Netherlands – an end to exemptions allowing port entry for Russian-flagged vessels

The Dutch Minister for Infrastructure and Water Management has announced in a written statement to parliament, that the Dutch government will no longer grant exemptions to the EU’s prohibition on Russian-flagged vessels, or vessels registered with the Russian Maritime Register of Shipping from using Dutch ports.

The Dutch had been granting permission for Russian fishing vessels to use Dutch ports based on the “food products” exemption. This practice will now stop with the Minister stating: “Future requests for an exemption for Russian flagged ships will also be assessed negatively”.

Press reports in the Netherland had linked Russian fishing vessels to espionage, but the main reasons given in the statement include:

      • “increasing geopolitical tensions”;
      • “upcoming tightening of European sanctions policy”; and
      • that the issue “had also been discussed in the debates about the European summit by a number of factions and attention was drawn to effective implementation of the sanctions by the Netherlands”.

 

 

Sweden – companies called to Foreign Ministry to explain possible circumvention

It is being reported (e.g. here and here) that a number of large Swedish companies have been called to the Foreign Ministry to attend a meeting also attended by a number of other authorities.

The meeting concerned information received by Sweden from the European Commission about exports to Russia which may have been in breach of, or circumvented, the EU’s sanctions.

The companies called to attend the meeting included Atlas Copco, Ericsson, Volvo, SKF and Sandvik.

The companies deny breaches of sanctions.

The Swedish authorities are now considering what further action to take.

Denmark – investigation closes into alleged import of fuel from partly Russian-owned refinery in India

Further to our earlier post regarding an investigation by the Danish Business Authority into allegations that the Danish shipping company Hafnia, was importing refined fuels from a refinery in India that may have been owned or controlled by Rosneft (which is a designated person under the EU’s sanctions), it is now being reported (here – behind a paywall), that the Danish Business Authority has concluded its investigation having determined that it could not establish that there had been a breach of Russian sanctions.

As yet the Danish Business Authority has not issued a statement on its website.

United Kingdom – OFSI has ongoing oil price cap investigations

As part of its evidence to the UK Parliament HM Treasury (of which OFSI is a part) has provided the first indications that it has ongoing investigations into possible breaches of the oil price cap.

HM Treasury stated:

OFSI takes a proactive enforcement approach and is currently undertaking a number of investigations into suspected breaches of the oil price cap, using powers under SAMLA to request information and working closely with international partners in the G7+ coalition. Although OFSI cannot discuss or comment on individual cases, OFSI is able to launch investigations based on
suspected breach reports shared with us, intelligence capabilities, and other reporting“.

HM Treasury also repeated the statistic from its Annual Report that as of April 2023 it had 172 cases under live investigation (no update covering the intervening 13 months was provided), and confirmed an earlier ministerial answer that the first fines for breaches of post-2022 Russian sanctions are expected this year.

Switzerland – publishing the 10 fines for breaching sanctions imposed by SECO: Part 1 – cases 1-3

Below is the first in our series of publishing the 10 final administrative criminal decisions reached by SECO in Switzerland. The examples below relate to Russian and Belarusian sanctions.

The next instalment will be published on Monday.

1.   Final administrative criminal decision dated 21 November 2022

Original: 2022-11-21 – I.41 – Strafbescheid

Translation: 2022-11-21 – I.41 – Strafbescheid_Translated to English

The company in question attempted to export 1,850kg of a kind of lubricant (customs code 3403) included in the list of banned exports from Switzerland to Russia. The value of the products was €17,440.

The goods were stopped by Swiss customs at Mendrisio. An investigation was commenced.

The company cooperated and admitted the breach but submitted in writing that it was unaware that the product was included on the sanctions list.

SECO accepted this evidence and undertook its assessment of the penalty based on the fact that the breach was negligent and not intentional. This distinction gives rise to significantly different penalties under Swiss law.

A negligent breach can give rise to a maximum penalty of CHF 100,000 and/or a custodial sentence of up to three months.

Given the low value of the breach, and the accepted evidence of negligence rather than intent, SECO relied upon a provision of Swiss criminal procedure whereby if a fine is of no more than CHF 5,000 then the company can pay the fine without the need for further investigation to determine the specific individuals responsible. This was said to be proportionate compared to the time and cost of a full-blown investigation.

In light of this a fine of CHF 4,500 was imposed plus costs of CHF 1,260.

Comment: while the result may be proportionate to the value of the goods, it is unclear from the final decision whether the company in question received the payment of €17,440. It may be hoped that if such payment had been received that those funds would have been confiscated.

It is also noteworthy that the investigation was commenced on 5 September 2022 and finished by 26 October 2022, with the final decision issued on 21 November. As described the defendant was able to make written submissions but no person was interviewed and no documents or other evidence was sought. The submission of negligent ignorance of the sanctions appears to have been accepted without being tested.

2.   Final administrative criminal decision dated 18 January 2023

Original: 2023-01-18 – I.42 – Strafbescheid

Translation: 2023-01-18 – I.42 – Strafbescheid_Translated to English

The company in question sought to export pumps (customs code 8413.9130) to Belarus valued at €39,619.20. Such goods are prohibited from sale, delivery or export to Belarus under article 6 of the Swiss Ordinance dated 16 March 2022. The goods were stopped at Zurich airport and had been due to arrive in Belarus after first being transported through Turkey and Russia.

The company accepted the breach, but submitted that it had obtained SECO clearance when the order was first placed in January 2022, but that it had mistakenly failed to re-check the tariff code against the Ordinance at the time of export in June 2022. The company also undertook remediation measures and appointed a sanctions compliance officer.

SECO accepted that the breach was not intentional, but stated that “as a company active in international trade, it had a duty to carefully analyse the embargo ordinances imposed by Switzerland and to take the necessary measures to ensure that they were not contravened“.

As with the earlier final decision, SECO relied upon the provision whereby a fine of under CHF 5,000 could be paid by the company without having to investigate the culpability of individual employees.

SECO considered as aggravating factors the value of the intended export and the fact that “more thorough control and monitoring” was expected of such a company. Mitigation consisted of the company’s cooperation, the remediation undertaken, and the fact that the export was not completed.

In light of this a fine of CHF 2,000 was imposed plus costs of CHF 560.

Comment: The case is a noteworthy statement of SECO’s expectation of a trading company’s duty to ensure compliance. Also noteworthy is the credit received for cooperation and remediation.

While one may wonder whether an export routed to Belarus through Turkey and Russia was intended as circumvention it appears that it was the company’s own customs declaration which indicated accurately both the nature of the goods and the destination. Accordingly, it is understandable why SECO took the view that the conduct was not intentional especially when combined with the fact that the company had earlier sought (and obtained) clearance for the export.

3. Final administrative criminal decision dated 1 May 2023

Original: 2023-05-01 – I.63 – Strafbescheid

Translation: 2023-05-01 – I.63 – Strafbescheid_Translated to English

The company in question attempted to exporte a painting valued at CHF 1,500 (i.e. a prohibited luxury good) to Russia, with the painting seized by the customs office at Mülligen.

An investigation was commenced as part of which the company admitted the alleged facts. The company, however, also noted that the painting had first been shipped to Moscow on 22 February 2022 (prior to the prohibition on the export of luxury goods) but that it had been returned to Switzerland undelivered as the customer was not at home at the time of the attempted delivery. By the time of the second attempted export in September 2022, the prohibition had come into place.

SECO accepted the company’s submission of a negligent rather than intentional breach noting, however, that the company “was obliged to examine more closely whether the export of the said goods to or for use in the Russian Federation was permissible“.

SECO availed itself of the same provisions allowing a simplified investigation where a company is fined CHF 5,000 or less. A fine of CHF 700 was imposed plus costs of CHF 370.

Comment: SECO noted the early admission of fault and the company’s cooperation, as well as the mitigating circumstance that the sale (when first conducted) had been lawful and that if the customer had been home at the first attempt there would have been no breach. Also noted was the low value of the breach.

The case is, however, illustrative of the expectations of due diligence and compliance expected by SECO even on a company that “is a family business and very rarely exports to Russia“, and that even a one-off, low value breach may still be the subject of investigation, conviction and fine.

Ireland – vessel registered with Russian Maritime Register of Shipping barred from entry

It is being reported that the Irish authorities have barred the vessel, the Sarah M, from loading a cargo of livestock after the authorities became aware that the vessel was registered with the Russian Maritime Register of Shipping.

Under article 3ea of Regulation 833/2014, any vessel certified via the Russian Maritime Register of Shipping was, after 8 April 2023, barred from entry to EU ports.

Germany – vessel which had cargo of Russian timber is released

In an earlier post we reported that the German authorities had seized a vessel in the Port of Rostock which was carrying a cargo of sanctioned birch timber from Russia. The planned destination had been the United States where the timber is not sanctioned but the ship had diverted to Rostock seemingly after technical troubles.

The vessel in question, Atlantic Navigator II, has now been allowed to leave Rostock.

The Customs authorities have not stated whether the timber remained on board.

The Rostock Public Prosecutor’s Office is also reported to have confirmed that the matter remains the subject of an ongoing investigation.

Poland – sanctions investigation commenced into state-controlled oil trading company

After first being reported by Polish radio station Radio Zet, it is now being reported in the press that the Polish Special Services has commenced an investigation into whether the Swiss oil trading subsidiary of a state-controlled oil company has breached the EU’s Russian sanctions in relation to oil.

The Polish parent company is Orlen, which is 49% owned by the Polish state, and the Swiss subsidiary is Orlen Trading Switzerland.

It is alleged that the Swiss subsidiary was incorporated in Switzerland in late 2022 ahead of the relevant changes to EU sanctions which came into effect in early 2023 as a means of continuing to purchase and trade in oil of Russian origin.

The companies are reported as having denied the allegations.

Latvia – investigation into bunkering vessel refueling Russian “shadow fleet”

A vessel owned by a Latvian company is providing bunkering (i.e. refueling) services to the Russian “shadow fleet” in the Baltic sea off the coast of Gotland in Sweden.

A spokesman for the Latvian Foreign Ministry has stated that an investigation is now underway to see if the Latvian company is breaching or circumventing EU sanctions, in particular whether the fuel being supplied is of Russian origin.

The Latvian company, Fastbunkering, denies breaching sanctions.

It is noteworthy that just two days ago the Swedish authorities were reported as having closed an investigation into these same possible breaches of sanctions.

A Swedish prosecutor was reported as having stated: “I have made the assessment that it is not worth requesting legal aid from Latvia because it is not expected to lead to a higher penalty than a fine“.

Germany – Ministry of Economic Affairs calls for investigation into alleged sanctions breaches relating to Mariupol reconstruction

The German Ministry of Economic Affairs and Climate Change is being quoted in the press as having called for an investigation by the relevant authorities into allegations that two German companies may be breaching the EU’s sanctions by providing material for the rebuilding of the occupied city of Mariupol.

The companies, Knauf and WKB Systems GmbH have both issued statements saying they comply with relevant sanctions.

The call for an investigation follows reports of the supply of construction material first published in Monitor.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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