Iran Sanctions – International Group Update in relation to the Geneva Joint Plan of Action
21 January 2014
Members will already be aware, from the Club’s previous News Alert dated 29 November 2013 (click here), of the Geneva Joint Plan of Action (JPoA) reached between the P5+1 nations and Iran to provide an easing of some sanctions in exchange for significant concessions by Iran in relation to its nuclear enrichment program. The International Group of P&I Clubs has now issued an update (“the IG Update”) clarifying the position on the JPoA as at 17 January 2014 – click here for the full text of the IG Update.
The key points for Members to note are that the proposed measures temporarily lift sanctions from only a very limited number of trades with Iran, essentially:-
the carriage of petrochemical products from Iran;
the carriage of crude oil from Iran to US waiver countries outside the EU, currently China, India, South Korea, Taiwan and Turkey;
the carriage of goods to Iran for use in Iran's automotive industry.
As per the IG Update, the temporary measures should be effective for a period of six months from 20 January 2014 until 20 July 2014. However, since there can be no guarantee that the time period will be extended, Members are advised to ensure that any relevant contract(s) will be fully executed by 20 July 2014 at the latest.
It should be noted that the above proposed temporary measures will not provide relief from the current prohibitions on transactions with Iranian designated entities and persons even if transactions fall into one of the three listed categories above.
In addition, Members should bear in mind that whilst the sanctions in respect of the above trades may be lifted temporarily, there are still notifications to be made and/or authorisations to be obtained for payments above a certain level. The IG Update indicates that the level at which authorisation will be necessary should increase so that parties may make payments to an Iranian person, entity or body of up to Euro 400,000 without having to seek prior authorisation from their competent authority.
Irrespective of all of the above, there is the practical problem that a large number of international banks have implemented their own policies against making payments to any Iranian entities, whether directly or indirectly and regardless of whether such payments fall within the sanctions. So far as the Club understands such policies are unlikely to change in the foreseeable future.
Members should therefore continue to exercise due diligence in their dealings with potentially Iran-related cargoes and entities.
The Club will provide a further update once the combined effect of the EU and US temporary measures, as implemented, are known and clarified.
In the meantime, Members requiring further assistance and/or clarification in relation to the above, and any Iran-related matters that may affect Club cover, should approach their usual Club contact.