In Mamancochet Mining Ltd v Aegis Managing Agency Ltd  EWHC 2643 (Comm). the effect of the on-off-on again of US sanctions against Iran which are due to kick in again this Sunday 4 November at 1159 pm EST came under consideration. A claim under the marine insurance policy was made in respect of the theft of cargo carried from Russia to Iran in 2012, under a bill of lading naming an Iranian national was the consignee. The US sanctions regime came into effect in 2013, was lifted in 2016, and is reimposed this Sunday. The policy provided ““to the extent that …payment of such claim …would expose that insurer to any sanction, prohibition or restriction under …the trade or economic sanctions, laws, or regulations…” and the issue was whether the insurer could refuse to pay out on the ground that payment would ‘expose’ it to US and/or EU sanctions within the meaning of the policy clause.
Teare J held that the present clause referred to a payment which “would expose” the insurer “to any sanction, prohibition or restriction”, rather than being “exposed” to the risk of being sanctioned (in the sense of being subject to the risk of a sanction). Before a sanction can lawfully be applied there must be conduct which is prohibited. It was not enough that that the regulatory agency in question might conclude that there was prohibited conduct (when in law there was not or may not be) and so impose a sanction. Accordingly, the clause provided that the insurer was not liable to pay a claim where payment would be prohibited under one of the named systems of law and thus “would expose” the Defendants to a sanction. Nor did the sanctions clause extinguish liability under the policy when sanctions against Iran were previously imposed in 2013.
The claimants had also argued that the EU Blocking Regulation would preclude the claimants from refusing to pay out under the policy. In the light of the construction of the sanctions clause, this issue did not fall to be decided but Teare J saw “[c]onsiderable force in the Defendants’ “short answer” to the point, namely that the Blocking Regulation is not engaged where the insurer’s liability to pay a claim is suspended under a sanctions clause such as the one in the Policy. In such a case, the insurer is not “complying” with a third country’s prohibition but is simply relying upon the terms of the policy to resist payment.”
 Regulation (EC) 2271/96 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom, as amended by Commission Delegated Regulation (EU) 2018/1100, amending the Blocking Regulation with effect from 7 August 2018 by including the various US sanctions against Iran