In one of the fastest delistings in recent OFAC history, on 3 July 2019, the US Department of Treasury, Office of Foreign Asset Control (OFAC) delisted PB Tankers S.p.A (the Company) and their five owned and one managed vessels, removing them from the sanctions listing in relation to trade with Venezuela.
The Company’s continued commitment to strong compliance policies and procedures, as well as the support of the Italian authorities and the quality of the information provided by the company and its professional advisors (Julian Clark and Siiri Duddington and Matthew J Thomas of Blank Rome) were cited for the speedy resolution of the case.
By way of background, on 12 April 2019, the Company and its fleet was designated to the US Specially Designated Nationals (SDN) List, triggered by the delivery of oil products on one of their vessels, “SILVER POINT”, from Venezuela to Cuba during March 2019. When the sanctions were imposed on PDVSA, the vessel was on long-term time charter to Empresa Cubana Importadora de Combustibles y Lubricantes (Cubametales). At the time the Company and its fleet was designated, the Company was working to amend or cancel the charter, to require Cubametales to stop using the vessel for carriage of PDVSA-origin cargoes. The Company had no contracts or other commercial dealings with PDVSA itself and was acting in accordance with legal advice obtained in relation to the sanctions position. The Company sought to take those steps notwithstanding the fact that the text of E.O. 13850 did not bar non-US persons from transporting PDVSA-origin cargo, and there was no clear secondary sanctions regime banning non-US shipping from Venezuela. Moreover, OFAC guidance indicated that non-US persons were not barred from dealing with PDVSA exports.
The Company is a wholly family-owned shipping company with a history stretching back to the 19th century, owned and based in Italy. The designation was made without notice and, understandably, had a catastrophic effect on the Company, its workers and counterparties. It immediately halted the Company’s (and the vessels’) operations, hindering the provision of supplies and services to the vessels, precluding repatriation and replacement of crew members, caused the termination of insurance cover that is necessary to protect third parties and the environment in case of an incident, cut the Company off from banking services, and created an imminent risk of a grave financial crisis for the Company, so much so, that the Company was pushed towards bankruptcy administration.
The Company’s strategic response to the listing under the guidance of our shipping lawyers and Blank Rome, was key to a truly remarkable result. This involved co-ordinating with the Company, its embassy both in Rome and Washington DC, as well as various Italian and EU institutions, to maintain pressure not only through formal channels, but also by way of strategic lobbying. Throughout this process, our shipping team implemented an action plan that managed the delisting application to OFAC and the US State Department, and ensured the best possible protection for the Company’s existing contractual relations and third party service providers, as well as its continued existence during this difficult time, particularly with regard to its crews, vessels and the environment. Finally, the team assisted generally with steps to protect the Company's future, while ensuring that the focus remained on achieving a formal delisting. It is important to note, however, that what was never lost in this process was the fact that the Company is a family-owned shipping company, with a real heritage and standing in the community, and this gave further urgency to a particularly dire situation.
The case is a stark warning of the sometimes unexpected reach of sanctions regimes, and the dire consequences of falling foul of those sanctions, even unknowingly. The starting point for shipowners is ensuring that robust sanctions clauses are included in all their contracts to protect their position particularly in the ever-changing sanctions landscape.