Members are referred to previous circulars regarding International Sanctions1.
On 16 October 2012, the EU published Council Decision 2012/635 (the "Decision") setting out further restrictions in respect of trade with Iran. Whilst the Decision is not binding on private individuals and entities, similar, binding restrictions are expected to be implemented in the future. The Club takes this opportunity to alert Members to the likely forthcoming further restrictions, to provide Members with an overview of current EU and US sanctions and to remind Members of the countermeasures adopted by the Club in response to international sanctions.
As explained in earlier Circulars, the Club is not subject to the jurisdiction of the EU and thus is not directly affected by the EU Council Decision or by existing EU Regulations. However, as the Club benefits from the reinsurance of the International Group of P&I Clubs, which is subject to EU legislation, the Member’s ability to make a recovery from the Club may be affected where a claim relates to a sanctioned cargo, sanctioned entity or some other restriction imposed by the EU Regulations.
In addition to the EU sanctions, Members must also be aware of relevant US laws which can apply to non-US entities. Most recently Presidential Executive Order 13622 of 30 July 2012, and the Iran Threat Reduction and Syrian Human Rights Act of 10 August 2012, impose additional sanctions against non-US entities that engage in certain transactions with Iran.
Members should note that whilst this Circular focuses on Iran and Syria, international sanctions are in place against other countries. This Circular provides an overview of some of the most significant prohibitions imposed by international sanctions but is not a substitute for members taking advice and/or researching what measures may apply to their activities.
Members are reminded that as per the Club’s Special Clause for voyages affected by sanctions, it is the responsibility of the Member to notify the Club in advance of any voyage which may result in claims where recovery from the Association may be affected by any sanction, prohibition or other restriction. Further, Members are required to provide a Confirmation Letter in the form prescribed by the Club in circular No. 12-001 of 10 April 2012 confirming that they are aware of the sanctions, prohibitions and restrictions which may affect the voyage and the associated impacts on the cover provided by the Club.
EU sanctions against Iran
Future restrictions
Amongst other things, the proposed further restrictions will, when implemented, prohibit:
- The import, purchase or transport of Iranian natural gas and the provision of (re)insurance related to the same;
- The sale supply or transfer to Iran of metals (including graphite, and raw and semi-finished metals, such as aluminium and steel) relevant to the industries controlled directly or indirectly by the Iranian Revolutionary Guard Corps;
- The sale, supply or transfer of key naval equipment and technology for shipbuilding, maintenance or refit to Iran or to Iranian or Iranian- owned enterprises engaged in this sector.
- The supply of vessels designed for the transport or storage of oil and petrochemical products to Iran or for the transport or storage of Iranian oil and petrochemical products.
Existing Restrictions
Amongst other things and with limited exceptions, the existing sanctions on trade with Iran prohibit:
- Making funds/economic resources available, directly or indirectly, to persons/entities identified in the EU’s list of sanctioned persons. This list is regularly updated and it is recommended that it is checked prior to any transaction;
- The import, purchase or transport of Iranian crude oil, petroleum and petrochemical products and the provision of (re)insurance related to the same; and
- The direct or indirect sale, supply, transfer or export to Iran of goods, equipment and technology listed in the Annexes to EU Regulation 267/2012.
US Sanctions on Iran
The United States continues to impose ever more stringent and complex economic sanctions on Iran. US companies are essentially prohibited from participating directly or indirectly in any transactions with Iran, with limited exceptions for humanitarian items. As of October 9, 2012, any non-US entity owned or controlled by a US company is also subject to the same prohibitions as its US parent. Further, the US parent will be liable for violations by its non-US subsidiary or affiliate. In addition, any company publically traded on a US Stock Exchange (which includes many non-US companies) must make public filings of their activities relating to Iran.
Many of the US sanctions apply not only to US entities but also to non- US entities, even where such entities do not have a US nexus. Sanctions may be imposed by the US on non-US entities, without a US nexus, who:
- Transport crude oil, petroleum products, or petrochemicals from Iran to third countries which have not received a waiver for the purchase of Iranian oil products from the US President;
- Transport to Iran refined petroleum products, most petrochemicals, and equipment, supplies, or other goods that may be used to support Iran’s ability to develop petroleum resources, or support Iran’s ability to refine petroleum or produce petrochemicals;
- Provide goods or services to, or engage in transactions with, certain individuals and entities that have been designated as, or are owned or controlled by, Specially Designated Nationals (“SDNs”) or otherwise identified for specific sanctions;
- Tranship goods from the US to Iran through third countries;
- Re-export certain US-origin goods to Iran;
- Transport to Iran goods that could be used for the development of weapons of mass destruction, or be used to monitor or repress the Iranian people; or
- Participate in or assist Iranian entities in evading US sanctions;
Virtually all USD wire transactions pass through a US bank. With limited exceptions, US banks are obligated to block or reject transactions involving Iran or SDNs and report this to US authorities. Non-US banks and other financial institutions are subject to sanctions if they facilitate significant transactions with Iranian banks, or facilitate transactions relating to petroleum or petrochemical exports or involving certain blocked entities.
The US sanctions have broad humanitarian exceptions and would not sanction foreign persons transporting food (including many bulk agriculture products), medicine, and basic medical supplies to Iran, provided the transactions do not involve certain SDN entities.
EU Sanctions against Syria
With limited exceptions, the existing sanctions on trade with Syria prohibit:
- Making funds/economic resources available, directly or indirectly, to persons/entities identified in the EU’s list of sanctioned persons. This list is regularly updated and it is recommended that it is checked prior to any transaction;
- The import, purchase or transport of Syrian crude oil and petroleum products and the provision of (re)insurance related to the same; and
- The direct or indirect sale, supply, transfer or export to Syria of goods, equipment and technology listed in the Annexes to EU Regulation 36/2012.
US Sanctions on Syria
United States economic sanctions on Syria prohibit the import of Syrian petroleum or petroleum products into the US, and generally prohibit US entities from engaging in transactions relating to Syria, or providing any services to or for the benefit of Syrian entities. These sanctions do not have broad extra-territorial application, but some US sanctions may apply to non-US persons. Sanctions may be imposed by the US on non-US entities, without a US nexus, who:
- Provide goods or services to certain Syrian SDNs designated for their support of international terrorism;
- Transport goods used to monitor or repress the population to Syria; or
- Assist the Syrian government or Syrian entities to evade US sanctions.
US banks cannot generally process wire transfers in which there is a Syrian interest, and such transfers will be blocked or rejected (hence USD transactions involving Syria are generally prohibited). With certain exceptions, no US broker, insurer, or other service provider can facilitate the transport of goods to or from Syria. Further, no U.S-origin goods may be shipped by any person to Syria, with the exception of certain humanitarian items.
Summary
In light of the EU and US restrictions, Members are urged to carry out enhanced due diligence where any voyage/transaction relate to Iran or Syria in order to ensure compliance. In the event that Members violate the sanctions, cover may be restricted.
Should Members have any queries regarding international sanctions against Iran or Syria, they should contact the Club.
1
No. 09-019 dated 2010/03/01,
No.10-006 dated 2010/06/25,
No.10-007 dated 2010/07/05,
No. 10-031 dated 2011/02/25,
No.11-022 dated 2012/02/09,
No.11-025 dated 2012/02/27,
No. 11-030 dated 2012/03/29,
No.12-001 dated 2012/04/10,
No.12-008 dated 2012/06/28 and
No. 12-012 dated 2012/08/17.
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