Shippers Can't Use Incoterms to Shift Sanctions Compliance Obligations, EU Says
Incoterms, the rules that define the responsibilities of sellers and buyers in shipping contracts, don’t relieve shippers from their sanctions compliance obligations or modify sanctions-related requirements “in any way,” the European Commission said in recent guidance.
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The guidance specifically addresses the “Ex Works” incoterm, which places “most responsibilities concerning the transport and delivery of the shipment” on the importer or buyer. Even if that incoterm is used, other parties to the transaction -- besides the importer -- still have an obligation to ensure the shipment doesn’t violate sanctions, the commission said.
“Compliance with EU sanctions is mandatory for all persons under EU jurisdiction, including individuals on EU territory, EU nationals wherever they are located, companies incorporated in the EU whether they are doing business inside or outside the EU, and foreign companies with regard to business conducted in the EU,” it said.
The commission said that includes the seller's “obligation" to make sure certain goods don't end up in restricted nations such as Russia or Belarus. "They cannot escape liability by means of contractual agreements or if they fail to perform due diligence," it said, warning they may face reputational damage or criminal penalties for any violations.