EU Regulation 267/2012 in force from 24 March 2012
The EU Regulation implementing EU Council Decision 2012/35/CFSP of 23 January 2012 was published in the Official Journal on 24 March 2012. In accordance with Article 51 the Regulation enters into force as from 24 March 2012 and is binding and directly applicable in all EU member states with immediate effect and without the need for domestic implementing legislation.
The Regulation, an associated HMT Notice regarding the Regulation, and FAQs issued by the I.G. to assist with issues in connection with the Regulation, can be downloaded from the links set out below.
EU Regulation 267/2012 - Summary:
This Regulation came into immediate effect from the date of its publication, on 24 March 2012. The new Regulation provides for further restrictive measures against Iran pursuant to the Council approved Decision 2012/35/CFSP of 23 January 2012 and has also incorporated (and expanded) the measures which were contained in EU Regulation 961/2010, which is now repealed.
The issues of most concern to the Club and its Members are:
- A ban on the import, purchase, or transport of Iranian crude oil, petroleum products and petrochemical products; and
- A ban on the provision, directly or indirectly, of financing or financial assistance, as well as insurance or reinsurance, related to those activities.
Articles 11 to 14 of the Regulation set out the above prohibitions, such that to those persons to whom the Regulation applies, it is prohibited to import, purchase or transport crude oil, petroleum products and petrochemical products if they originate in Iran, or have been exported from Iran. Lists of crude oil and petroleum products referred to in Article 11 and petrochemical products referred to in Article 13 are set out in Annexes IV and V of the Regulation respectively. It is also prohibited to provide, directly or indirectly, financing or financial assistance, including financial derivatives, as well as insurance and reinsurance related to the import, purchase or transport of crude oil, petroleum products and petrochemical products. The Club is subject to this latter prohibition.
Under Articles 12(1) and 14(1), the prohibitions do not apply to the execution until 1 July 2012 of trade contracts concluded before 23 January 2012 where they involve crude oil and petroleum products, and until 1 May 2012 of trade contracts concluded before 23 January 2012 where they involve petrochemical products, nor do the prohibitions apply to “ancillary contracts necessary for the execution of such contracts”. Ancillary contracts may include certain insurance contracts although those contracts would need to be necessary for the execution of the underlying trade contract. It is not clear whether, for example, a Member’s Hull and Machinery policy would qualify under this exemption. Members subject to the Regulation and seeking to perform a trade or ancillary contract to which this exemption applies are required to notify, at least 20 days in advance, the activity or transaction to the competent authority within their Member State.
Articles 12(2) and 14(2) also provide a short grace period prior to the entry into force of the prohibitions relating to the provision of insurance and reinsurance, and state that in respect of third party liability insurance and environmental liability insurance and reinsurance, the prohibitions on the provision of insurance/reinsurance in relation to the import, purchase or transport of Iranian crude oil and petroleum products shall apply only from 1st July 2012, and from 1st May 2012 in relation to petrochemical products. It is not necessary in this case for the underlying trade contract to be concluded before 23 January. It is important to note that this grace period applies ONLY to third party liability insurance and environmental liability insurance and reinsurance, which will include P&I insurance, but will NOT apply to other types of insurance. The Club can continue to provide P&I insurance to its Members conducting otherwise lawful trade involving the transport of crude oil, petroleum products and petrochemical products originating in or being exported from Iran, but only until the 1st July 2012 (1st May for petrochemical products), following which the provision of insurance will be prohibited. However Rule 24(i) b will exclude recovery for liabilities arising out or consequent upon a ship being employed in an unlawful trade, for example in respect of Members subject to EU jurisdiction, there may be no recovery for liabilities incurred if they arise out of or are consequent upon the execution a trade contract involving a prohibited trade entered into after 23rd January 2012.
OTHER PROVISIONS
Other changes introduced by Regulation 267/2012 include a ban on the sale, purchase, transportation or brokering of gold, precious metals and diamonds, to, from, or for the Government of Iran (Article 15); a ban on the supply of specialised financial messaging services used to exchange financial data to designated persons/entities (Article 23.4); as well as incorporating extended asset freezing measures to include the Central Bank of Iran (“CBI”), Bank Tejarat and Tidewater Middle East Co (which operates 7 Iranian ports managing about 90pct of Iran’s container operations) (see Article 23.2 and Annex IX). The existing ban on the provision of insurance and reinsurance to Iranian entities set out in Article 26 of repealed Regulation 961/2010 has been carried over into the new Regulation at Article 35 and extended to encompass broking activities.
Many of the measures set out in Regulation 961/2010 have been incorporated into the new Regulation. By way of summary, other measures set out in new Regulation 267/2012 include:
- Restrictions contained in Articles 2-10 on trade in, and the provision of technical assistance, brokering services, or financing or financial assistance in relation to, dual-use goods, technology and equipment which might be used for Iran’s nuclear proliferation-sensitive activities and the development of nuclear weapon delivery systems. Lists of prohibited dual-use goods and technology are set out at Annexes I - III of the Regulation and also comprise all goods and technology as defined in Regulation EC no. 428/2009 of 5 May 2009 with the exception of certain items as specified in part A of Annex I of Regulation 267/2012.
- Restrictions contained in Articles 8 and 9 on trade in key equipment and technology for, technical assistance or brokering services and financing or financial assistance related to, the Iranian oil and gas and petrochemical industries; a list of key equipment and technology for use in the exploration and production of crude oil and gas, refining of crude oil and liquefaction of natural gas, and the petrochemical industry, the sale, supply, transfer or export of which is prohibited, is provided at Annex VI to the Regulation;
- Restrictions in Article 15 on trade in gold, precious metals and diamonds, to, from or for the Government of Iran, its public bodies, corporations and agencies and the CBI;
- Restrictions in Article 16 on provision of Iranian denominated bank notes and coinage to or for the benefit of the CBI;
- Restrictions in Article 17 on financing of, participation in, and creation of joint ventures with, Iranian enterprises engaging in oil, natural gas and petrochemical activities in Iran;
- Similar restrictions are set out in Article 22 in relation to Iranian enterprises engaged in mining, enrichment and reprocessing or uranium;
- Freezing of funds and economic resources under Articles 23-26 and 29, which broadly replicate the asset freezing measures contained in Regulation 961/2010. Lists of designated persons and entities are set out at Annexes VIII and IX of the Regulation. Pursuant to the obligation to freeze funds and economic resources of IRISL and of designated entities owned or controlled by IRISL, it is prohibited to load and unload cargoes on and from vessels owned or chartered by IRISL or by such entities in ports of EU Member States. However this prohibition does not require the impounding or detention of such vessels or their cargo/crew.(Article 23.2);
- Restrictions in Articles 30 and 31 on transfers of funds to and from Iran which were previously set out in Article 21 of Regulation 961/2010. Article 30 clarifies the application of the notification and authorisation requirements to linked operations and series of transfers which relate to a single underlying obligation to make a transfer of funds. Restrictions on funds transfers to/from Iran set out in Article 30 may make it difficult for persons/entities subject to the Regulation to do business with Iranian entities. Transfers due on transactions regarding foodstuffs, healthcare, medical equipment or for humanitarian purposes, shall be carried out without any prior authorisation, but need to be notified if above Euro 10,000 or equivalent. Any other transfers of funds over Euro 10,000 or equivalent must be notified in advance in writing to the relevant competent authorities of the Member States; and transfers of or over Euro 40,000 require an application for prior authorisation. An application shall be deemed granted if the authority has not objected in writing within 4 weeks of the application. The application will be granted unless there are reasonable grounds to determine that the transfer of funds could be in breach of any of the prohibitions or obligations of the Regulation. The relevant authority for the UK is HMT.
- Restrictions in Articles 32 and 33 concerning the Iranian banking sector;
- Restrictions in Article 34 on Iran’s access to the bonds markets of the EU;
- Restrictions in Article 35 on the provision, and the brokering of the provision, of insurance and reinsurance to Iranian entities, namely to: (a) Iran and its Government, its public bodies, corporations and agencies; (b) an Iranian person, entity or body other than a natural person; or a natural or legal person, entity or body when acting on behalf or at the direction of a legal person, entity or body referred to in (a) or (b). The prohibition in Article 35 on providing insurance to Iranian companies and to a natural person or company (which could be outside of Iran) when acting “on behalf or at the direction of” such an Iranian company, entity or body raises issues of corporate control. However Article 35.3 provides that “direction” does not include direction for the purposes of docking, loading or unloading, or safe transit of a vessel temporarily in Iranian waters. Further, the prohibition does not apply to provision of compulsory or third party insurance to Iranian persons, entities or bodies based in the EU. It is also permissible to insure or reinsure the owner of a vessel chartered by an Iranian company. [Repealed Regulation 961/2010 set out an additional requirement that the Iranian chartering company was not designated for asset freeze in Annex VIII and IX of that Regulation]. Article 35.4 permits insurers to comply with insurance and reinsurance contracts concluded before 27 October 2010, but it will not be possible to renew or extend such contracts. The restriction on funds transfers may interfere with the performance of existing contracts. The insurance ban applies to the provision of insurance to subsidiaries of Iranian companies outside Iran, and to any person acting on behalf of such companies or entities. It does not apply to the provision of insurance to an Iranian resident in his or her private capacity ;
- Restrictions in Article 36 on transport, in particular the requirement for declaration of cargo and the submission of pre-arrival and pre-departure information in relation to all goods brought into or leaving EU territory from or to Iran;
- Restrictions in Article 37 on providing bunkering and ship supply services to Iranian ships and certain services to cargo aircraft;
- Article 38 embodies a defence to claims, by Iranian persons, entities or bodies, for breach of contract or impaired performance as a result of compliance with the measures imposed by the Regulation;
- Article 40 sets out a requirement to supply relevant competent authorities with information which would facilitate compliance with the Regulation;
- Article 41 prohibits participation in activities which may circumvent the measures in the Regulation;
- Article 42 sets out a potential defence in relation to failure to comply with the provisions of the Regulation if the relevant persons, entities or bodies did not know, or had no reasonable cause to suspect, that their actions would infringe the prohibitions. Penalties for breach of the provisions of the Regulation applicable to the UK are set out in the Iran (European Union Financial Sanctions) Regulations 2012.
- Article 47 leaves it up to individual Member States to prescribe penalties for breach of the Regulation;
- Article 49 sets out the scope of application of the Regulation, which applies within the territory of the EU and to any person/entity in respect of business done in whole or in part within the territory of the EU, as well as to all EU nationals/EU incorporated companies, EU flagged vessels/aircraft and to persons/entities physically present in the EU.
UPDATE 25 APRIL 2012
HMT has issued a supplementary Financial Sanctions Notice providing further guidance on the insurance and reinsurance prohibitions set out in EU Regulation 267/2012 relating to the import, purchase or transport of crude oil, petroleum products and petrochemical products from Iran. The Notice, which should be read in conjunction with Articles 11-14 of the Regulation, provides as follows:
- it is confirmed that “third party liability insurance and environmental liability insurance and reinsurance” does include P&I insurance and reinsurance. This was understood to be the case in any event.
- it is clarified that the notification requirement set out in Articles 12 (1) and 14 (1) in respect of the performance of a contract in accordance with an exemption applies to the underlying trade contract as well as to related ancillary contracts, including (re)insurance. Only transactions or ancillary contracts required for the execution of a trade contract concluded before 23 January 2012 (the "parent contract") will be covered by an exemption. Notification must be made to the relevant competent authority as set out in Annex X of the Regulation. In the case of the U.K., whilst the Department of Business Innovation and Skills is the competent authority for the export and import restrictions set out in Chapter II of the Regulation (Articles 2 to 16), queries related to the restrictions as set out in Articles 11 and 13 and their associated exemptions/derogations can be addressed to HMT in the first instance.
- the application of the prohibition on the import, purchase and transport of Iranian crude oil or petroleum products, and the related prohibition in the provision of insurance/reinsurance, is to be reviewed before those prohibitions come into effect on 1 July 2012 to take account of the availability and price of crude oil and petroleum products produced in countries other than Iran and the impact on global oil markets, as well as the impact on third countries.
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activities pursuant to (re)insurance provided in accordance with Article 12 and Article 14 of the Regulation, for example the payment of claims from insured incidents for which there was valid cover, may run their course, subject to compliance with any other relevant provisions of the Regulation.
A copy of the Supplementary Notice can be downloaded from the link set out below.
