TURKEY: An Introduction to Shipping

The Significance of the Turkish Straits 

The Mediterranean Sea and the Turkish Straits, especially the Bosphorus Strait, are of crucial importance due to their role in the facilitation of international commerce, all the while being a crossroads for historical, sociological and cultural advancements which still influence the geopolitical structure of the Eurasian territory at large. All of these elements make the region consisting of the Turkish Straits, called Istanbul and Çanakkale Straits and the Sea of Marmara, one of the busiest waterways in the world, highly congested with military, leisure, and mostly commercial vessels. On that account, sovereignty over these waterways has always been a long-sought struggle for a variety of empires and nations throughout history, further signifying their ongoing prominence.

Indeed, sitting at the crossroads between Europe and Asia through the Suez Canal, The Mediterranean Sea links Asia into trade with the EU which is its main trading partner, while also ensuring the provision of energy products to Europe from the Gulf states and the transportation of passengers all around the world. Under the current paradigm, the Turkish Straits still hold their significance in the maritime industry by connecting the Black Sea to the Mediterranean, providing a medium for the regional transportation of manufactured products and the provision of other essential services such as shipbuilding, maintenance and repair, upgrading, shipyard facilities rental, technical support, bunker delivery and supply of equipment.

Impact of Sanctions Against Russia 

Furthermore, as an ongoing development preserving its importance in the maritime sector, the EU -aside from UK and the US- being one of the major actors in the field of international trade, has imposed massive and unprecedented sanctions against Russia in response to Russia's war of aggression against Ukraine which initiated on 24 February 2022 and the polemical invasion of Ukraine's Donetsk, Luhansk, Zaporizhzhia and Kherson regions. These restrictive measures add to the framework established by already existing limitations imposed on the Russian Federation since 2014 following the annexation of Crimea and the non-implementation of the Minsk agreements. Under such restrictions, products of Russian origin (that are produced in Russia and/or exported from Russia) are held to import prohibitions which are undoubtedly bound to immobilise the actors involved in transactions with Russian companies and their affiliates. Among the goods on the list of Russian goods that are prohibited from being imported are crude oil (from December 2022), refined petroleum products (from February 2023), coal, steel, iron, gold and diamonds, including jewellery, seafood and liquor, cigarettes and cosmetics, cement, asphalt, wood, paper, synthetic rubber and plastics. Moreover, as a part of these measures, The EU has closed its ports to Russia's whole merchant fleet comprising over 2800 vessels. Under these measures, stakeholders (including those of Turkish origin and those who deal with Turkish businessmen) who conduct business with Russian companies and/or transport goods of Russian origin, should take into consideration these prohibitive measures while doing so.

However, the measure concerning the closing of ports does not impact vessels carrying agricultural and food products. In addition, such restrictive measures in terms of import prohibitions would not hamper the transfer of agricultural and food products from Russia to third countries, ie countries outside the European Union. Therefore, no general prohibition is imposed on the transfer of agricultural and food products between third countries. Indeed, such an approach conforms with the overarching need to mitigate the threat of famine, which can be a debilitating threat for third-world countries and to address potential global price spikes in food products. In the same vein, the previously adopted Initiative on the Safe Transportation of Grain and Foodstuffs from Ukrainian ports (“Black Sea Grain Initiative” in short) appears to have targeted the same objective, the aims of which seem to be long-forgotten and seemingly left to wither by its regional signatories.

The Black Sea Grain Initiative 

The Black Sea Grain Initiative itself focuses on enhancing agricultural productivity and sustainability within the Black Sea region via cooperation among regional powers. The Initiative aimed to combat worldwide famine to ensure global food security while also aspiring to bolster grain production, improve agricultural innovation, promote technological interaction between countries, garner regional collaboration in fields such as market development and research, and even contribute to the ongoing battle against climate change at large. The Initiative was bolstered and encouraged by Turkey, which is one of the main actors active in the Black Sea. After its signing ceremony hosted in Istanbul, Turkey, on 27 July 2022, the Initiative offered a much-needed “beacon of hope” amidst the hostile environment presented in the aftermath of the Russian-Ukrainian war. Unfortunately, however, while the actions of which were also the trigger point for the Initiative, Russia withdrew from the accord itself, and the initiative was not renewed after the conclusion of its third term, which had already expired on 17 July 2023.

Moreover, it appears also worth mentioning from a dispute resolution point of view that, the UK Arbitration Act dated 1996 underwent a plethora of significant changes and revisions through the course of a 2.5-year review and consultation process. Following the recommendations and draft bill published by the Law Commission on 6 September 2023, the draft Bill was accepted as the new “Arbitration Bill” in November 2023 by the UK Parliament and duly put into effect. The Bill provides for a long-anticipated rework of the Act in matters such as governing law of arbitration agreements, duty of disclosure, jurisdictional challenges and summary disposal of claims. The Bill’s prominence from the perspective of Turkey’s role in international commerce mainly derives from the fact that most of the arbitration agreements or clauses which are contained within charter parties are commonly governed by English Law and subject to arbitration in the United Kingdom, which preserves its role as the main centre for international arbitration for the settlement of disputes.

Turkey at the Intersection Point 

Ultimately, considering Turkey is at the intersection point of three distinct seas, Turkish expertise regarding maritime services has been maintained, which still manages to gather the attention of various traders and investors all around the world in the shipping sector. In addition, changes introduced by the UK Arbitration Bill will without any doubt also influence business stakeholders of Turkish origin and those who decide to work with Turkish merchants as well. As also noted earlier, the stakeholders of international trade should take into account the restrictive measures imposed on Russia following its intervention in Ukrainian territory and modify their business strategies accordingly. Nonetheless, our fingers are crossed on the possibility that one day the regional conflict will meet its end and transportation from the Black Sea, especially of food products to the rest of the world will carry on as previously with the former cooperation of Russia and other Black Sea powers including Turkey.