International Group of P&I Clubs - Platts · PDF fileunderstanding of proposed/adopted...

International Group of P&I Clubs

www.igpandi.org

The International Group

The European Union ban on the transportation of Iranian

crude oil and products: a law of unintended

consequences?

The sanctions ban on carrying Iranian oil, petroleum and petrochemical

products, including stemming Iranian bunker oil and the consequences for

ship owners and insurers if EU Regulators enforce the sanctions

2 IG Sanctions Presentation to Platts Conference

2012


1.General overview

2.EU Sanctions measures

3.Other sanctions measures

4.Club Cover implications

5.Practical implications for shipowners, Clubs and third parties

6.What next?

IG Sanctions Presentation to Platts Conference

2012

3


PART I - GENERAL OVERVIEW

Sanctions against sovereign States are not new

Governments apply targeted interventions

Sanctions can make parent companies accountable for the acts of its

subsidiaries

Ship owners/charterers may not know at the start of a contract/fixture

all the facts so due diligence is required to assess sanctions risk

Insurers vulnerable to sanctions as a result of the actions of assured or

through lack of diligence or risk assessment.


2012

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2012

The International Group Part I cont/

Complex regulatory framework – UN (UNSCR) US and EU, UK

Sanctions regimes can target countries, corporations, persons,

financial transactions, trade, transport and insurance

Measures vary depending on political objectives and sanctions

target/s

European Union sanctions require implementation in 27 States

• Challenge for IG Clubs: implementation, enforcement and penalties

could be different in 27 States

U.S enforcement through State, Energy and Office of Foreign Assets

Control (OFAC);

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Part 2

EU Iran Sanctions

• 2009 UK Order in Council prohibiting insurance to IRISL. IRISL

fleet was entered in various IG clubs

• 2010 EU Regulation 961/2010 (repealed) directly applicable across

the EU. Rules apply to EU States, private persons and entities

• 2012 EU Council Decision 2012/35 followed by Regulation

267/2012 prohibiting purchase, import and transport of defined

products and the insurance related to such activities

• 2012 EU Council Decision 2012/635 amends Decision 2012/35

introduces new restrictions and prohibitions


2012

6

UN Sanctions

EU Sanctions

UK Sanctions

US Sanctions



2012



2012

• Non-EU insurer or reinsurer

• EU insurer or reinsurer

• Non-EU Registered ship

• EU Registered ship

Unlawful

voyage

Lawful

voyage

Cover lawful

Cover Unlawful


example of crude oil prohibition

EU ship

Iranian Crude

EU Action


2012


Example of EU insurance prohibition

EU Insurer/reinsurer

Ships carrying Iranian oil

EU Action


2012


EU Council Regulation 267/2012 (Iran) provides

“It shall be prohibited ..... to provide directly or indirectly .....

insurance and reinsurance related to the transport of crude oil

[petrochemical products] and petroleum products of Iranian

origin or that have been imported from Iran”.

• EU insurers/reinsurers prohibited from providing P&I cover

from 1 May for petrochemical products and from I July for

crude/petroleum products

• IG efforts to raise key concerns with regulators resulted in

exemptions with sunset provisions.

• Political imperatives override pragmatic concerns


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Part 3

Other relevant sanctions legislation - United States:

• Plethora of U.S measures conferring powers of enforcement on

U.S Treasury and State Department

• Iran Sanctions Act of 1996 (ISA); The Comprehensive Iran

Sanctions, Accountability, and Divestment Act (CISADA) 2010

• Energy-related sanctionable activities target the supply of refined

petroleum to Iran and goods and services for the development of

Iranian refining capacity

• Extends to insurance of defined trades

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Part 4 - Sanctions Impact Summary

• EU/US prohibitions on insurance of oil/petrochemical

cargoes affect all tankers carrying defined products of Iranian

origin

• Prohibitions may also extend to dry cargo vessels carrying

dual use cargoes to Iran e.g. cement, steel etc.

• Provision of IG P&I cover is prohibited to a SDN / designated

shipping companies


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Part 5 - Club cover implications

• Clubs could be unknowingly exposed to liability for breach of

sanctions even where shipowner member is not in breach

• All IG clubs introduced sanctions rules on cover to protect

the Club/members against exposure to sanctions liabilities.

• Clubs discussed common approach – no common rule but all

clubs have sought to protect against exposure to liability for

breach of sanctions


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Pooling Agreement Appendix IV

Sanctions

“Liabilities, costs and expenses to the extent that such liabilities,

costs and expenses are not recovered from the collective

reinsurances … because the provision of cover, the payment

of any claim or the provision of any benefit in respect of

those liabilities, costs and expenses would expose the

reinsurers thereunder to any sanction, prohibition or

restriction under the United Nations Resolutions or the trade or

economic sanctions, laws or regulations of the European Union,

United Kingdom or United States of America.”

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Part 6

1 Practical implications for shipowners

•Diligence needed to ensure prohibited cargoes are not carried

•Diligence needed to seek to identify origin of bunkers stemmed

•Diligence needed to ensure charterers, shippers, receivers are not

US SDN or EU blacklisted

•Diligence needed to ensure adequate insurance cover/financial

security in place on voyages for which EU insurance prohibitions apply


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2. Practical implications for clubs

• Diligence needed to ensure no inadvertent breach of

sanctions

• Diligence needed to keep abreast of developments and to

keep members updated

• Need for engagement with regulators on licensing of

payments/collections/posting of guarantees and security


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3. Practical implications for third parties

• Victims of maritime accidents

• IMO/IOPCF

• States

• Ship Financiers

• Oil Receivers

• Other insurers/reinsurers


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Part 7

What Next – How to deal with Regulators

• Driven by political will which is likely to pay little regard to

economic or insurance considerations

• Increasing regulatory focus on “indirect sanctions” targeted

at insurance and financial arrangements

• Continuing need to educate and raise levels of

understanding of proposed/adopted measures on P&I

insurance cover


2012

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International Group of P&I Clubs

www.igpandi.org

International Group of P&I Clubs - Platts · PDF fileunderstanding of proposed/adopted...

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