INSIGHT: Syria Sanctions
On 14 October 2019 US President issued a new Executive Order Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria. Turkey's Ministries of National Defense and Energy and Natural Resources, and entities owned and controlled by, or acting on behalf of, these ministries were added to the SDN list. In addition, OFAC has issued three Syria-related General Licenses authorising official activities of certain international organisaitons dealing with the two Turkish Ministries and General License 2, authorising a one month wind down of operations or existing contracts involving the two Ministries. General License 2 does not authorize debits to accounts of two Ministries at US financial institutions.
On 20 November 2018, the US Department of the Treasury published an OFAC Advisory to the Maritime Petroleum Industry. The Advisory does not announce new sanctions but concludes with a clear warning that ships which engage in activity which is in breach of existing sanctions (as outlined below) can expect to face severe penalties. The Annex to the Advisory, a "Non-Exhaustive List of Vessels That Delivered Oil to Syria 2016-2018", is a clear sign that activity in Syrian ports is being monitored. A further OFAC Shipping Advisory was published on 25 March 2019. This contains an extensive non-exhaustive list of vessels which have engaged in sanctionable conduct in support of the Government of Syria or entities owned by the Government of Syria.
The Advisory identifies deceptive shipping practices including disabling Automatic Identification System (AIS). More information on AIS monitoring including implications for P&I cover is available here.
For more information See Freehill Hogan Maher Client Alert: U.S. Issues strong warning against petroleum trade with Syria.
The seizure in Gibraltar in July 2019 of the tanker Grace 1 with cargo allegedly destined for the Banyas Oil Refinery also underlines the continuing commitment to enforcement of EU sanctions against Syria.
The United States first introduced sanctions at the end of April 2011 against five key persons and entities in the Syrian regime. This measure was followed shortly afterwards by similar sanctions imposed by the European Union. The US sanctions were significantly extended on 18 August 2011 and the list of sanctioned parties has grown. The EU followed on 3 September 2011 by targeting the supply, transport, financing and insurance of Syrian oil and petroleum products (see Regulation 878/2011 below). The list of sanctioned parties has grown steadily.
It is important to note that the situation may change quickly. Recent experience with sanctions in other regions demonstrates that sanctions can be extended rapidly and without advance notice.
Members are reminded of that sanctions may prejudice cover (see Rules 3.3(e), 30.4.6 & 32.6 and equivalent provisions in the Terms & Conditions governing fixed premium products).
How individual members will be affected will depend on a wide variety of factors and it is not possible for this website to provide comprehensive or conclusive advice. The intention is to provide some general comments, convenient access to relevant materials and news of latest developments. Members should not act in reliance solely on the information provided here. They must make their own enquiries and take legal advice which can take account of their circumstances. Members should also note that any loans granted on the security of their vessels are likely to include a requirement that insurance is at all times maintained on conditions acceptable to their bank.
Members trading to Syria must also note that Sanctions regulations applicable to the Association may limit the assistance which the Association is able to provide to members who face claims which involve Syrian claimants. This can be the case even if the members are engaged on a trade which is in itself lawful. Members trading to Syria therefore run the risk that if they face any claims, the Association may be unable to provide security or make payments to claimants.
EU - Sanctions against persons & entities
The Regulations listed below and additional information, including a Consolidated List of Targets, can also be found on the UK Treasury website which also contains (under the heading ”Releases”) Financial Sanctions Notices providing guidance on each of the Regulations.
The latest list of EU Sanctions against (inter alia) Syria can be found here.
The EU first introduced measures against the Syrian regime in May 2011.
On 19 January 2012, Council Regulation 36/2012 entered into force, consolidating previous Regulations. Guidance from the UK Treasury can be found in Financial Sanctions Notice 36/2012. Annex II of the Regulation listed individuals and entities subject to restrictions. Annex II has subsequently been amended on many occasions and in view of the fluid situation any owners or charterers intending to trade with Syria must carry out a thorough risk assessment which should include a check against the latest list of targeted entities and individuals. As at 18 July 2017, 256 individuals and 67 entities were listed.
On 12 December 2014, the EU published Council Decision 2014/901/CFSPamending Council Decision 2013/255/CFSP and Council Regulation (EU) No 1323/2014 amending Council Regulation No 36/2012 introducing new restrictive measures in view of the situation in Syria.
The new measures prohibit the following:
- The sale, supply, transfer or export of jet fuel and additives specifically formulated for jet fuel to Syria; and
- Providing direct or indirect financial assistance, insurance, reinsurance or brokering services relating to any of the above transactions
It is important to note that the Regulations apply not just to the named parties but to companies owned or controlled by them.
The Regulations apply:
(i) within the territory of the EU,
(ii) to any vessel under the jurisdiction of a Member State,
(iii) to any person inside or outside the territory of the Union who is a national of a Member State,
(iv) to any legal person, entity or body incorporated or constituted under the law of a Member State,
(v) to any legal person, entity or body in respect of any business done in whole or in part within the Union.
EU - Sanctions in relation to Syrian crude oil, petroleum products and jet fuel
Measures to restrict the transport of crude oil and petroleum products were first introduced on 3 September 2011 by Council Regulation 878/2011. These provisions were consolidated and expanded in January 2012 in Regulation 36/2012 which introduced wide ranging prohibition on the purchase, import or transportation of crude oil and petroleum products of Syrian origin and refers to “transport….to any other country” not just to the EU (see Chapter II of regulation 36/2012). "Petroleum products” are listed in Annex IV. The Regulation also includes a ban against on providing, directly or indirectly, financial assistance, insurance or reinsurance related to such activities (Article 6.d). This appears to prevent EU based insurers from providing insurance even where the shipment is to a port outside the EU and performed on a vessel flying a non-EU flag. It could also arguably affect non-EU insurers. The reference to insurance is significant in view of the exclusion in Skuld Rules 3.3(e), 30.4.6 & 32.8.
Similar restrictions were introduced in respect of jet fuel and additives on 12 December 2014 (see above).
There is a ban on participating in activities designed to circumvent these prohibitions.
The transport of key equipment and technology for the following key sectors of the oil and gas industry in Syria, or to Syrian or Syrian-owned entities engaged in such sectors outside Syria, are prohibited: a) refining, b) liquefied gas, c) explorations and d) production. The Regulation also bans investment in or financial support for Syrian enterprises engaged in exploration, production and refining crude oil, in Syria or abroad.
It is also prohibited to provide military equipment to Syria using a EU member state flagged vessel.
The Regulation further prohibits the provision of insurance or reinsurance to the Syrian Government, its public bodies, corporations and agencies or to any person acting on their behalf or at their direction, or to entities owned or controlled by them. Insurance or reinsurance to the owner of a vessel that is chartered to a Syrian person, entity or body which is not listed in Annexes I or II, is allowed.
EU - Sanctions in relation to arms
On 15 October 2012, EU Council Decision 2012/634/CFSP introduced an amendment to Decision 2011/782/CFSP prohibiting trade in and transport of arms and related material of all types, including weapons and ammunition, military vehicles and equipment from or originating in Syria and extending the prohibition to include finance, insurance or reinsurance.
EU - Sanctions in relations to certain chemicals and equipment used for internal repression
On 22 July 2013 the Council issued a Council Regulation No. 697/2013 as an amendment to the Regulation No. 36/2012.
The amendment, among other things, prohibits sale, supply, transfer, export (directly or indirectly) of equipment, goods, technology which might be used for internal repression or for the manufacture and maintenance of products which might be used for the same purpose, whether or not originating in the Union to any person, entity or body in Syria or the use in Syria. Annexes are provided listing prohibited goods and equipment (mostly chemicals and chemical compounds). This regulation also prohibits the direct or indirect insurance or reinsurance of any such sale, supply, transfer or export.
On 3 August 2015 OFAC designated the following Syrian entities involved in maritime commerce:
- the General Directorate of Syrian Ports,
- Lattakia Port General Company,
- Tartous Port General Company,
- Syrian General Authority for Maritime Transport,
- Syrian General Shipping Agencies Company ("Shipco")
pursuant to Executive Order 13582 as entities in which the Government of Syria has an interest.
On 1 May 2012, the President signed Executive Order 13608 which opens the way for measures to be taken against non-US entities and individuals who have been involved in efforts to evade US Sanctions in respect of Syria and Iran. No foreign sanctions evaders have yet been identified but any are will be subject to restrictive measures, including exclusion from US financial and commercial systems and denial of entry into the US. US persons are prohibited from doing business not only with specially designated nationals and blocked persons (SDNs) but also with designated “foreign sanctions evaders”. A US Treasury Department Fact Sheet has also been published.
On 9 October 2012 the President signed Executive Order 13628 authorizing the Implementation of certain sanctions set forth in the Iran Threat Reduction and Syria Human Rights Act of 2012.
On 29 April 2011, the President signed Executive Order 13572 blocking the property of three individuals and two entities associated with the Syrian regime. Since then a series of additions have been made to the SDN List and there are now over 60 designated entities and individuals, including a number of major organisations involved in the banking, oil and gas industries including General Petroleum Corp. Syrian Co for Oil Transport, Syrian Gas Co, Syrian Petroleum Co and Sytrol. On 8 May 2014 a Russian bank Tempbank was designated for support given to the Syrian regime. Since then, further additions have been made to the designated entities and individuals. Reference should be made to the SDN List maintained by OFAC (the Office of Foreign Assets Control of the US Department of the Treasury) to obtain up to date details of designated persons.
On 18 August 2011, Executive Order 13582 significantly extended the scope of sanctions. A US Treasury Press Release provides useful information about the Order. Reference should be made to the Order for its full effect. It is essential to note that the Order is worded in very wide terms. Its precise scope is uncertain and considerable caution is necessary in any dealings with Syria. Some of the main features are as follows:
- All property in the US or in the possession or control of any US person (including any overseas branch) of the Government of Syria is blocked. This extends to persons determined by the Secretary of the Treasury to be supplying financial support or goods or services to, or acting on behalf of a person whose property is blocked.
- The import into the US of petroleum or petroleum products of Syrian origin is prohibited, along with any transactions (such as financing or facilitating) related to such a trade.
- New investment in Syria by a US person, wherever located, is prohibited.
- Transactions designed to avoid the effect of the Order are prohibited.
In June 2013, OFAC published a Statement on Licensing Policy indicating a favorable licensing policy regime for US persons requesting authorisation to engage in transactions related to petroleum or petroleum products of Syrian origin for the benefit of the National Coalition of Syrian Revolutionary and Opposition Forces and the telecommunications and agricultural sectors.
Further information, including FAQs, is provided on the US Treasury Resource Senter on Syria Sanctions.
National (Other than US)
The Norwegian Ministry of Foreign Affairs has consistently aligned itself with EU Sanctions against Syria, most recently in a Press Release on 23 July 2012. The first such announcement in May 2011 was followed by a Regulation which took effect on 2 September 2011 (Norwegian only). On 6 September a further Press Statement was released (in Norwegian only) stating the Norwegian government's intention to adopt measures equivalent to EU Regulation 878/2010.
In a Press Release of 23 September 2011, (Norwegian only) Norwegian Authorities expressed their support of the EU reinforcement of Syria sanctions by Regulation 950/2011 issued the same day.
On 27 November, the Arab League voted to introduce sanctions against the Syrian regime. The scope of the sanctions is not yet clear but is reported to include blocking the sale of "non-essential" commodities to Syria, a freeze on Syrian government assets, cutting off transactions with the Syrian central bank, halting funding by Arab governments for projects in Syria, a ban on commercial flights and a travel ban on senior Syrian officials. The date of implementation will be announced shortly.
On 30 November, the Foreign Minister of Turkey announced sanctions on Syria that include a travel ban on Syrian leaders and the freezing of their assets, prohibition on shipment of arms and military equipment and suspension of dealings with the Syrian Central Bank and Syrian Trade Bank. Businessmen "strongly supporting" the regime would also be sanctioned.