The US Treasury Department’s recently-published guidelines on how the price cap on Russian oil will be applied to shipping promise hard work for maritime companies to stay in compliance with the rules.
Bruce Paulsen, a maritime lawyer at New York’s Seward & Kissel, said the documentation rules unveiled by the Office of Foreign Assets Control (Ofac) create a very complex regime.
“It’s going to take the industry a great deal of work to be able to comply,” said Paulsen, who focuses on both sanctions and shipping litigation. “By and large, it is perhaps the most complex sanctions regime I have ever seen.”
He contrasted the preliminary guidance to the US government’s primary sanctions on Iran, which essentially ban Americans and US companies from doing business with Iran or anyone on an Ofac blacklist.
As TradeWinds reported over the weekend, Ofac released preliminary guidelines for maritime service companies that will require them either to document oil price information or to collect attestations from customers stating that Russian oil was purchased at or below the oil price cap.
The rules appear to put tanker owners and operators somewhere in the middle, meaning they will have to keep documentation of oil prices in some cases but collect customer attestations in other situations. Confusingly, tanker owners and operators appear to be referred to as “shippers” — a term that in maritime parlance is reserved for a company that hires a ship.
Protection and indemnity clubs, hull and machinery insurers and insurance brokers will have to collect attestations from their customers that they are following the rules.
And while the guidance shields maritime service companies from facing sanctions if customers provide them with falsified records, in the same document Ofac asks maritime companies to watch out for red flags.
“There is a safe harbour for inadvertent violations, but certainly the banks, the shipping companies and the P&I insurers are all going to have to act with extreme care to ensure that they are properly under the cap,” Paulsen said.
The lawyer said more guidance is needed from Ofac, which has said it plans to publish more information.
In the meantime, shipping companies should prepare to comply with a more complex set of rules than earlier sanctions.
“If they intend to carry cargo below the cap, they need to put in place, in connection with their already existing compliance programme, the necessary compliance steps to satisfy all these requirements to show that what they are doing is legal,” Paulsen said.