The latest update from Lloyd’s;
The Lloyd’s Market Association (LMA) has published a new model clause for use by marine hull underwriters, addressing the position of transit fee, toll or other payments made in connection with vessels passing through the Strait of Hormuz.
The clause has been developed to provide clarity to the market on the insurance position where it has been confirmed that a payment (including financial or other forms of payment) has been made to enable a vessel to pass through Iranian territorial waters or otherwise transit the Strait.
The LMA has developed the clause in response to concerns about applicable sanctions and terrorism legislation arising where insurers become aware, or through appropriate due diligence ought reasonably to become aware, that any financial or non-financial payment has been given by the insured. It is intended to operate alongside existing sanctions clauses.
Under the clause, insurers will not cover any such payment. In addition, where a payment has been made, cover for the relevant vessel will cease due to the risk of a breach of sanctions and/or terrorism legislation in the US, UK or EU.
Arabella Ramage, Legal and Regulatory Director at the LMA, commented: “The clause and guidance have been developed to support the market in navigating a complex and evolving legal and regulatory environment.
“It provides a clear contractual position for insurers and insureds where transit payments, including non-financial payments, are given in connection with passage through the Strait of Hormuz. The clause and guidance align with existing sanctions and terrorism frameworks, while also evidencing the insurer’s due diligence and compliance.”
The clause and guidance note are available on the LMA website.
Be the first to comment