In an evolving landscape for sanctions risks, the decision in Tonzip Maritime Ltd v 2Rivers Pte Ltd [2025] EWHC 2036 (Comm) offers timely guidance on how sanctions clauses should be applied in practice—and how charterers can protect themselves when owners raise sanctions-related objections.
Background
The case arose under a charterparty for a voyage from Russia to the Mediterranean. The sanctions clause entitled Owners to refuse orders if, in their reasonable judgement, compliance would be prohibited by sanctions or expose them (or the vessel, crew, managers or insurers) to sanctions risk. Where such risk existed, Owners could refuse performance and Charterers were obliged to provide alternative orders.
On this basis, Owners declined to load cargo after undertaking various sanction searches. The shipper, Neftisa, was flagged as a high-risk company due to historic links with a sanctioned individual.
The Charterer disputed this assessment, providing legal analysis, media reporting and corporate documentation suggesting that the individual had ceased to control the company. The Owners rejected this evidence and treated Charterer’s subsequent communication as a repudiatory breach, terminating the Charterparty.
The Court’s Decision
The Commercial Court held that the Owner’s conduct was not justified under the sanctions clause. The key finding was that “reasonable judgement” requires an objective assessment of all relevant evidence, not reliance on a single sanctions-screening result.
Owners had access to a second screening report contradicting the first and had been provided with substantial material from Charterers. The failure to engage with this information rendered its decision objectively unreasonable. Damages of USD 233,600 plus interest were awarded to Charterers.
Although the matter is now on appeal, the principles set out in the Commercial Court decision remain commercially significant.
Commercial Takeaways for Charterers
This case offers several practical lessons for charterers operating under sanctions clauses:
- Screening tools are not determinative
Owners may be inclined to treat screening hits as conclusive, but the judgment makes clear that automated tools are only one source of information. Charterers can challenge reliance on screenings by providing evidence form other credible sources. - Provide robust, verifiable evidence early
Where a sanctions concern arises, charterers should respond proactively. Legal opinions, corporate registry documents, independent reports and compliance analyses can demonstrate that the owner must undertake a broader assessment. - Emphasise the “reasonable judgement” requirement
Sanctions clauses often use wording such as “reasonable judgement”, “reasonable belief” or “reasonable determination”. This creates an objective standard. Charterers can, and should, hold owners to that standard when refusals appear overly cautious, incomplete or based on selective information. - Encourage a collaborative risk-assessment process
The case underlines that owners cannot ignore relevant information provided by charterers. A transparent exchange of documents and reasoning helps prevent disputes and supports a defensible compliance position for both sides. - Treat sanctions concerns as evidence-driven, not risk-avoidance driven
Sanctions exposure in the current climate is high, and commercial parties may naturally err on the side of caution. However, the judgment shows that adopting an overly cautious stance without proper evidential basis can amount to a breach. Charterers should press for decisions grounded in fact, not solely in perceived risk.
Conclusion
The Catalan Sea demonstrates that sanctions clauses do not permit owners to rely solely on basic screening hits or adopt a “better-safe-than-sorry” approach without evidential justification. For charterers, the decision reinforces the importance of providing clear, well-supported information and holding owners to the objective standard required by the contract.
In an environment of increasing sanctions scrutiny, evidence-based decision making is not only a compliance requirement – it is an essential commercial safeguard for charterers.
