How does Chinese Law and rulling affect your business?
How much do you know about the sanctions by the UN and possibly USA, UK as well as other countries? As of November 1st China has imposed a new Law, PIPL in short and this stands for ‘Personal Information Protection Law’.
A privace Law which regulates sharing of information of persons but now also occurs to be applied in logistics, especially shipping. The side affect, namely, is that China and ships flying the Chinese flag can choose not to share information any longer which results that they may, according the PIPL, switch off the AIS (Automatic Information System). Sources state that this suits Chinese liners and operators who can avoid the reporting system under Chinese Law and call countries which due political or other reasons been placed on sanction lists of the U.N.
Non reporting could affect the effectiveness for ports (think about reporting of ETA’s of ships), however, suppose your cargo is onboard a ship which does not report via AIS any longer? That ship may call or have called sanctioned countries and ports. Think of Iran, Venezuela, Cuba, Crimea Region, Eritrea, Yemen etcetc. Consequently, to safeguard your cargo and your interests whilst cargo is loaded onboard a Chinese flagged vessel, for instance as part cargo, you should know very well which routing and ports the ships will follow. If your cargo (and you as principal being responsible) has been in a sanctioned country or port, you may be held liable by governments having been involved in illegal operations. This may sound ‘kafkaesk’ but wait till the long arm of the USA government reaches out and your business or USDollar remittances are blocked. The burden of proof is on you, as Merchant. Perhaps you think that you work through a small company or a another structure, not having a link to you. Well, there is the piercing through corporate veil which is for a government with a capable intelligence agency not such a big hurdle.
Just to give you an example of the fines which can be imposed by USA government: criminal penalties in fines upto USD. 1 million per violation and upto 20 years in prison for natural persons, this applies also on foreigners, non US citizens! You can check yourself, punitive fines, criminal proceedings, damaged reputation, all there. In 2020 4 tankers where in dire trouble when it was discovered they executed a ship-to-ship oil transfer, the ships in question were kicked out from their registry and further proceedings followed.
Last but not least, governmental sites have it clearly spelled out: ‘turning off a ship’s automatic identification system (aka AIS) is flagged as potential mis-leading. It is explained that many of these activities could be used to confuse or conceal the identities of vessels, cargoes, routes and ports. Those operating in the shipping sector should be aware of these risks and carry out due diligence to account for them!
SeaWorks BV is active in tailor made shipping solutions and advice in logistical contracts, charter party and booking notes. Mediation and arbitration are part of our activities and we have been able to manage for clients terms and conditions which helped them to conduct their business without worries. If you have any questions or you wish more to know about SeaWorks’ advice, please contact us directly at email@example.com