On 23rd January the EU Council published a Decision which prohibits the import, purchase or transport of crude oil, as well as petroleum and petrochemical products from Iran. It also prohibits the provision of insurance relating to their transport.
The Decision itself only binds EU member states, but shipowners and insurers will be affected when the Decision is followed up with a Regulation – which could operate retrospectively from 23rd January if it follows closely the terms of the Decision. There is no current date set for the issue of a Regulation, but if the time frame is similar to earlier phases of the EU sanctions regime it is unlikely to be before March 2012.
Whilst it may only be ship operators that are subject to the jurisdiction of the EU who are bound by a prohibition on transport, there will be a wider effect on non-EU ship operators. The prohibition against the provision of insurance and reinsurance extends to all EU based or regulated insurers and reinsurers. It is therefore expected to impact all the International Group P&I Clubs as their reinsurance & Pooling arrangements fall within the scope of EU regulation. Non-EU operators intending to carry Iranian oil or petroleum products are therefore likely to find that their P&I clubs are unable to provide cover.
There is an exception for contracts concluded before 23 January 2012 which may be executed up until 1st July 2012 for crude and petroleum products, and up to 1st May 2012 for petro-chemical products. The exception also allows, within the same time frame, the performance of ancillary contracts (which might include transport and insurance contracts) necessary for the execution of excepted contracts.
The International Group is seeking clarification from the EU and the HM Treasury in the UK regarding various aspects of the decision and the likely effects upon Club members.
Further updates will be provided in due course. In the meantime, the Managers take the opportunity to remind Members of the UK Club’bs Rule 5(V) relating to Sanction Risks.