The period from 2010 to 2014 saw major changes in the sanctions landscape which had a significant impact on many shipping businesses worldwide. These changes tended not to affect cruise lines because the majority of the developments related to countries such as Iran, Ivory Coast, Libya and Syria, which were of limited relevance to the industry.
However, recent developments with respect to Russia and Cuba will potentially have a major impact on the industry. This article looks at those developments, and their potential impact on cruise lines, against a background of uncertainty in respect of future changes to the US sanctions against Cuba, and the EU and US sanctions against Russia.
US sanctions against Cuba
At the end of 2014, President Obama announced the partial relaxation of US sanctions against Cuba as part of a package of diplomatic and economic measures designed to “normalize relations” between the US and Cuba.
The US embargo against Cuba is set out in a host of different legislative measures, some of which can be amended pursuant to the authority of the President, but many of which need Congressional approval. As a result, so far we have merely seen a partial lifting of US restrictions.
The recent changes do not currently directly affect cruise lines (for the reasons set out below), but they do indicate the lines along which there may be further relaxations. Cruise lines are therefore keeping a close eye on developments in this area.
One change of particular interest to cruise lines is that US persons are now permitted to travel to Cuba without a licence (provided that the purpose of the travel falls within one of 12 categories). While US Government guidance makes explicit that this does not extend to travel to Cuba for normal tourist activities (because that is not one of the 12 permitted categories), this may change in the future and any complete lifting of the US travel embargo could result in significant business opportunities.
Likewise, cruise lines may be interested in the partial relaxation of the so-called “180 day rule”, which previously prohibited any vessel (whether or not US-flagged) which had called at a port in Cuba from calling at a US port for the next 180 days. The effect is that vessels which have engaged in certain trade with Cuba (including agricultural commodities and other authorised cargoes) will no longer need to wait 180 days before calling at a US port (although direct voyages from the US to Cuba still require an export licence).
While this relaxation does not currently extend to cruise ships, this could change in the future, and could also result in significant business opportunities. In a sign of potential future developments, press reports indicate that in early May 2015, the US authorities issued a licence to Baja Ferries (a Mexican operator) which would allow it to operate the first passenger ferry service between the US and Cuba (subject to appropriate consents from the Cuban authorities) for more than 50 years.
EU and US sanctions against Russia
The current EU sanctions (which were imposed in July 2014 and then extended) prohibit the provision of“services directly related to tourism activities in Crimea or Sevastopol” and, in particular, provide that “it shall be prohibited for any ship providing cruise services, to enter into or call at” any of the following seven ports situated in the Crimean Peninsula: (1) Sevastopol (2) Kerch (3) Yalta (4) Theodosia (5) Evpatoria (6) Chernomorsk (7) Kamysh-Burun.
The EU has recently indicated that the current sanctions will be renewed and tied to the complete fulfilment of the Minsk Agreement between the EU and Russia. This requires, amongst other things, Russia to secure its border with Ukraine and hand over control of that border to Ukraine. It is therefore likely that the current restrictions will be extended for at least six months (to 31 December 2015). The position after that date will of course depend on whether Russia fulfils the terms of the Minsk Agreement and/or if there are any other developments (either positive or negative) on the ground.
This prohibition applies to vessels flying the flag of a Member State or any vessel owned or operated by an EU company. There is an express derogation for vessels entering or calling at one of those ports for reasons of maritime safety in cases of emergency.
In addition, the EU maintains a broad asset freeze, affecting 168 individuals and 37 entities, including Kerch Commercial Sea Port, Kerch Ferry, Russian National Commercial Bank and Sevastopol Seaport.
In order to ensure compliance with the EU sanctions, cruise lines should have in place procedures to ensure that they do not enter into or call at any of the seven listed ports, and that they do not have any dealings with any individual or entity which is included on a sanctions list.