Shipping Industry Feels Force Of EU Sanctions Against Iran

On 23 December 2012 the restrictive measures against Iran contained in Council Regulation (EU) No 1263/2012 came into force. The measures supplement those already contained in Regulation 267/2012 of 23 March 2012. Whilst extending the restrictive measures in areas already legislated for, such as over the transfer of funds and financial services, it introduces new prohibitions which affect the shipping industry in a number of important ways. In particular, ship builders and repairers, classification societies and surveyors and charterer/ operators will be affected by prohibitions against dealing with Iranian persons.

Ship builders/repairers

The amended regulation now prohibits the direct or indirect sale, supply, transfer or export to any Iranian person, entity or body or for use in Iran of "key naval equipment or technology" for use in ship building, maintenance or refit or used in the construction of oil tankers. The equipment/technology is listed in detail in a new annex to the regulation by reference to the harmonised system code, but includes: marine propulsion engines; outboard motors; steam turbines and parts of steam turbines for marine propulsion; ship's or boat's propellers; and direction finding compasses and other navigational instruments for use in the maritime industry.

As with previous iterations of the EU sanctions against Iran, the direct or indirect provision of technical assistance, brokering services, financing or financial assistance in relation to those goods or related to the provision, manufacture or maintenance of those goods to an Iranian person, entity or body, or for use in Iran, is also prohibited.

There are limited exceptions in respect of providing such goods to someone who is not an Iranian person, entity or body where a vessel has been forced into an Iranian port or territorial waters by reason of force majeure. There are also exceptions in respect of the provision of these goods and services until 15 February 2013 in respect of contracts concluded before 22 December 2012.

However, the effect upon the shipbuilding/repair industry could be significant. Suppliers of such goods and services who are subject to the regulation will now have to conduct extensive due diligence on their customers to ensure that they are not being provided to an Iranian person, entity or body.

The definition of an Iranian person, entity or body is sufficiently broad that this could be a real concern. It includes not just the state of...

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