New European Union Measures against Iran -European Council Decision 2012/35 dated 23 January 2012 & European Council Regulation 267/2012 dated 23 March 2012-Countermeasures by the Club
10 April 2012 No.12-001
| Members are referred to the previous circular No.11-025 dated 27 February,2012 and No.11-030 dated 29 March 2012. | |
| On 23 March 2012 the European Union Foreign Affairs Council met and adopted Council Regulation (EU) No. 267/2012 (the "Regulation"). Following the publication of the Regulation on 24 March 2012 the Club has decided to take the countermeasures as described in the paragraph 3. | |
| 1. | Background |
| On 23 January 2012 The European Union Foreign Affairs Council (the "Council") agreed to introduce further measures of sanctions against Iran, specifically, to prohibit the import, purchase and transport of Iranian oil, petroleum products and petrochemical products and to ban the provision of related insurance and reinsurance. The new measures were set out in Council Decision 2012/35 dated 23 January 2012 (the "Decision"). On 24 March 2012 was published Council Regulation 267/2012 implementing the provisions of the Decision. | |
| The provisions of the Regulation substantially reflect the corresponding provisions in the Decision including the prohibition on the purchase, import and transport of Iranian oil, petroleum products and petrochemical products as well as the ban on providing related insurance and reinsurance. The Regulation sets out an exemption for "third party liability insurance and environmental liability insurance and reinsurance" from the prohibition on providing insurance and reinsurance for the import, purchase and transport of petrochemical products until 1 May 2012, and of Iranian oil and petroleum products until 1 July 2012. P&I insurance will fall within the scope of these exemptions and thus the Clubs including those regulated by the EU can provide cover for the import, purchase and transport of petrochemical products until 1 May 2012 and for the import, purchase and transport of Iranian oil and petroleum products until 1 July 2012. However, the insurance ban will apply to P&I insurance after 1 May or 1 July 2012. The impact on the Club's cover after 1 May (for petrochemical products) and 1 July 2012 (for oil and petroleum products) is explained in paragraph 2. | |
| 2. | Impact on the Club's cover |
| The Club is not subject to the jurisdiction of the EU and thus not directly affected by the sanctions set out in the Decision 2012/35 and Regulation 267/2012. As the law stands, the Club may continue to insure non-EU Members who transport Iranian oil and other products even after 1 May or 1 July 2012 so long as the vessels involved are not registered within the EU, the voyage is entirely outside the jurisdiction of the EU and no EU nationals are involved in the operation or decision making process. | |
| However, the Club benefits from the reinsurance programme of the International Group of P&I Clubs (IG) by which all IG Clubs reinsure each other for claims in excess of USD8 million. Any reinsurers including other IG Clubs subject to EU legislation will not be able to pay out if a claim involves a sanctioned cargo(uc0u8251 ). This will impact the Member's ability to make a recovery from the Club as the Club is not able to pay out on any claim in relation to which it can make no recovery from reinsurers. Because of this, the Member could suffer a significant shortfall in any claims made. | |
| On another point, the Club issues Blue Cards pursuant to CLC or the Bunker Convention. The Conventions allow third party claimants to bring direct action against the Club under Blue Cards. The Club would be exposed to such a risk even in respect of sanctioned cargoes. From the date of this Circular the Member is required to and accepts he must reimburse to the Club any sum or sums paid by the Club on behalf of the Member in respect of a Blue Card to the extent that such payment is not recoverable from the Club under the Club's Rules. | |
| *With regard to the sanctioned cargo, please refer to the Annex IV and Annex V of the Council Regulation (EU) No.267/2012. In case it should be difficult to as certain whether the cargo is subject to the sanction, it is recommended to contact with the authority of EU member states for confirmation. | |
| URL: | |
| http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:088:0001:0112:EN:PDF | |
| 3. | Countermeasures |
| Taking the above situation into account, the Club has decided tointroduce the following countermeasures. | |
| (1) | Declaration in advance |
| The Member is required to make a declaration in the attached document 1 to the Club in advance of fixing an entered vessel for any voyage on which recovery from the Club may be affected by any sanction, prohibition or restriction or other adverse action of a competent authority or government. | |
| (2) | Provision of Confirmation Letter |
| The Member is required to provide a Letter to the Club in the form of the attached document 2 confirming that: | |
| a) | the Member is aware of the sanctions, prohibitions and restrictions which may apply to such voyage as prescribed in the declaration and the Member accepts that recovery of any and all claims will be limited to the extent that the Club is able to reimburse the Member as a result of any sanctions, prohibition or restriction. |
| b) | the Member shall conduct any such voyage in the full knowledge of the risk that the Club may lawfully cancel the contract of insurance or decline to pay claims or reduce the amount of any payment thereof under Rules 11.3.(3) and 36.(9) due to such voyage. |
| c) | the Member shall pay any costs and/or expenses arising out of any incident relating to such a voyage to the extent that such costs and expenses are not recoverable from the Club under the Club's Rules and that the Member fully understands that the Club shall not provide security for the benefit of the Member in respect of any sum or sums not recoverable from the Club. |
| d) | the Member shall on demand reimburse to the Club such sum or sums as the Club has paid on behalf of the Member under any guarantee, undertaking or certificate whatsoever provided by the Club on behalf of the Member, or in connection with a ship entered with the Club by or on behalf of the Member, to the extent that such payment is, or in the opinion of the Club is, in respect of liabilities, costs and expenses not recoverable from the Club. |
| On the demand of the Club the Member is also required to have the Confirmation Letter (document 2) counter-signed by a reliable guarantor who expressly accepts joint and several liability for the obligations set out in the Letter. The Member must obtain the prior approval of such guarantor from the Club and the Club shall have an absolute discretion as to the approval of a guarantor. | |
| (3) | Special Clause for Sanctions Act |
| In order to implement the above countermeasures the Club has introduced the Special Clause for voyages affected by sanctions as per attached document 3, and the Special Clause will be introduced and applied to insurance contracts for all vessels from 10 April 2012 | |
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