Paul Henty, Partner, Beale & Co. Image Credit: Beale & Co

A vessel is due to load, screening identifies a possible link between the cargo interest and a designated person, and the ownership picture is unclear. The charterer wants performance to continue, delay is already costing money, and the owner, supplier or terminal operator must decide whether the risk is serious enough to justify stopping the transaction.

That is the commercial problem at the centre of Tonzip Maritime (Singapore) Pte Ltd v 2 Rivers Pte Ltd (The Catalan Sea) [2026] EWCA Civ 641. The real question is not simply whether sanctions apply. It is who bears the cost of uncertainty while the answer is being worked out.

The dispute concerned a tanker chartered to carry crude oil from Russia. The charter allowed the owners to refuse orders which, in their reasonable judgment, were prohibited by sanctions or would expose the owners, vessel, managers, crew or insurers to sanctions.

Screening identified links between the shipper, Neftisa, and a sanctioned businessman, Mikhail Gutseriev. The owners refused to load. The charterers supplied corporate assurances and legal opinions intended to show that Mr Gutseriev had transferred control to his half-brother and no longer controlled Neftisa. When the owners maintained their refusal, the charterers cancelled the charter.

At first instance, the owners lost. The judge concluded that they had not shown a sufficient factual basis for believing that Mr Gutseriev still controlled Neftisa. The Court of Appeal reversed that decision.

Its central point was that the clause did not require the owners to prove that loading would actually breach sanctions, or even that a breach was more likely than not. The operative word was “expose”. A reasonable judgment that performance created a real risk of sanctions liability could be enough.

That distinction matters because these decisions are rarely made with a complete factual picture. Owners may know far less than charterers about the shipper, the ownership chain and the background to a restructuring, while still being expected to decide quickly, often against moving freight and commodity prices.

The judgment therefore strengthens owners operating under appropriately drafted sanctions clauses, but it does not give them a free hand to reject any cargo that produces a screening hit. The test remains objective. The question is whether a reasonable owner could conclude, on the material available, that there was a real sanctions risk.

In The Catalan Sea, the surrounding facts did the work. A valuable majority interest was said to have been transferred, after designation, to the designated person’s half-brother and longstanding business partner. There was no information about the consideration paid, while screening material continued to associate Neftisa with him. Those facts were capable of supporting a reasonable concern that the transfer had not ended his influence or control.

The decision therefore cuts both ways. Owners gain protection for a considered, evidence-based refusal. Charterers retain the ability to challenge a refusal based on little more than a superficial match and a general better-safe-than-sorry instinct.

A screening platform can identify an association. It cannot determine who controls a company today. A hit may reflect historic rather than current ownership. A transfer to a family member may be genuine, or it may be cosmetic. A corporate register may show who holds the shares without revealing who gives the instructions.

The same caution applies to reassurance material. The court was not rejecting legal opinions. It was rejecting legal opinions built on unverified assumptions about who really exercised control. Its point was narrower. The opinions did not remove the risk because they rested heavily on assumptions about the very issue in dispute, namely whether control had genuinely ceased. Much of the underlying information also originated from Neftisa’s own side. The Court paid close attention to the assumptions and limitations on which those opinions were based. One was an assumption that the brother was not taking instructions from the designated person. Rather than dispelling concern, those reinforced the Court's view that uncertainty remained as to who really exercised control.

That means the practical value of any reassurance depends on its factual foundation. A legal opinion may be sound as law but still provide limited comfort if the critical facts have not been independently verified.

For owners, operators, traders and suppliers, the sensible approach is to treat the screening hit as the start of the enquiry rather than the end. What is the alert actually based on? Is it current ownership, historic ownership, family connection, board membership or an unexplained association? If the picture is unclear, ask for current evidence of ownership and control, including the terms, timing and consideration of any transfer.

The source of the reassurance also matters. Self-certification may add little unless it is supported by independently verifiable material.

Just as important is the record made at the time. The reasonableness of the decision will principally be assessed by reference to the information available when it was taken, not reconstructed with hindsight. A contemporaneous note of the screening results, the questions asked, the answers received and the basis for the final judgment may prove more valuable than any explanation prepared after a dispute has begun.

The decision did not discuss s 44 of the Sanctions and Money Laundering Act 2018, which shields a party against civil liability for an act or omission taken in the reasonable belief this was required by sanctions legislation. This statutory defence can be a useful protection, although recent cases have also shown that it is not a get out of jail free card. Indeed, the question of its applicability will come back to the vexed question of reasonableness, which caused some disagreement between the upper and lower courts in this case. Again, the contemporaneous record will be crucial evidence.

Although The Catalan Sea arose under a voyage charter, the problem is wider. Bunker suppliers, traders and terminal operators increasingly conduct their own sanctions screening before supplying fuel, access or services, and they face the same difficulty: an ambiguous ownership link, incomplete information and pressure to decide quickly.

The judgment does not protect guesswork. It recognises that a reasonable commercial judgment may have to be made before certainty is possible. The businesses best placed to defend that judgment will be those able to show, from their contemporaneous records, what they knew, what they asked and why they concluded that the risk was real.