Alert issued by the London P&I Club

2010.10.06_cargo_vv.jpgThe London P&I Club issues alert regarding New sanctions against Syria introduced by EU as follows:

Members should be aware that with effect from 3 September 2011, the EU has introduced new sanctions against Syria, by which the carriage of crude oil or petroleum products from or originating from Syria is prohibited.

A copy of the relevant Regulation (Council Regulation (EU) no 442/2011) can be found via:

http://www.hm-treasury.gov.uk/d/finsanc_syria_council_regulation_eu_878_020911.pdf

Under the new Regulation, it is prohibited:

a) to import crude oil or petroleum products into the European Union if they: (i) originate in Syria; or (ii) have been exported from Syria;

b) to purchase crude oil or petroleum products which are located in or which originate in Syria;

c) to transport crude oil or petroleum products if they originate in Syria, or are being exported from Syria to any other country;

d) to provide, directly or indirectly, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to the prohibitions set out in a), b) and c);

e) to participate knowingly and intentionally, in activities whose object or effect is, directly or indirectly, to circumvent the prohibition in point (a), (b), (c) or (d).

Members should note that these prohibitions apply not only to the carriage of crude oil or petroleum products, but also to the provision of insurance in respect of such carriage. They therefore also apply directly to this Club. Accordingly, Members (whether subject to an EU jurisdiction or not) involved in trades or voyages to which the prohibitions apply are reminded of the Rule excluding cover in respect of claims that, if paid, would put the Association in breach of legislation of this sort and result in its being subject to sanctions (as advised in Circular 5:431).

The prohibitions do not apply to the execution up to and including 15 November 2011 of any obligations arising from contracts concluded before 2 September 2011, provided that anyone seeking to perform such an obligation notifies the relevant authority at least seven working days in advance.

Members who are not engaged in the carriage of crude oil or petroleum products should note that the existing sanctions in relation to Syria, introduced by the EU and US earlier this year, remain in force. These sanctions introduced asset freezing measures on certain persons identified as being responsible for the violent repression of the civilian population in Syria. It should be noted that the new EU legislation expands the criteria for imposing asset freezes and in future the EU can add any person or entity whom the EU determines as benefiting from or supporting the Syrian regime. Members who are not engaged in the carriage of crude oil or petroleum products but who continue to be involved in transactions with Syrian entities, or in trade involving Syria, should therefore continue to check if the ownership or control of their counterparties is directly or indirectly connected with a sanctioned person or entity listed by the US, EU and any other applicable country.

Members should also be aware of the potential for practical difficulties involving the banking sector, when engaging in lawful trade with Syria. Many international banks have imposed restrictions on processing payments involving Syria. This not only has an impact on the Members' ability to make or receive payments linked with Syria for operational reasons, but may also affect the ability of the Association to pay service providers in Syria, to assist with the provision of bank guarantees or to pay claims to lawful third parties connected with Syria without the prior agreement of the bank in question, which will be subject to the criteria applied by it at the time. In view of the wide and often vague criteria applied by some of the international banks, it is not possible to guarantee that such prior agreement can be obtained in every instance or without delay.

In light of the sanctions imposed, Members trading with Syria are recommended to make themselves familiar with any legislative regimes applicable to them, in order to avoid being in breach.

Further clarifications on implementation and enforcement issues, in particular on the effect on P&I cover, is being sought.

Source: The London P&I Club