On 20 November 2016, the Delta Pioneer allided with port facilities at the port of Primorsk. The facilities owner, LLC Transneft-Port Primorsk (the claimant), submitted the claim against the shipowner, Pontoporos Special Maritime Enterprise, and its operator, Delta Tankers Ltd. The ship was arrested on 23 November 2016. The defendants submitted an application to release the ship, providing an alternative security in the form of two Letters of Undertaking (LOU) of West of England (Luxembourg) P&I Club (the insurer) issued to the benefit of the claimant. The LOU stipulated that the insurer guaranteed the payment of the claim up to the sums stated in the LOU if the Court found in favour of the claimant or the parties settled the dispute amicably.

Held: The application is dismissed.

According to art 94(2) of the Commercial Procedure Code of Russia, the security measure can be changed by the defendant providing an adequate countersecurity. Under art 391(1) of the Merchant Shipping Code of Russia, the ship can be released due to providing an alternative security only by the ruling of the court, commercial court, or the proper arbitral tribunal. According to art 391(2), if the parties fail to agree on the form and the amount of the adequate alternative security, the court should decide this.

The Court found that the LOU could not be a sufficient alternative security in light of the European Union sanctions imposed on Russia since 2014. These sanctions may obstruct the payment under the LOU.