obstacles. Among these assets are the TANGO and AMADEA, two superyachts that were seized in the spring of 2022. More than a year and a half later, the TANGO and AMADEA are stuck in legal limbo. Taxpayers fund the staggering cost of upkeep, which (for full upkeep) can per annum be ten percent of a yacht’s total value. The costs include wages for a skeleton crew, insurance, docking fees, diesel supply and general maintenance.  Licenses from multiple jurisdictions are often needed to process transactions relating to a frozen asset, making payment for these services even more complicated and time consuming. 

Continue Reading Superyacht seizures and financing risk associated with sanctions