Posted on: 27 April 2023
Windward’s recent webinar, Navigating deception: the impact of Russia’s invasion on the maritime ecosystem, featuring a panel of experts – Ami Daniel, CEO & Co-Founder, Windward; Siiri Duddington, Partner, Hill Dickinson; Ioannis Papadimitriou, Senior Freight Analyst, Vortexa; and Jos Standerwick, Chief Executive, Maritime London, who moderated the discussion – provided interesting viewpoints on the legal and commercial impact of the war, as well as a deeper look at deceptive shipping practices.
A Legal Perspective on Russia Sanctions
From a legal perspective, according to Siiri Duddington, Partner at Hill Dickinson LLP, no one could have envisioned the scale of sanctions that have been issued as a consequence of the war. The sheer number of sanctions packages issued by the sanctions authorities, most notably the EU and the UK, have targeted the financial, trade, energy, technology, and defense sectors. This has made it difficult for the industry, which has also had to deal with issues of interpretation, exceptions, and the impact of a sanctioned individual’s interest in a business, etc.
Russia’s sanctions program is unique, according to Siiri, because of the concerted effort by the G7 to prohibit Russian oil imports completely, and further to prohibit transport and related services of oil to third-party countries unless it complies with an oil price cap. This has all been set against the backdrop of a worldwide energy crisis. The coordinated approach has also been unique, and the war doesn’t seem to be showing signs of abating, making for a complex sanctions landscape over the next year, or possibly longer.
The Commercial Impact
In recent years, both Venezuela and Iran have been sanctioned. But what makes the sanctions on Russia so different, and why have they made such an impact on the market?
According to Ioannis Papadimitriou, Senior Freight Analyst at Vortexa, there are two main differences between previous sanctions and the current sanctions on Russia:
- Russia is a huge energy exporter whose impact extends beyond crude oil, to clean and dirty petroleum products.
- Any discussion of penalization came at a time when the energy demand was high and many questions revolved around energy security. The G7 and EU understood the need for Russian oil to still flow, to stabilize oil prices and not burden consumers.
Due to these two reasons, the sanctions are not a global outright ban, as was seen with Iran and Venezuela. These were also the reasons that gave birth to the price cap regulations. The fact that trade with Russia is still allowed, makes the whole situation complicated, with deceptive shipping practices on the rise and bad actors becoming more creative.
Deceptive Shipping Practices
Based on Windward’s insights, the recent The New York Times article stated that, “[AIS manipulation] is a technology enabling the transmission of fake locations to carry out murky or even illegal business operations could have profound implications for the enforcement of international law.”
According to Ami Daniel, CEO & Co-Founder of Windward, who was part of our expert panel, deceptive shipping practices are constantly evolving and many in the shipping industry are not screening for illicit activities. If businesses aren’t implementing due diligence strategies or using artificial intelligence, staying ahead of this cat-and-mouse game is nearly impossible. This makes it easy for businesses to fall prey to bad actors and end up harming their reputation or bottom line (or both).
Looking at a recent case, such as the incident featuring the Nobel, can provide a deeper understanding of these complex deceptive shipping practices and how important due diligence is. Continue to read here or to watch the webinar in full please use this link.
