The United States of America, the European Union and the United Kingdom decided to impose sanctions against Russia as a result of Russia's recognition of the independence of the two separatist regions in eastern Ukraine and the subsequent military operations against Ukraine.
In this context, how the merchants especially those operating in the transportation/shipping sector should take action needs to be indicated regarding the sanctions which to be applied to Russia. First of all, the legal relations with the Russian entities must be examined as per the sanctions imposed by the European Union, the United Kingdom and the United States of America. Moreover, it is necessary to examine the sanctions, embargo and banned person lists regularly. It is important to examine sanction lists which are revised almost every day to avoid breaching the sanctions, especially the sanction list of the United States of America and the European Union.
In this direction, the United States of America took concrete steps and updated the Specially Designated Nationals and Blocked Persons List (SDN List) and announced the banned persons, entities and vessels. The list continues to be updated from time to time due to the concrete event in question. The United States of America's sanctions are not to be applied to companies not founded in their territory for their commercial relations with Russian entities. The said sanctions only can be applied to those companies in the event of using US Dollars in transactions. In this situation, the United States of America consider that as a breach of sanctions whether the company is founded in the USA or not. To clarify, such business between Russian entities and companies that are not founded in the USA is not directly accepted in United States jurisdiction. However, if payments are made in US Dollars, the trade will be deemed to have been made in United States jurisdiction and shall be considered as a breach of sanctions.
According to the European Union sanctions legislation; In the event that Russian citizens or legal entities own directly or indirectly 50 per cent of an entity or vessel, those entities are considered as sanctioned entities by the European Union. For this reason, it is necessary to carefully examine the ownership/property structure of the partners in the business relationship.
Due to the sanctions summarized above, the entities who have commercial relations with Russia whether directly or not should investigate their business partners and especially their ownership/property structures within the framework of these sanctions. In this regard, the contracts made with the said parties should be examined. If the performance of the contracts is in the scope of sanctions, it should be refused and the contracts containing breaching conditions of the sanctions should be terminated. In case of a new business relationship, the contracts should contain conditions and terms that will give the party the right not to fulfil the said performance and to terminate the contract unilaterally.
You can check sanctioned entities in the SDN list from the below link: https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/2022022
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.