A Dubai-based shipping firm that’s sanctioned by the UK is seeking to challenge the restrictions, saying it has never been part of Russia’s shadow fleet in its short history.
Lawyers for Fractal Marine DMCC, which managed a fleet of 28 vessels as an intermediary between owners and charterers, told a London court Friday that it will be forced into liquidation unless the sanctions are suspended.
The company offered not to transport any Russian crude before a final government review as it warned that unscrupulous competitors could take over the tanker trade.
“The consequence is that Fractal Marine is unable to operate, unable to pay its staff” and “vessel owners will have no choice but to replace Fractal Marine with one of its competitors,” lawyer Maya Lester said.
Fractal was one of several firms that sprouted in early 2022 shortly after a Group of Seven price cap and wider western sanctions on Russian oil. It previously played a significant role in transporting Russian oil but has always insisted that it operated within the cap “through extensive due diligence and attestation measures.”
The firm said it was suffering from the closure of its bank accounts and withdrawal of insurance coverage following the UK crackdown in February. Fractal’s lawyers said that if it was forced to shut down, other competitors that might include the “shadow fleet” would instead transport the Russian oil. “This is entirely counterproductive,” Lester said.
UK government lawyers said the court should deny any request to suspend the sanctions.
“The fact that the substantial effect of sanctions can be relaxed could be perceived as a sign of leniency or ineffectiveness by individuals and entities who could be the subject of sanctions in the future,” the UK government lawyer Richard Hanstock said in a court filing.
The UK acted unilaterally when it hit the company with sanctions in February when it was already in conversations with US authorities, Fractal’s lawyers say. They want a judge to quash the sanctions declaring them unlawful.
