P&I clubs review Russian obligations as sanctions arrive
No ban on providing cover yet, according to lawyers, but marine mutuals mindful of Iran precedent
International Group protection and indemnity (P&I) clubs are reviewing their obligations to Russian shipowners in light of the growing array of sanctions from multiple governments, according to industry sources.
While few representatives of the 13 marine mutuals that make up the International Group were willing to go into details of their deliberations, given the obvious sensitivity of the situation, several privately confirmed the matter is being discussed.
Lawyers believe there is nothing in any of the sanctions rolled out so far by the US, the EU, Britain, Canada or Australia that rules out providing cover to Russia-linked shipping per se.
However, marine insurers are naturally wary after having been prohibited from providing cover for vessels involved in trading with Iran, and have also having had to review their conduct in relation to Venezuela.
That has led to increasing awareness that a rapid response might be needed should the net be extended to take in Russia.
“There is no doubt the developing sanctions landscape is going to have a major impact on large parts of the shipping industry,” Nick Austin, a shipping partner at law firm Reed Smith, said. “But the devil will be in the detail. The market will have to keep close tabs on the regulations as they are published by the authorities.
“The market is scrambling to get to grips with what the sanctions mean in practice, and the steps they need to take.”
The International Group ruminations come after West of England confirmed that it axed cover for two of the five Russian-financed ships specifically singled out by the US because of links with Promsvyazbank-affiliated PSB Leasing.
The vessels have been named as FESCO Magadan (IMO: 9287699) and FESCO Moneron (IMO: 9277412), both Russian-flag 800 teu feeders built in 2003.
“We can confirm we held the entry for these two ships,” West of England said in a statement. “Due to their recent designation by the US authorities however cover has been terminated in accordance with our rules.”
North Group director, Mike Salthouse, who is also chair of the International Group sanctions committee, said sanctions against Russian have so far avoided energy and shipping and are focused instead on financial services and individuals. “As you know, clubs do not provide cover for unlawful trade, which includes a breach of applicable sanctions, or a trade by an entered vessel that would put a club at risk of breaking sanctions,” he said.
He declined to discuss whether any sanctions committee meetings are under way or planned to discuss the Russia situation, other than to affirm that the committee “meets regularly.”
International Group chief executive, Nick Shaw, declined to comment.
“The imposition of sanctions by the US, UK and EU creates a fluid and fast-moving situation to which we as a leading marine insurer need to respond,’’ said Gard, the world’s largest P&I and hull provider.
“The key for us is to assist our members and clients during these difficult and turbulent times and to effectively protect people, property and the environment while ensuring that we meet all the relevant external requirements and sanctions imposed.”
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