Baltic Exchange: UK Shipbrokers Risk Penalties for Deals With Russia

baltic exchange
File image courtesy Baltic Exchange

Published Apr 4, 2022 9:58 PM by The Maritime Executive

On Monday, the Baltic Exchange advised its members that it believes that many UK shipping industry participants are taking on a serious compliance risk if they continue to engage in everyday business transactions with Russian entities. 

"Following discussions with a Baltic Member who received oral guidance from the UK Government, the Baltic Exchange is of the opinion that UK persons are prohibited from broking, chartering and selling vessels to persons connected with Russia," the organization said in a member circular. 

This includes dealings with individuals who reside in Russia, as well as companies incorporated or located in Russia, and it covers all UK companies and their overseas divisions. 

"The Baltic Exchange recommends that UK Members urgently take their own independent legal advice on this issue and take extra care in performing background checks on companies and potential clients," the Exchange advised. 

The announcement could affect a substantial share of the world's shipbroking firms, many of which are headquartered in London or have large branch offices in its financial district. The Baltic Exchange is itself located in the City of London, though its parent company is headquartered in Singapore. 

It is also the latest in a long series of bad news for Russian shipping. Five out of the world's top six container lines have substantially exited the Russian market, with some exceptions for humanitarian goods. The Joint War Committee at Lloyd's has listed all Russian territorial seas on its register of areas with heightened risk of war, terrorism or piracy. Many top bunkerers have ceased doing business with Russian ships, including Bunker Holding, the world's largest bunkering firm. The UK and Canada have banned all Russian ships from their ports, and informal impediments - like dockers' unions refusing to serve Russian vessels, and engine OEMs declining to provide parts and service - add further challenges for Russian shipowners.