Class societies start pulling out of Russia
Lloyd’s Register has fired the starting pistol on class disengaging from provision of all services to Russian owned, controlled or managed assets or companies. The likely exodus of service will further isolate Russian controlled vessels
Classification societies had been holding off from withdrawing class from Russian controlled vessels, but with Lloyd’s Register the first to pull out and DNV following suit, pressure is mounting on the rest of IACS societies to take a position. An exodus of class services could leave thousands of vessels unclassed, uninsured or moving services swiftly back to Russia
CLASSIFICATION societies have started withdrawing services from Russia in a move that could potentially leave hundreds of vessels rapidly seeking new certification and insurance arrangements.
Lloyd’s Register was the first class society to announce on Thursday that it had started withdrawing class from all Russian controlled, owned or managed ships.
DNV has started winding down “business that is not in line with our values” and will cease all new business activities in Russia. However, it has been careful to leave open the caveat that it is still “evaluating” the existing business portfolio.
Nevertheless, where LR has led other class societies are now expected to follow amid rapidly tightening sanctions regimes restricting the provision of services to Russian entities.
Members of the International Association of Classification Societies contacted by Lloyd’s List were all evaluating their options on Thursday and several announcements are expected to follow.
The move by Lloyd’s Register follows an internal review of all Russian connections and business links to Russian entities.
It is not clear how quickly the process of class withdrawal will take. LR told Lloyd’s List that there was no defined notice period agreed, but “LR will not be providing such certificates going forward to Russian clients and notifying the relevant flag Administrations of the withdrawal of class as it takes effect”.
Ordinarily that would invalidate existing certificates issued on behalf of the flag Administration, but it will also require the vessel owners to revisit insurance cover. Most insurance and finance requires that ship classification services are placed with an IACS member.
Given the reluctance of most businesses to engage in new business with Russian-linked entities, that is likely to spur a rapid exit of vessels to either the Russian Register or class societies prepared to engage Russian owners.
LR has stressed that it had been reducing its Russian-related business in recent years and declined to reveal precise figures for how many vessels or companies would be affected by the move. However, according to Lloyd’s List Intelligence data, LR classes 67 vessels either owned or controlled by Russian-affiliated entities.
Outside of the Russian Register, Italian society Rina is the largest provider of classification services to vessels with Russian ownership or control, closely followed by DNV and then Bureau Veritas.
“Based on the latest legislative requirements taking effect in the United Kingdom, the European Union and United States, LR has confirmed that it will disengage from the provision of all services to Russian owned, controlled or managed assets or companies,” Lloyd’s Register said in a statement.
The International Association of Classification Societies said a decision on providing cover for individual Russian shipping companies would rest with each class society.
While current sanctions regimes do not explicitly call out the provision of class services, the widening scope of regimes will make it difficult for any class society to engage with Russian interests.
On Wednesday, the European Union introduced expanded restrictions on financial transactions with Russian businesses that included specific restrictions on maritime safety.
The amendment introduced new restrictions on the export of maritime navigation and radio communication technology, adds the Russian Maritime Register of Shipping to the list of state-owned enterprises subject to financing limitations, and introduces a prior information sharing provision for exports of maritime safety equipment.