The 16th package of EU-Russia sanctions

1. The 16th EU sanctions package against Russia – an overview of further amendments to EU sanctions law

The EU has adopted a 16th sanctions package just in time for the third anniversary of Russia’s war of aggression against Ukraine. EU Regulation 2025/395 determines the changes made to EU Regulation 833/2014 and EU Regulation 2025/390, while EU Implementing Regulation 2025/389 determines the change to EU Regulation 269/2014. These regulations are accompanied by new sanctions against Belarus. EU Regulation 2025/392 and EU Implementing Regulation 225/386 have been adopted in this regard. The United Kingdom has also decided on extensive further sanctions and the United States has promised to follow suit.

2. Highlights on key issues for the maritime industry

We would like to highlight aspects of the 16th EU sanctions package that we consider to be particularly relevant, especially with regard to their impact on the maritime industry. In a digression, we address some questions that may arise in the event of shipping accidents involving tankers from the shadow fleet. In addition to the obvious abstractly greater risk of such an event, due to shutdowns of the AIS, spoofing (see our article on the 12th EU sanctions package, https://www.ahlers-vogel.de/das-zwoelfte-paket-der-eu-russland-sanktionen-2/ ) and the age of the ships used, there are some special features to be considered that arise from the application of the applicable sanctions law.

The shadow fleet consists of ships that Russia uses to export oil while circumventing the European oil price cap or that are used for other unlawful activities. A general definition of the shadow fleet, without reference to Russia, can be found in IMO Resolution A. 1192 of 6 December 2023. This is a broad definition. It includes not only ships used to circumvent sanctions, but also those that undermine compliance with safety and/or environmental standards.

The broad definition, together with the far-reaching measures that now also apply to service providers and business partners of the owners of these ships under sanctions law, not only creates considerable pressure to carefully check clients and business partners. In view of the link between the provisions of sanctions law and the broad definition of the IMO, fundamental questions arise as to whether the regulations are precisely targeted at containing the illegal activities of the shadow fleet that boost Russia’s revenues. In specific individual cases, the IMO definition could give rise to demarcation difficulties that also imply questions regarding the determinability of state criminal laws. It should be noted at this point that German criminal provisions of the Foreign Trade and Payments Act refer to the provisions of the relevant EU regulations.

The concept of containing Russian profit margins in the oil business by means of the so-called oil price cap entails particular potential risks of circumvention and thus also poses particular challenges for maritime service providers, business partners or other obligated parties to ensure legally compliant behaviour. In December 2022, the EU introduced a price cap to curb Russia’s oil revenues and thus its ability to finance its war against Ukraine. European economic operators are prohibited from carrying out petroleum shipments above the border or, for example, insuring such shipments. Many vessels in the Russian shadow fleet therefore have inadequate or no insurance cover. Often, the ships do not meet international safety standards. The shadow fleet thus poses a threat to maritime safety and the environment. We have already addressed the challenges posed by the shadow fleet in our comments on the 12th and 15th EU sanctions packages.

The EU has listed 74 additional ships. This means that a total of 153 ships are now listed in the EU, the purchase, operation, insurance, etc. of which is prohibited (Art. 3s EU Reg. 833/2014 in conjunction with Annex XLII). By comparison, the lists of the American OFAC (Office of Foreign Asset Control) currently include several hundred ships. Not all of the vessels sanctioned by the EU are on the OFAC sanctions lists. For those on both lists, a distinction must be made based on the reason for the sanction. Article 3s (2) lists several reasons for sanctioning vessels. The EU list includes vessels sanctioned under Article 3s (2) (a), (b), (c), (d) and (g). Because of lit. a) (transport of goods and technologies used in the defence and security sector from or to Russia, for use in Russia or for Russia’s warfare in Ukraine), the list contains relatively few ships. These are also included on the OFAC list. The same applies to the sanctions under lit. d) (operating in a way that contributes to or supports measures or strategies that undermine or threaten the economic viability or food security of Ukraine (e.g. by transporting stolen Ukrainian grain) or the preservation of Ukraine’s cultural heritage (e.g. by transporting stolen Ukrainian cultural property)).

When imposing sanctions under Art. 3s (2) (c) (operating in a way that contributes to or supports measures or strategies to exploit, develop or expand the energy sector in Russia, including energy infrastructure) and (g) (a vessel owned, chartered, or operated by, or otherwise used under the name of, on behalf of, or for the benefit of, a natural or legal person, entity, or body listed in Annex I to Regulation (EU) No 269/2014) the EU-sanctioned vessels can also be found on the OFAC list for the most part. There are only very few ships that do not match.

There is a strikingly small number of overlaps for ships that are sanctioned under Art. 3s para. 2 (b) of EU Regulation 833/2014 (carriage of crude oil or petroleum products listed in Annex XXV originating or exported from Russia, and the use of irregular and high-risk shipping practices as defined by International Maritime Organisation General Assembly resolution A.1192(33)). Many ships in this category have not been sanctioned by OFAC. This also applies to some ships that fall under both categories b) and c). From today’s perspective, the US does not seem to view these sanctioned ships as a sufficient threat to the US to be added to the sanctions list. We would also like to point out that most of the ships added in the 16th sanctions package were sanctioned under lit. b). A few ships from categories c) and g) were also added.

The importance the EU places on curbing the revenues associated with the operation of the shadow fleet is illustrated by the newly created possibility, in addition to persons, entities or organisations that are part of Russia’s military-industrial complex, materially or financially support it or benefit from it, to also list, in accordance with Art. 3 (1) (k) of EU Regulation 269/2014, which own, control, manage or operate vessels that can be attributed to the shadow fleet. In addition to these persons, institutions or organisations, those that otherwise provide material, technical or financial support for the operation of such a vessel are also recorded.

In view of this new regulation, a precise analysis of companies with which trade is conducted in this sector of the maritime industry or to which services of any kind are provided is highly recommended.

The existing prohibitions on oil price hedging are extended by the complete ban on the temporary storage in the EU and the transfer of crude oil and petroleum products originating in Russia (Art. 3nb EU Regulation 833/2014) from 26 May 2025, although with the continuation of the exemption for oil deliveries via pipelines (Art. 3m EU Regulation 833/2014).

In addition, restrictions have been established on transactions with those ports and facilities (Art. 5ae EU Regulation 833/2014) that were deemed particularly significant for either the defence complex or the oil business and that are listed in Part A of Annex XLVII. The focus on limiting the impact in these two sectors is underpinned by wide-ranging exemptions under Article 5ae of EU Regulation 833/2014, for example, to take account of the fact that some countries in Europe have a different level of dependence on gas supplies than others. In addition to product-related exemptions, paragraphs 3 and 4 of Article 5ae of EU Regulation 833/2014 also provide for exemptions for emergency situations and humanitarian concerns.

3. Considerations regarding accidents involving a shadow fleet tanker

There has been an increase in maritime accidents or at least incidents potentially involving shadow fleet tankers. So far, there has been no major oil spill disaster. Some high-profile experts in the maritime industry believe that such an event is only a matter of time.

We would like to start by addressing some of the issues that arise in the event of a collision.

It would be usual for the parties involved to exchange guarantees either in the form of bank guarantees or a letter of undertaking (‘LoU’) signed by the insurer, usually without considering the degree of fault in accordance with the expected amount of the claim including costs. This approach is not to be expected or even possible in two respects in the event of a collision with a tanker of the shadow fleet. It is at least inadvisable for a shipowner to accept a letter of undertaking from an unknown insurance company that has not been appropriately rated, and in practice this is inconceivable. The bank guarantee is therefore considered. If it is not provided, an arrest and subsequent realisation must be considered. The regular low value of the substandard tonnage used then plays a direct role. Consequently, the question arises as to whether the damage to one’s own ship is covered in terms of the possible realisation value of a tanker of the shadow fleet involved in a collision.

Beyond damage to one’s own ship, this consideration can easily be multiplied for other conceivable circumstances that increase the claim for compensation. For example, it is conceivable that joint and several debtors would be held liable for claims by third parties who have the choice of debtor as a result of the collision and its consequences. In this context, oil pollution control measures are conceivable if oil escapes from both ships. In addition to the lack of recourse for claims for damages, further questions arise. This is because providing security to the other party in the collision is also not possible without further consideration. In this context, it will be necessary to determine whether the ship is a listed ship. In particular, the listings of the US Office of Foreign Assets Control and any such listings that are also relevant to the owner of the ship involved will be considered. If the ship is on a list, the provision of security is not possible from a sanctions perspective. This means that the owner of the ship involved in the collision faces an additional, unusual risk in the event of a collision with a tanker of the shadow fleet. If the insurer is unable to provide security due to the associated violation of sanctions regulations, it is difficult to see how the shipowner will be able to successfully enforce a right to the provision of this security. This also puts his own ship at an increased risk of being arrested and realised.

If a constellation arises in which the assignment to the shadow fleet is only probable but not clear, difficult demarcation issues may arise.

Verifying compliance with sanctions regulations, such as the regulations on the oil price cap, can be difficult for the opposing party. The time during which the insurer of the shipowner cannot work in the usual way of providing support due to concerns about sanctions can be converted into greater risk potential for a shipowner.

Against this background, too, it must be a primary goal to withdraw as many ships of this shadow fleet as possible from circulation through port state controls.

All coastal states and the more than 120 member states of the International Oil Pollution Compensation Fund bear the risk of having to carry the losses and costs of an oil pollution caused by an accident involving such a tanker to a very large extent and with a very high probability.

4. Emphasis on some further sectoral prohibitions and regulations

An important change has been made in the legal system that brings with it a new type of regulation.

Claims for damages arising from unlawful proceedings abroad, as defined in Articles 11a and 11b, may be heard in an EU Member State under the newly created Article 11d of EU Regulation 833/2014 even if the court in that Member State does not have jurisdiction, provided that the case has a sufficient connection to the Member State of the court seised. This regulation is intended to counter the increasing geopolitical influence on international legal systems, which are not characterised by the principle of independent justice, as is regularly the case in autocratic or oligarchic systems.

The 16th sanctions package introduced far-reaching bans on the use of certain sections of infrastructure, in particular regarding ports and airports, which are of central importance to Russia.

Article 3l of EU Regulation 833/2014 closes a regulatory gap in road transport. Road transport companies established after 8 April 2022 will be treated the same as road transport companies established before that date; from 26 July 2024, they will also be banned from transporting goods by road in the EU, including for transit purposes.

The EU flight ban has been extended to air carriers from third countries operating domestic flights within Russia or delivering air cargo to a Russian company. If an airline is on the list, it is not allowed to fly to the EU.

With a one-year transitional period, the 16th sanctions package introduces a ban on the import or transport of Russian primary aluminium (CN code 7601). During the transitional period, a quota mechanism will apply, whereby up to 275,000 tonnes of primary aluminium may be imported from Russia over the next 12 months. For primary aluminium contracts concluded before 25 February 2025 (or ancillary contracts necessary for the execution of such contracts), an exemption is granted for the import of up to 50,000 tonnes into the EU from 26 February 2026 to 31 December 2026.

5. The extension of the sanctions lists and the obligation to exert influence on non-European subsidiaries

The list of sanctioned persons has been extended to include 48 individuals and 35 entities, including not only Russian individuals and companies, but also individuals from North Korea and China and companies from China and Turkey.

Thirteen more Russian banks have been excluded from the SWIFT system (i.e. from the use of specialised financial messaging services). The new sanctions package allows the EU to list financial institutions involved in circumventing the Russian oil price cap scheme and facilitating transactions with vessels of the ‘shadow fleet’.

In future, not only supporters of the Russian military-industrial complex, but also profiteers can be listed (Art. 3 (1) (l) EU Regulation 269/2014).

In the future, European economic operators will also be required, in the context of financial sanctions, to exert ‘significant influence’ over their non-European subsidiaries and to prevent, to the extent possible, listed persons from making funds or economic resources available to subsidiaries by means of internal group policies, controls and procedures (Art. 15a EU Regulation 269/2014, recitals 11 et seq. EU Regulation 390/2014).

6. Comment

The 16th sanctions package again includes far-reaching measures with certain key aspects. The maritime industry is particularly exposed, which should be seen in parallel with the importance of the shadow fleet for the Russian economy and the risks associated with it.

For players in the maritime industry, this means being particularly vigilant to ensure compliance with the sanctions regulations.

This applies organisationally and in the context of active risk management on land as well as for ship operations, in order to avoid the dangers posed by the shadow fleet’s illegal actions, such as switching off the AIS and concealing GPS data.

Given the level of detail of the regulations, obtaining legal advice should you require it is to be considered; overview publications cannot replace advice in individual cases. This also applies to this article.

Do you have further questions on these or other topics? Our experts will be happy to support you with solutions tailored to your individual needs.