Iran: Insurance: Iran Sanctions

Last Updated: 30 October 2012
Article by John Cadman and Neil Beighton

Last week saw the Council of the EU strengthen its position on Iran in the wake of similar US measures over the summer. Of particular note for the insurance market is the move to broaden the export ban in relation to oil, gas and petrochemicals.

The Council's Decision

Further to Council Decisions in January and March of 2012, on 16 October 2012, the Official Journal of the European Union published Council Decision 2012/635/CFSP. This has not yet been implemented but amends an earlier 2010 Decision concerning restrictive measures against Iran as outlined below.

Also published in the Official Journal was Council Implementing Regulation 945/2012, which extends the current asset freezing regime to a further 34 Iranian persons and entities. The Regulation is directly applicable in Member States and therefore effective from 16 October 2012.

EU Prohibitions - Where are we now?

-    Ban on imports from Iran

The prohibition covers import, purchase or transport of crude oil, petroleum products, petrochemical products and natural gas from Iran.

-    Ban on exports to Iran

The ban prohibits exports of:

  • Key equipment and technology for the exploration and production of oil and gas, refining and liquefaction of natural gas, and petrochemical industries in Iran;
  • Vessels designed for the transport or storage of Iranian oil or petrochemical products;
  • Key naval equipment and technology for ship-building, maintenance and refit; and
  • Materials that might be of relevance to Iran's nuclear, military and ballistic programmes.

-    Ban on investment in the Iranian oil and gas industries

The prohibition restricts direct and indirect financial and technical assistance for all transactions between the EU financial sector and Iranian banks, limiting credit, new investment in and joint ventures with companies in Iran (including derivatives) as well as insurance, reinsurance and brokering services. 

Short term export credits, guarantees or insurance supporting trade with Iran will be prohibited, together with construction, or the provision of technical assistance or financing for the construction, of new oil tankers for Iranian persons or entities.

-    Newly sanctioned entities

The current asset freeze in respect of persons and entities considered to be providing support to the Iranian regime has been extended to cover the oil and gas sector. Some of these are state entities but the majority are corporates, operating from London, the Channel Islands and elsewhere.

US – The current position

The Council Decision comes in the wake of legislative developments in the US.  This summer saw the Iran Threat Reduction and Syria Human Rights Act 2012 ("ITRA") become law.  The "core" US embargo of Iran generally prohibits "US persons" from engaging in trade or transactions involving Iran. However, ITRA expands the application of this "core" embargo to non-US persons under US ownership or control. This means that foreign subsidiaries of US companies must comply with the Office of Foreign Assets Control's ("OFAC") Iranian Transactions Regulations, and may no longer "knowingly" deal with other Iranian entities under other OFAC sanctions programs.

ITRA also expands the types of activities that can lead to a non-US person being sanctioned under the Iran Sanctions Act ("ISA") (as amended). The following 3 potential sanctions were added to the previous 9: (i) a prohibition on US investment in equity or debt instruments of a sanctioned entity; (ii) the denial of visa to, and exclusion from, the US of any corporate officer, principal or shareholder with a controlling interest in a sanctioned entity; and (iii) the imposition of sanctions against the principal executive officer or person performing similar functions of the sanctioned person.

In the words of the Department of the Treasury, "today Iran faces the most stringent, comprehensive, and effective sanctions programme ever implemented".

How will these developments impact the insurance industry?

Who is sanctionable under the Council Decision?

EU nationals and entities, whether domiciled inside or outside the EU, are sanctionable under the new Council Decision.  Brokers, (re)insurers and clients should also continue to be aware of the US sanctions regime, particularly as they have extra-territorial scope and far-reaching penalties.

What activities are sanctionable under the Council Decision?

EU insurers and brokers are prohibited from, directly or indirectly, providing insurance, reinsurance or brokering services related to the import, purchase or transport of Iranian oil, gas and petrochemical products.  Insurers are also banned from entering into new short, medium or long term commitments to provide insurance or reinsurance of trade with Iran.  The insurance market should particularly exercise care in relation to ongoing dealings on existing placements which pre-date the broadening of sanctions.

Summary

The impact of the Council Decision is most likely to be felt by brokers, insurers and reinsurers engaged in the insurance of risks in the oil, gas and petrochemical industries, as well as those involved in insurance of trade credit and the risk of financial instruments.  The sanctions are now sufficiently broad that the market should assess carefully whether it is now possible to conduct any business involving Iranian risks lawfully in the light of these new developments.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 23/10/2012.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions