Special Clause for Iran Sanctions Act

25 June 2010 No.10-006

Please refer to our Special Circular No.09-019 of 1 March, 2010 "Iran-U.S./U.K. current and pending legislative action targeted at trading activities involving Iran" and the Special Circular No.10-004 of 14 June 2010 "Report on the 569th Meeting of Board of Directors".

The following special clause will be introduced and applied to insurance contracts of all ocean-going vessels from 25 June 2010. The main purpose of this Clause was approved at the Meeting of Board of Directors of 14 June 2010.

"Special Clause for Iran Sanctions Act"

The case "if any material events occur other than those mentioned in the preceding items in which the Association's trust in the Members is undermined, thus making the continuance of the contract of insurance difficult" set out in Rule 11.3(3) shall include the circumstances that "if a Member has exposed or will expose the Association to a material risk of being or becoming subject to a sanction, prohibition, restriction or other adverse action by a competent authority or government, which may materially affect the Association."

U.S. Congress approved on 24 June 2010 "the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010". This law will be enacted soon after President Barack Obama's signing and is likely to come into force at the same time of enactment. The cancellation of the contract based on this Special Clause will be effective at the time of enforcement after this U.S. law enactment. Please understand that this U.S. law will penalize the prohibited transportation of Oil products for Iran, which includes acceptance of the charterer's such instruction, acceptance of booking for Iran and etc.

As announced in the Special Circular No.09-019, the law imposes new trade sanctions focused specially on the exportation of refined petroleum products to Iran. Sanctions would apply in relation to any vessel(s), regardless of country of flag/registry/beneficial ownership, trading refined products into Iran even where, as a matter of the law governing the relevant contracts of carriage, the adventure is lawful. Sanctions would be imposed on the persons (both US & non-US persons) who provide goods, service, technology, information or support relating to the shipping or other transportation of refined petroleum products to Iran and sanctions would be also imposed on the persons (both US & non-US persons) who provide insurance

or reinsurance for such activities. Please see URL
for details of the law. In relation to this sanction, the model clauses to be included in the charter parties, were already published by Intertanko and also will be by BIMCO soon.

For Members of ocean-going vessels, please remember that any action to be taken against this U.S. law. is likely to lead termination of insurance contract. Please understand that this is very important and urgent to establish new Special Clause during the 2010 policy year.