Iran - US Sanctions - Refined Petroleum Products

CIRCULAR REF: 2010/017

CIRCULATED TO ALL MEMBERS, BROKERS AND DIRECTORS                                                                               

On 1 July 2010 the USA enacted legislation targeting amongst other things the importation of refined petroleum products into Iran. The legislation formerly referred to as the Iran Refined Petroleum Sanctions Act (or IRPSA) now goes under the title the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (or “CISAD”). 

The introduction of such legislation had been anticipated and Members are referred to the Association’s circular dated Tuesday, 23rd February 2010.

CISAD is now signed into law and effective.

A copy of President Obama’s statement concerning the legislation is attached.

A copy of the Act is attached.

Amongst other things CISAD makes it illegal to ship or to insure the shipments of Refined Petroleum Products into Iran. Refined Petroleum Products are defined by CISAD to include “…diesel, gasoline, jet fuel (including naptha-type and kerosene-type jet fuel), and aviation gasoline.”

It appears that the Act may also apply to any form of support for the development of Iran’s direct domestic refining capability. This could include the shipment of materials, provision of services, technical support, or finance for such development.

Businesses which break that law are likely to find that their dollar transactions are blocked by the US banking system. It follows that what is essentially a piece of US domestic legislation can be enforced against any business entity – including North of England and its Shipowner and Charterer Members – which trade in dollars. There are also participants in the IG Reinsurance Programme domiciled in the US which we believe are now unable to participate in the pooling of any liabilities arising out of the trade to Iran of RPP.

Members are reminded that pursuant to the condition of entry endorsed on their certificates of entry for the 2010 policy year their insurance will cease:

“…where by operation of law the Association is prohibited or prevented from providing Insurance to the [Member / Ship] (the reference to “operation of law” includes any direction, regulation, sanction or other measure issued or implemented by any government, authority or power in a position to require, compel or enforce compliance therewith by the Association or its Members, Directors, Managers, officers, employees, servants or agents).”

Members who are performing or intend to perform voyages carrying Refined Petroleum Products to Iran should notify the club (Mike Salthouse, Mark Robinson or Graham Anderson) as soon as practicable.

An International Group circular is expected to be issued in due course.

M J C SALTHOUSE

DIRECTOR – North Insurance Management Limited

As Managers on behalf of the North of England P&I Association Limited