[2025] EWHC 2036 (Comm)

On 5 November 2021, the Claimant chartered the Vessel to the Defendant for a voyage from a port in the Ust Luga to Primorsk range (that is, a Russian Baltic Sea port) to the Mediterranean (intention Aliaga, Turkey) carrying oil (the “Charterparty”).

A key clause in the Charterparty was the Eastern Pacific Voyage Charter Trade and Economic Compliance Clause (the “EPS Sanctions Clause”), which was set out in the fixture recap. By its terms the Defendant warranted that performance of the charter would not expose the Claimant, the Vessel, its crew or insurers, to any national, international or supranational law or regulation imposing trade and economic sanctions, prohibitions or restrictions. The Charterparty also provided that the Claimant was not obliged to comply with any orders for the employment of the Vessel which in its reasonable judgment would expose it (or the Vessel, its crew or insurers) to the sanctions laws in question. I will set out the detail of that clause in due course.

It was common ground that “Sanctions” within the meaning of the EPS Sanctions Clause as regards UK law referred to those provisions contained in the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”), The Republic of Belarus (Sanctions) (EU Exit) Regulations 2019/600 (the “UK Regulations”), and as regards European Union (“EU”) law referred to Council Regulation (EC) No 765/2006 of 18 May 2006 concerning restrictive measures in respect of Belarus and Council Decision 2012/642/CFSP of 15 October 2012 concerning restrictive measures against Belarus, as amended from time to time (the “EU Regulations”), (individually the “UK Sanctions Laws” and the “EU Sanctions Laws” and collectively the “Relevant Sanctions Laws”).

This was before Russia had invaded Ukraine, and there were no sanctions on Russian oil generally, but there were sanctions on certain individuals, including Mikail Gutseriev (“Mr Gutseriev”), a Russian businessman with links to the Lukashenko regime in Belarus.

On or about 21 June 2021, the EU imposed sanctions on Mr Gutseriev and on 9 August 2021, the UK imposed sanctions on him. Thus, at all material times, Mr Gutseriev was a designated and/or listed person under the Relevant Sanctions Laws.

On or about 22 July 2021, it was reported in the Russian financial newspaper, Kommersant, that Mr Gutseriev had:

Pursuant to the Charterparty and the Defendant’s orders thereunder, on 17 November 2021 the Vessel arrived at the nominated port of loading, Primorsk, and gave notice of readiness (“NOR”) at 00.01 hours. There was then something of a stand-off between the Claimant and the Defendant.

The shipper of the cargo that the Defendant wished to load aboard the Vessel (the “Neftisa Cargo”) was Neftisa. On 16 November 2021, three draft bills of lading identifying Neftisa as the shipper were provided to the Claimant by agents on behalf of Neftisa and/or the Defendant. On or about 16 and 17 November 2021, the Defendant confirmed to the Claimant that Neftisa was the supplier of the Neftisa Cargo and that the Charterers’ orders were to load it aboard the Vessel and carry it to Aliaga. The Neftisa Cargo was being exported and sold by Neftisa to the Defendant FOB Primorsk for money consideration pursuant to a sale contract between Neftisa and the Defendant dated 12 April 2021 (the “Sale Contract”).

Under clause 3.1 of the Sale Contract, property, title and risk was to pass from Neftisa to the Defendant as the Neftisa Cargo passed the inlet flange of the hose connection of the Vessel’s intake pipe at the load port.

It was not disputed before me that performance of the intended contract of carriage with Neftisa would have taken place in part within the EU and part within the UK. Two of the Vessel’s crew were EU nationals and the Claimant’s directors were UK nationals, resident in the EU. There was no jurisdictional challenge to the application of the Relevant Sanctions Laws.

Performance of the Defendant’s orders would have required and/or in the ordinary course of things would have entailed:

The Claimant’s sanctions screening checks revealed that Neftisa was associated with Mr Gutseriev, who was designated under EU and UK Sanctions Laws, and identified him as the indirect owner of Neftisa and the Chairman of its Board of Directors (reported July 2015-July 2021) and (no further information reported after August 2021) [Trial bundle p3463].

In these circumstances, the Claimant refused to load the Neftisa Cargo and called on the Defendant to provide alternative voyage orders [C1/110/3423]. The Defendant tried to persuade the Claimant to change its mind. It provided a letter dated 16 November 2021, on Neftisa headed paper, indicating that Mr Gutseriev was not a member of the Board of Directors of Neftisa and “[i]n accordance with the legislation of the Russian Federation is not the controlling person of “Neftisa””. The Defendant also provided copies of legal opinions from international law firms, Herbert Smith dated 12 July 2021 and 17 November 2021 and Baker McKenzie dated 14 July 2021, to the effect that, if various factual assumptions were made, Neftisa was not owned or controlled by Mr Gutseriev and so was not subject to EU or UK sanctions. It is the Claimant’s case that those law firms did not warrant, or express an opinion supporting, the truth of the factual assumptions on which their legal opinions rested and the Claimant was not persuaded to allow the loading of the Neftisa Cargo.

The Defendant did not provide alternative orders to the Vessel and matters came to a head on 24 November 2021, when the Defendant sent an email to the Claimant purporting to cancel the Charterparty on grounds of the Claimant’s refusal to load the Neftisa Cargo. Later the same day, the Claimant replied, stating that the Defendant’s purported cancellation amounted to renunciation of the Charterparty and that the Claimant terminated the Charterparty for repudiatory breach.

If the Charterparty had been duly performed, the Vessel would have been redelivered to the Claimant in the Mediterranean, which was a more favourable location for future employment than Sikka, India.

On 17 November 2021 the Defendant fixed another vessel, m/t Zuma, which accepted the Neftisa Cargo.