A merican Club Circular No. 44/18 1 NOVEMBER 28, 2018 CIRCULAR NO. 44/18 TO MEMBERS OF THE ASSOCIATION Dear Member: IRAN SANCTIONS UPDATE – IRANIAN CRUDE OIL SHIPMENT WAIVERS In Club Circular 41/18 of November 6, 2018 Members were informed of the reimposition of US secondary sanctions against Iran in the aftermath of the US Administration’s decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) signed by China, France, Germany, Russia, the United Kingdom, the United States, the European Union (EU) and Iran. The US has made it clear that it expects all non-US persons to comply with the secondary sanctions thus reimposed. Primary US sanctions against Iran, prohibiting US persons from dealing with Iran, have always remained in force. Unlike the US, the EU has sought to maintain the sanctions relief provided for by the JCPOA by amending the annex to Council Regulation (EC) No 2271/96 (the Blocking Regulation). The Blocking Regulation forbids EU nationals from complying with US secondary sanctions against Iran. Eight countries - China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey - have been, or will be, granted waivers by the US so that they may continue to be permitted to import limited amounts of Iranian crude oil. The waivers do not extend to any other commodities. Limited guidance in relation to these waivers, or Significant Reduction Exemptions (SREs), is provided by OFAC FAQ 642. It is understood from various contacts which have been made with the authorities in Washington that countries holding SREs are being advised by the US Administration to import Iranian crude only on NITC or IRISL vessels, or on vessels registered in the country holding the SRE, and only where those vessels are insured under a sovereign guarantee issued by the government holding the SRE. However, there appears to be some uncertainty in this regard, and it remains to be seen whether the US government will provide clearer official guidance generally, or permit vessels from non-SRE countries to transport Iranian crude oil, and allow entities in non-SRE countries to provide insurance cover therefor. Under the primary US sanctions against Iran which apply to US persons, the American Club is currently expressly prohibited from insuring vessels transporting crude oil and petroleum products to or from Iran. However, and as mentioned in Circular 41/18 to which reference is made above, the Club has sought authorization to cover shipments by non-US Members encompassed by the waivers, should this ultimately be permissible beyond the narrow circumstances mentioned in the previous paragraph. A merican Club Circular No. 44/1 8 2 Some limited trade with Iran is possible for non-US persons to undertake without a significant risk of violating US secondary sanctions (for example, the carriage of certain agricultural commodities, consumer goods and foodstuffs: see OFAC FAQ 637). Members should be aware, however, that even if the trade does not appear to violate US sanctions, practical difficulties mean that it is unlikely that International Group clubs, including the American Club, will be in a position to make or receive payments, provide security or respond to any claims in the usual manner. Moreover, in circumstances where the American Club may be able to cover a claim with an Iranian nexus, there is the potential for there to be significant reinsurance shortfalls. For the 2018 policy year, individual International Group (IG) clubs retain the f