Update 3 September 2015:

As the US moves towards congressional approval of the deal with Iran, timelines are becoming a little clearer now.  Whilst, as at today’s update, the sanctions remain fully in place it appears more likely that the deal will be approved by the US, then the UN and, of course, Iran.

At the same time, there appears to be a great deal of optimism within the shipping industry that Iran will be open up again for trade, given the reports of trade delegations and companies travelling to Iran to re-ignite previous or new connections.  Perhaps hardly surprising in today’s market that a ‘new’ opportunity is being seized on so readily.

In light of this, The Charterers Club have produced a very comprehensive overview as at 1st September 2015 which can be found here, which also includes advices from US lawyers which we wanted to share.  We would reiterate that, notwithstanding the progress that’s being made to agree the deal, sanctions remain in place and insurance policies still contain exclusions where trade is in breach of sanctions.

Please contact us should you wish to know more about the above or how your policies will respond.  We will continue to update our Blog as matters progress.

Original Blog:

The P5+1 group of countries made up of US, UK, France, China and Russia plus Germany have come to an agreement with Iran whereby the sanctions can be lifted as a result of Iran’s agreement to limit their sensitive nuclear activities.

This is very good news for the shipping market which has been restricted from trading with Iran for many years now.  However, before owners and operators flood back to trading with Iran, there are a number of issues that remain until the sanctions are formally lifted – until that time, any trade that is or could be in breach of the sanctions will or may give rise to policies being prejudiced or invalidated in whole or in part.

In terms of a timeline, the UK newspaper The Guardian states in their report “Later this month, the UN security council will pass a resolution incorporating the agreement and its five annexes as an attachment, but it will be 90 days before it enters into force, to allow for it to be reviewed domestically in the US and Iran. At that point, Iran will carry out its part of the bargain, dismantling nuclear infrastructure. Western officials say that might take several months, but a senior Iranian official said his government was ready to act much faster.

“We think that in a matter of weeks not months we will be able to finish what we have committed to,” the official said…The deal will enter a period of limbo for up to 82 days: 60 for [US] Congress to review it and a further 22 for a first vote and possibly a second in the event of a presidential veto.”

In the meantime, the Sanction Limitation Exclusion Clause 2010/009 will still be applicable to both Assureds and their Insurers and could, therefore, prejudice claims or invalidate policies where trade is undertaken that is in breach of the sanctions that remain in place.  That said, insurers are unlikely to make any specific changes to policies once the sanctions are lifted as this clause simply no longer has an effect and the underlying policy continues.

The International Group’s of P&I Clubs’ Sanction Committee has stated the following:

“The diplomatic agreement of 14 July 2015 between the E3/EU+3 and the Islamic Republic of Iran opens the way for the restoration of trade activates with Iran by lifting the trade, energy, insurance and banking embargoes that have been incrementally imposed by the European Union and U.S since 2009.

Full details of the way in which implementation of the agreement will be managed in the EU and U.S. is yet to emerge and is unlikely to do so in the immediate future, but it is clearly intended that all UN Security Council sanctions as well as multilateral and national sanctions related to Iran’s nuclear programme will be lifted, subject to the terms of the Joint Comprehensive Plan of Action (JCPOA).

At this early stage in the process it is difficult for the club to anticipate the timescale by which the current legislation in the EU and U.S. will be repealed or rolled back. It is, however, clear that the prohibition on the provision of insurance or reinsurance to Iran or the Government of Iran, an Iranian legal person, entity or body, or a natural person or a legal person, entity or body acting on their behalf or at their direction will be lifted, and the current prohibition in respect of the transport of oil, petrochemical and gas products will also be lifted.

The JCPOA provides that adoption will occur 90 days after the endorsement of the JCPOA by the UN Security Council or at an earlier date by mutual consent of all JCPOA participants, at which point the JCPOA comes into effect. The EU and its Member States will adopt an EU Regulation, taking effect on the date of implementation, terminating all provisions of the EU Regulation implementing all nuclear-related economic and financial EU sanctions.

In the meantime the club advises Members with an interest in trading to Iran to proceed with extreme caution and continue to seek independent advice before committing to trade contracts.”

We would reiterate that, whilst an agreement has been reached to lift the sanctions, those sanctions remain in force until each jurisdiction (particularly the US, EU, UK which most insurers are subject to in one way or another) lifts them.

Please contact us should you wish to know more about the above or how your policies will respond.