United States Bans Russian-Affiliated Vessels From U.S. Ports

President Biden issued a Proclamation on 21 April 2022 to “prohibit Russian-affiliated vessels from entering into United States ports.” As mentioned on this alert, this motion considerably builds upon U.S. sanctions in opposition to Russia within the maritime sector that already goal sure vessels, cargos, and blocked events. Some vessels that had been beforehand not impacted by present U.S. sanctions in opposition to Russia might now be barred from getting into U.S. ports below this Proclamation.

Russian Vessel Ban

The Proclamation’s ban on the entry of Russian-affiliated vessels goes into impact on 28 April 2022 at 12:01 a.m. Eastern Daylight Time and applies to all vessels that both: (1) sail below the Russian flag (i.e., are registered in Russia); (2) are Russian owned (i.e., the authorized title of possession of the vessel that seems on the ship’s registration paperwork is the federal government of the Russian Federation or a Russian firm, citizen, or everlasting resident); or (3) are Russian operated (i.e., a Russian firm, citizen, or everlasting resident is answerable for the industrial choices regarding the employment of a ship and decides how and the place that asset is employed).

The Proclamation makes a slender exception for the entry of Russian-affiliated vessels used within the transport of “special nuclear material,” “source material,” and “nuclear byproduct material,” as these phrases are outlined below the Atomic Energy Act. The Proclamation additionally permits entry of Russian-affiliated vessels as a result of drive majeure to permit seafarers to disembark or embark for functions of conducting crew modifications, emergency medical care, or for different humanitarian want.

Vessel Ban Enforcement – Denial of Entry into U.S. Waters

The Proclamation’s ban on Russian-affiliated vessels was issued pursuant to the Magnuson Act, 46 U.S.C. § 70051, which offers the Secretary of Homeland Security and the U.S. Coast Guard broad authority to regulate the motion of overseas flag vessels in U.S. waters, together with the precise to grab such vessels below some circumstances. The Proclamation cites this statutory authority expressly.

All overseas flag vessels destined for U.S. ports are screened by the U.S. Coast Guard, U.S. Customs & Border Protection, and a wide range of different businesses inside the U.S. authorities. Upon submission of a vessel’s 96-hour Advanced Notice of Arrival, the vessel is screened by these businesses. During that screening course of, if the vessel is decided to be a Russian-affiliated vessel, the U.S. Coast Guard will difficulty an order to the vessel denying entry into U.S. waters pursuant to the Magnuson Act and the Proclamation. Violations of such orders might lead to important felony and civil penalties. If such an order is issued, a vessel proprietor or operator has the precise to enchantment the order to larger authorities, pursuant to present rules.

As a sensible matter, vessel homeowners, charterers, and operators shall be finest served by conducting sturdy due diligence to establish and resolve potential problems with concern, prior to submission of the Advanced Notice of Arrival for the vessel.

Other Maritime-Related Sanctions

The ban on Russian-affiliated vessels builds upon present U.S. sanctions in opposition to Russia that relate to vessels calling U.S. ports.¹ Principal amongst these are the blocking of sure Russian vessels and restrictions on import shipments of sure Russian-origin items.

Blocked Vessels and Owners

Pursuant to numerous govt orders issued between 2014 and 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated roughly 40 Russian-affiliated vessels to the Specifically Designated Nationals and Blocked Persons List (SDN List). Numerous different vessels are blocked by advantage of the truth that they’re owned 50% or extra by events on the SDN List. Like another blocked property, if these vessels enter U.S. jurisdiction or the possession of a U.S. individual, they have to be bodily blocked and will be seized by U.S. authorities. U.S. shippers, freight forwarders, insurers, monetary establishments, suppliers, and different U.S. individuals are strictly prohibited from any dealings with such vessels, together with chartering, reserving cargo, or offering any items, companies, or funds for blocked vessels.

Sovcomflot, Russia’s largest transport firm, isn’t absolutely blocked (as of the date of this alert) however, below Directive 3 of Executive Order 14024, Sovcomflot is topic to debt restrictions. Specifically, U.S. individuals (or individuals inside the United States) are prohibited from all dealings with Sovcomflot in new debt of longer than 14 days maturity or new fairness (the place such new debt or new fairness is issued on or after 26 March 2022). Among different issues, this restriction prohibits any extension of credit score or fee phrases to Sovcomflot which are longer than 14 days.

Import Shipments

In addition to sanctions that block vessels and bar Russian-affiliated vessels from U.S. ports, U.S. sanctions impose restrictions on import shipments that contain sure cargos and cargo pursuits. Under Executive Order 14066, shipments into the United States of most Russian-origin power merchandise are prohibited, together with shipments of Russian crude oil, petroleum, petroleum fuels, oils, and merchandise of their distillation; liquefied pure fuel, coal, and coal merchandise. Under Executive Order 14068, import shipments of Russian-origin merchandise, resembling fish, seafood, seafood preparations, alcoholic drinks, and non-industrial diamonds are additionally prohibited.

Even when imported cargo falls exterior the classes of products topic to particular import bans, shipments to the United States might however be topic to sanctions in the event that they contain (straight or not directly) blocked events or property—i.e., events on the SDN List or events/property owned 50% or extra by a number of events on the SDN List.

Due Diligence

To keep away from the potential of being denied entry into U.S. ports, previous to participating in commerce within the United States, all vessel homeowners, operators, charterers, and different vessel pursuits ought to fastidiously assessment all affiliations to Russian residents, firms, or different entities to make sure the vessel won’t be deemed a “Russian-affiliated vessel” below the Proclamation.

More broadly, U.S. sanctions, like these described above, name for steady due diligence on the a part of all U.S. and non-U.S. events concerned within the cargo of products to the United States. It is necessary to display screen all vessels, vessel homeowners, charterers, cargo pursuits, monetary establishments, and another events concerned straight or not directly within the cargo to make sure they don’t seem to be blocked or topic to different commerce restrictions.

It can be essential to be alert and to analyze any “red flags” that recommend the usage of misleading transport practices, resembling: ship-to-ship transfers used to hide info relating to the vessel, its cargo, or events concerned; disabling or manipulating a vessel’s automated identification system (AIS) to hide a vessel’s actions; and falsifying cargo and vessel paperwork, together with false certifications relating to the cargo’s nation of origin. OFAC mentioned such illicit transport and sanctions evasion practices within the Sanctions Advisory, printed in May 2020.

Conclusion

Ok&L Gates will proceed to trace and supply updates on persevering with developments with respect to Russian sanctions. If you will have any questions relating to the sanctions mentioned on this alert, please contact the important thing contacts under.

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