The term "Russian shadow fleet" generally refers to a fleet of merchant ships that operate outside of the traditional shipping industry's regulatory framework. These vessels may be used to circumvent sanctions or to engage in activities that are not in compliance with international laws and standards. The term has gained prominence in the context of sanctions imposed on Russia by various countries following its annexation of Crimea in 2014 and its subsequent invasion of Ukraine on 24 February 2022. The recent surge in activity of this shadow fleet has practical and legal implications that will be briefly reviewed in this article.
Why the Shadow Fleet?
The Russian shadow fleet has become a term synonymous with the covert maritime operations that have grown in response to international sanctions against Russia. This fleet, comprised of aging and often uninsured tankers, has been established to illegally transport Russian oil and other commodities past the Norwegian coast and beyond, effectively bypassing the sanctions designed to affect Russia's pivotal export sector. The fleet's expansion is a direct consequence of the economic warfare waged through sanctions, with the unintended side effect of creating a substantial and less regulated maritime trade flow.
As sanctions tightened around Russia following its invasion of Ukraine, the shadow fleet saw a staggering growth of 70 percent within a year in 2024, according to Financial Times. This growth has been fueled by the necessity for Russia to find alternative routes and methods to sell its oil and gas, which are crucial to its economy.
The shadow fleet operates under the radar, often changing flags and ownership to avoid detection, and is estimated to now constitute around 20 percent of the world's tank fleet.
This significant share of maritime traffic raises alarms not only for sanction enforcement, but also for maritime safety and environmental protection.
Briefly on practical, economical, and political issues
The practical issues associated with the shadow fleet are manifold. The vessels, some of which are 15 to 20 years old or more, would typically be decommissioned at this stage in their lifecycle. However, they are now actively engaged in transporting Russian commodities. The fleet's aging ships have been described as a potential environmental hazard, especially as they navigate sensitive areas like the Norwegian Sea and Skagerrak. The risk of accidents is heightened by the fact that these vessels often sail without proper insurance, leaving a gap in liability and response readiness in the event of maritime emergency.
Economically, the shadow fleet enables Russia to continue profiting from its oil and gas reserves. Despite sanctions, Russian authorities have projected substantial revenues from these exports, for example with expectations to sell millions of tons of crude oil annually. This continued trade undermines the sanctions' intent to pressure the Russian economy and presents a challenge to the global effort to curtail Russia's energy export capabilities.
Politically, the existence of the shadow fleet creates a complex dilemma. It not only questions the efficacy of sanctions, but also highlights the geopolitical tactical conflicts where large countries may be contributing to the sustenance of this fleet, whether consciously or not. The fleet's operations near countries like Norway have prompted concerns from local authorities, who are acutely aware of the potential for this fleet to shift the balance of power within the shipping industry and alter the dynamics of international maritime trade.
The shadow fleet's presence casts a "dark shadow" over the maritime industry, as described by Knut Arild Hareide in a recent interview, the managing director of the Norwegian Shipowners' Association. The fleet's growth and the volume of oil it transports have surged, with reports indicating that these ships carried double the amount of oil in a year. This burgeoning fleet is not only a "serious risk" to the environment and maritime safety, as described by the EU, but also poses a significant challenge to the insurance and regulatory frameworks that underpin the maritime industry.
In conclusion, the Russian shadow fleet represents a multifaceted challenge that extends beyond the immediate goal of sanctions evasion. It has practical, economic, and political implications that affect not only the countries imposing the sanctions but also the broader international community. The fleet's operations highlight the need for a more coordinated and effective global response to ensure maritime safety, environmental protection, and the integrity of international sanctions.
Legal issues in the wake of the shadowfleet
The shadow fleet's operations present significant legal challenges. A large number of these vessels are uninsured and unregistered, creating uncertainty about responsibility for any accidents or oil spills. Normally, there are set procedures to handle such incidents, but these may be inadequate for the shadow fleet. In case of accidents, any damages may be challenging to recover. In the situation of oil spills and pollutions, this puts extra pressure on the International Oil Pollution Compensation Funds. Additionally, the shadow fleet also includes many older ships that are at a higher risk of mechanical issues and accidents, further bolstering the concerns regarding accidents and liability.
Legally, the principle is that the polluter should pay for any damage they cause. This is true in Norway and many other jurisdictions. However, if the responsible ship does not have the necessary insurance, others may end up unfairly shouldering the cost.
The shadow fleet also put strain on contractual parties' ability to uphold international sanctions. It can be difficult to perform due diligence on shadow fleet operators due to their lack of transparency and the potential for fraudulent documentation. Shadow fleets often have complex and opaque ownership structures, making it hard to identify the actual parties involved and their legal and financial status.
The sanctions imposed at the EU level cover a wide range of commercial services to the Russian government or legal entities established in Russia. The sanctions framework is becoming increasingly complex, resulting in the need for any trade with Russia or related parties to be carefully considered before proceeding. Establishing good routines and systems for due diligence is crucial to avoid breaches of the regulations. With a growing shadow fleet where ownership and contracts involving these companies are obscured, thorough investigations of the specific subject of the contract and the contractual counterparty are essential.
Kvale law firm's shipping and sanctions department closely cooperate to stay at the forefront of competence of legal issues related to the Russian shadow fleet. We urge you to contact one of our relevant partners if you have questions related to the Russian shadow fleet, and its legal implications.
