IRISL risks losing P&I cover again
ISLAMIC Republic of Iran Shipping Lines is at risk of losing P&I cover for the second time in four months, following Bermuda"s decision to take a lead from the UK in banning financial firms from doing business with the controversial Iranian company.
A representative of the South of England Protection and Indemnity Association, a Bermuda-registered fixed premium independent, told Lloyd"s List that it while it was still mulling its options, it would ultimately have to meet with the Bermudan ruling.
Two leading International Group clubs, Steamship Mutual and North of England, were last year required to terminate a relationship stretching back several decades on account of restrictions imposed by the British government.
IRISL thereafter switched to South of England, which set up shop outside the International Group in 2004. According to its website, it has in place an excess of loss reinsurance programme placed with Lloyd"s of London and others.
A Liechtenstein-registered entity, South of England Management, handles most of SEPIA"s affairs through a branch office in Zurich. Claims handling and marketing is carried out by Brighton-based company Southern Seas Management.
But its arrangements with IRISL may now be in question, following Bermuda"s Ministry of Justice announcement of a measure under the title of the Anti-Terrorism (Financial Restrictions Iran) Order 2010 on January 15.
The Bermudan document requires ?regulated financial institutions and insurers not to enter into, or continue to participate in, any transaction or business relationship with [Iranian bank] Bank Mellat and IRISL with immediate effect.?
Failure to abide by the direction may result in either civil or criminal action, with the maximum sanction set at a prison sentence of up to two years on top of a fine of such amount as the Bermuda Monetary Authority may decide.
Speaking from the Swiss office, SEPIA director Julian Wade said: ?We are just clarifying what the effect is of the Bermuda ruling. They have got cover with us at the moment, yes.
?It is really difficult for me to comment any further. We are taking advice on it. I have to say the directive is a little bit poorly worded. It isn"t an exact replica of what was issued by the UK.
?It will probably take a few days, I would imagine. These things don"t happen overnight. Obviously, ultimately we have to be in compliance with the law.?
The UK Treasury ruling - made in October under the Counter-Terrorism Act 2008 - came in response to allegations that IRISL has transported goods for Tehran"s ballistic missile and nuclear programmes, and the Bermudan authorities" stance is likely to have the same motivation.
But the Treasury direction applied only to the parent concern, and subsidiaries IRISL UK and Irinvestship ? with offices in London, Liverpool and Felixstowe ? were allowed to remain open.
P&I sources said last night that both jurisdictions have made provision for the service of existing claims on a run-off basis, but new cover cannot now be provided. Steamship Bermuda is understood to have applied for licences to wind down its involvement with IRISL in both countries.
Hull and machinery cover is understood to be provided by Norwegian insurer Gard, which does not face any state-imposed limitations on its business links with IRISL. Attempts to secure comment on this story from IRISL proved unsuccessful.
Iran has long been a target of US sanctions, with relations poor since the Iranian revolution of 1979. In September 2008, the Office of Foreign Assets Control named IRISL and 17 allegedly linked entities as providing logistics services to Iran"s Ministry of Defence.
In March last year, IRISL had changed the names of more than 40 of its vessels since the OFAC sanctions kicked in. Many vessels bearing politically-charged names were redesignated after flowers. For instance, boxship New State now trades as Dandelion.