Economic sanctions on Russia: Focus on Aviation and Shipping

 

These sanctions include individual sanctions, economic sanctions, restrictions on media, diplomatic measures and visa measures. As at this date, the EU is also close to finalizing its tenth sanctions package against Russia. Many of the economic sanctions imposed, not only at European level but also internationally, have affected global trading and the transportation sector, namely aviation and shipping.

 

Sanctions in the shipping sector

The closure of EU ports to Russian flagged-vessels may be considered as one of the most notable sanctions in the maritime sector. However, such a measure has no bearing on vessels making an emergency port call to prevent maritime safety or life at sea, as well as vessels carrying:

• Energy
• Pharmaceutical. medical, agricultural and food products
• Humanitarian aid
• Nuclear fuel and other goods necessary for the functioning of civil nuclear capabilities
• Coal

 

This prohibition also applies to any vessels that attempt to circumvent sanctions by changing the Russian flag or registration to a different state. Furthermore, the indirect or indirect purchase, import, or transfer of crude oil or petroleum products originating or exported from Russia has been prohibited as part of the EU’s sixth sanctions package. This, unless, the respective crude oil or petroleum products are purchased at or below a pre-determined price cap, which is yet to be determined by a Council Decision.

 

Sanctions in the Aviation sector

In the aviation sector, the EU has banned all Russian carriers from using its airports and entering its airspace under EU Regulation 833/2014. As a result, any aircraft registered in Russia or elsewhere but leased to a Russian individual or company are not permitted to land in, take off from or fly over the territory of the EU, unless in case of some limited exceptions or in case of an emergency.

 

Moreover, the EU has prohibited the export of goods and technology in the aviation and space industries to Russia. It is also prohibited for the EU to provide maintenance, technical support or insurance services related to such goods. As a result of this sanction, Russian airlines are barred from purchasing any aircraft, spare parts or any other equipment for their fleet rendering them unable to perform necessary repairs or technical inspections.

 

As a response to such restrictions, Russia also implemented reciprocal bans against airlines by prohibiting access to its airspace. Major airlines that typically used Russian airspace to operate long-haul services between Europe and Asia were forced to adopt new routes. These new routes added miles to some journeys, resulting in longer flight times and higher fuel consumption. Longer flight times indeed result in higher staff costs, less cargo carrying ability and higher maintenance costs on contracts charged on a flight hour basis. In reality, the industry is facing a challenging situation considering that efforts to avoid Russian airspace, which ultimately might also lead to lowering flight safety standards considerably.

 

In Malta, the Sanction Monitoring Board (‘SMB’) is responsible for ensuring that all United Nations (UN) and EU national sanctions are effectively implemented in Malta. By virtue of the National Interest (Enabling Powers) Act, Chapter 365 of the laws of Malta, all UN and EU sanctions are directly applicable.

 

Overall, it is evident that the effects of the war extend beyond Ukraine and Russia and have altered the global trading environment, this giving rise to new trading patterns. Political, economic and trade ties will significantly be changed as a result of this war.  

 

Written by Dr. Claudia Borg, Junior Lawyer and Ms. Suzana-Marie Tabone, Legal intern - BDO Legal Team