The Club wish to alert their members about new US Iran sanctions legislation entering into force on 1 July 2013. The legislation is entitled The Iran Freedom and Counter-Profileration Act of 2012 (IFCA) and is part of The National Defence Authorization Act for Fiscal Year 2013 (NDAA). Notably, it applies to both US and non-US persons.

The following IFCA provisions are of particular importance:

• § 1244 – Prohibition to provide “significant goods and services” in connection with Iran’s energy, shipping and shipbuilding sectors, ports and Iranian person on the Specially Designated Nationals (SDN) List, (see www.treasury.gov/sdn).

Notably, the key word is “significant” the meaning of which will depend on various factors such as size, frequency, type and commercial purpose of the goods/services

• § 1245 – Prohibition of sale, supply and transfer of precious metals and raw materials to or from Iran

This potentially includes any carriage to or from Iran of e.g. graphite, raw or semi-finished metals such as aluminium, steel and coal

• § 1246 – Prohibition to knowingly provide insurance for any Iran related activity for which sanctions have been imposed under any US law

This provision has far reaching implications for all insurers including the Club since the insurer potentially and automatically will be exposed to sanctions if it knowingly insures any activity sanctioned by the US.

For more information about IFCA, members are referred to the attached document “Summary of IFCA”. For general information about US sanctions legislation against non-US persons members are referred to the attached document “US sanctions FAQs”.

Insurance cover and general guidance
The provisions of IFCA, together with already existing US, EU and other national Iran sanctions legislation, makes it inherently very risky for any owner, charterer or operator to trade with Iran, Iranian interests or Iranian cargo. Breach of sanctions legislation may entail financial restrictions, financial penalties and even imprisonment. In addition, members may find themselves without insurance cover for the following reasons:

• P&I cover ceases automatically if the member is engaged in unlawful trade (P&I Rule 27 (e). It is to be noted that “unlawful trade” in this context may include any trade that is in breach of any sanctions legislation
• The Club will not pay any claim if payment will expose the Club to sanctions and corresponding liabilities are excluded from cover (P&I Rule 11:4)
• For Marine and other insurances there are sanctions clauses and/or other provisions in place which either cease or exclude insurance cover
• Should a claim or casualty arise in Iran or with any Iranian connection the Club and the Club’s banks will be prohibited to effect any payments or provide any guarantee e.g. to release a vessel irrespective of whether cover is in place or not due to various restrictions on financial transfers

Members are recommended to exercise extreme caution when trading with Iran, Iranian interests or Iranian cargo. Notably, the burden is upon the member to ensure that activities are lawful and do not breach any sanctions legislation. Members are encouraged to seek specific legal advice on any activities or transactions which may involve sanctions legislation.