P&I clubs resume Iran cover

Insurance cover for Iranian trade is set to resume this Monday following four years of sanctions that have driven vessels from the protection and indemnity clubs and greatly limited access to hull cover.
Iranian crude is loaded from a FSU in the Persian Gulf.

Iranian crude is loaded from a FSU in the Persian Gulf.

The European Union is suspending various sanctions on the transport and insurance of Iranian oil and petroleum cargos as a result of the November agreement restricting Iran’s nuclear enrichment activities and allowing inspection of facilities by the International Atomic Energy Agency.

The clubs in the International Group have agreed a common approach to reinstating cover but are advising shipowners to be cautious and ensure that deals comply with the relaxation and do not breach sanctions that remain in force.

The relaxation presumably also applies to hull cover although it is P&I that has proved more effective in limiting Iranian trade.  

The P&I clubs are warning that a shipowner transporting oil, or an insurer providing cover for a cargo to be carried from Iran to a country not covered by a US National Defence Authorisation Act (NDAA) waiver will still be in breach of sanctions.

The NDAA waivers cover China, India, Japan, South Korea, Taiwan and Turkey.

Within the limits of the waivers EU owned or registered ships will be permitted to lift Iranian cargoes.

The P&I clubs are drawing attention to the fact that the sanctions suspension is for six months with no guarantee they will be extended so contracts should not go beyond 20 July.

The clubs also note there is no suspension of the prohibition on EU purchase or import of Iranian oil and petroleum products and dealings with designated persons or entities continue to be banned.

And a big caveat is that the sanction suspension agreed does not permit the chartering of vessels to NITC, the Iranian tanker company, companies linked to Iran's Revolutionary Guard, or other Iranian designated persons or entities.

The clubs say they have been told that it may be permissible to make payments to frozen accounts belonging to designated entities but the “competent authorities” should be consulted in advance and there may still be problems with the willingness of banks to facilitate transactions.

Identical circulars issued by the P&I clubs say:

“On 20 January, by virtue of the suspension of Council Regulation 267/2012 article 11.1(d), clubs will be able to provide cover to both EU and non-EU owned or registered vessels undertaking transportation of oil and petroleum products, consistent with the import and purchase and transportation restrictions identified."

The European Union suspension takes immediate effect with the US set to begin taking similar steps later on Monday.

The clubs say the US has confirmed its political intent to mirror the EU action but faces issues relating to implementation.

President Obama can alter his own executive orders but the US government cannot amend or repeal acts of congress unless the legislation specifically grants that authority.