Shipping 2023

Last Updated February 01, 2023

Venezuela

Trends and Developments


Author



Hexa Legal is a Venezuelan law firm with a team of 20 lawyers. The firm is located in Caracas and specialises in commercial, arbitration, corporate, labour, tax, insurance and shipping Law. Clients are mainly multinational companies in the energy, oil and gas, telecommunications and shipping industries. Hexa Legal has recently offered comprehensive legal services regarding sanctions placed on an energy company based in Europe, the M&A of an Spanish insurance company and the arrest of a Panamanian tanker in Venezuelan waters.

Shipping in Venezuela: Legal Trends, Sanctions and Risk for Ship-Owners

A summary of events

Since 2015, Venezuelan oil and energy maritime operations have been subject to USA and European sanctions. This has led to a significant number of owners being reluctant to bring vessels into the country, and to insurers being reluctant to cover the risks of vessels coming to Venezuela for charging and discharging operations. Venezuela has the biggest reservoir of oil in the world and this activity has been sanctioned, which has caused serious difficulties for the Venezuelan economy.

In addition, the Venezuelan political landscape increases the risk for foreign ships. Unfounded arrests and seizures of vessels have occurred over recent years. Furthermore, a number of ships coming to the country are not protected by traditional insurers for war, riot and political risks.

The near future for shipping in Venezuela

Some sanctions have been relaxed in 2022 and 2023, which has led to oil companies from the USA and Europe restarting oil operations in Venezuela. Vessels carrying oil products would assist in an increase of trade and income.

Containership vessels from the major shipping lines are already reactivating an increase of TEUs in the principal ports of Venezuela, such as La Guaira and Puerto Cabello.

No strong institutions – no future for shipping

Tax, port, maritime and customs authorities are the key elements to regaining the trust of foreign investors, especially in the maritime sector. There have been a significant number of cases where containers have been retrieved from ports without the proper bill of lading or other documentation. These acts are perpetrated by individuals, but the authorities play an important part and could be deemed liable for letting this happen and for the lack of proper procedures as Maritime and Port Authorities.

At oil terminals, acts of smuggling, wrongful arrests, common crimes and security and safety concerns have not been properly controlled by the Port State Control and other authorities. In summary, if the institutions are not reorganised and assume their duties to facilitate shipping operations and procedures, shipping will not have a promising future in Venezuela.

National and international legal framework

Venezuela is an active member state of the International Maritime Organization, so the following international conventions apply in Venezuelan ports, alongside Maritime Safety Committee/Marine Environment Protection Committee Directives:

  • the International Convention for the Safety of Life at Sea (SOLAS);
  • the International Convention for the Prevention of Pollution from Ships, 1973 (MARPOL);
  • the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW); and
  • the Convention on Facilitation of International Maritime Traffic 1965 (FAL 65).

According to the UN Convention on the Law of the Sea and the human rights to due process, the Port State Control and enforcement authorities are also obliged to inform the flag of a vessel when she is detained and arrested for commercial or criminal reasons.

Recommendations for vessels intending to reach Venezuela for shipping operations

Operators intending to enter Venezuela should consider the following policies.

  • A know your customer (KYC) policy: clients should check whether the activity to be performed in Venezuela is sanctioned, both when the commodity or product is subject to restrictions and when one of the negotiating parties has been designated as a Special Designated National.
  • Safety/security: once this first step has been clarified, the owner and its insurer should check with their counsels in Venezuela as to the conditions of berthing and the safety and security conditions of the port of destination.
  • Charterparties: for ship operators in particular, it is recommendable for the charterparty to provide a guaranty stating that the port will be safe and that the vessel can be deviates without financial liability and damages for breach of contract.

Conclusion

To summarise, Venezuela is a land of real opportunity for shipping, even when political tensions and sanctions can obscure the sun behind the clouds. Operators just need to be certain that the type of business, cargo and stakeholders are on the same page, that the ports are safe and that the trade will generate an interesting revenue.

Hexa Legal

Av Rio Caura
Torre Humboldt
Piso 8. Caracas, 1080
Venezuela

+584143684563

aporras@hexa-legal.com www.hexa-legal.com
Author Business Card

Trends and Developments

Author



Hexa Legal is a Venezuelan law firm with a team of 20 lawyers. The firm is located in Caracas and specialises in commercial, arbitration, corporate, labour, tax, insurance and shipping Law. Clients are mainly multinational companies in the energy, oil and gas, telecommunications and shipping industries. Hexa Legal has recently offered comprehensive legal services regarding sanctions placed on an energy company based in Europe, the M&A of an Spanish insurance company and the arrest of a Panamanian tanker in Venezuelan waters.

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