Ref: Tonzip Maritime Ltd v 2Rivers Pte Ltd (The Catalan Sea) [2025] EWHC 2036 (Comm) — What the Judgment on Sanctions Clauses Means for Shipowners
Contact: Arthur A. Nitsevych, Interlegal Ukraine
What happened
- In November 2021 the vessel Catalan Sea was on voyage from ports in Russia to the Mediterranean under a charter to transport cargo from a shipper Neftisa. Before loading, the Charterers provided bills of lading naming Neftisa as shipper.
- Owners ran standard sanctions-screening (Refinitiv, World-Check). The screening flagged an association between Neftisa and a sanctioned Russian individual, Mikhail Gutseriev. On that basis Owners refused to load cargo — relying on the charterparty’s sanctions clause, which provided as follows:
“The Owners shall not be obliged to comply with any orders for the employment of the Vessel in any carriage, trade, voyage, ship-to-ship transfer operation or other service which in the reasonable judgment of the Owners, is prohibited by sanctions or will expose the Owners, the Vessel or its managers, crew, the Vessel’s insurers or reinsurers to sanctions. In the event that such risk arises in relation to a voyage the Vessel is performing, the Owners shall be entitled to refuse further performance and the Charterers shall be obliged to provide alternative voyage orders”
- Charterers contested the refusal, supplying after-the-fact evidence (media reports, legal opinions, company letters) that the sanctioned individual had allegedly transferred control of Neftisa to his brother. A stalemate followed: Charterers purported to terminate the charter; both sides claimed breach damages.
Sanctions Clause – what the clause said & how court viewed it
- The charter included a clause allowing Owners to refuse any orders if, in their “reasonable judgment,” carrying out the order would be prohibited by sanctions or would expose Owners, vessel, insurers or crew to sanctions.
- The court treated this limitation on Charterers’ rights as an exclusion clause and applied the contra-proferentem rule (a doctrine of contract interpretation that states an ambiguous contract term will be interpreted against the party who drafted it).
- Key for the court: the risk triggering the clause must be areal, objectively reasonable risk, not mere speculation or historical association. “Reasonable judgment” means good faith + objective basis based on information reasonably available at the time.
Evidence & Burden of Proof — why Owners lost
- Only the information available at the moment of refusal counted. Post-event evidence (e.g. later findings) was disregarded.
- Screening reports underlining past association with Gutseriev did not show contemporary control by him in November 2021. Another available (but unseen) report suggested Gutseriev had stepped down. The vessel’s commercial director admitted that if that report had been reviewed, they likely would have concluded no risk.
- Consequently, court found Owners had no objectively reasonable basis for refusal. Their decision was speculative, not fact-based — so their refusal was wrongful. Charterers′ counterclaim succeeded.
What this means
- Sanctions clauses can in principle be triggered by risk of sanction exposure, not only actual breach.
- But shipowners must be prepared to show clear, contemporaneous evidence of control by sanctioned persons — screening reports alone may be insufficient if outdated or incomplete.
- Courts will apply strict, objective test: refusal must rest on good-faith, reasonable, fact-based judgment — not guesswork or historical risk.
Practical takeaways for charter market
- Before refusing cargo on sanctions grounds, perform thorough, up-to-date due diligence, document all relevant evidence and ensure it supports a real risk at that moment.
- Reliance on historical associations without contemporary proof is risky.
- Charterers: where Owners resist orders citing sanctions, be ready to scrutinize the factual basis — challenge speculative or stale data.
- Legal and compliance teams should treat sanctions clauses not as automatic “exit ramps,” but as requiring rigorous, evidence-based decision-making.