Japan Club, the only Group Club not domiciled in the US,
UK or Western Europe, has published a clarification of questions of cover for
the carriage of certain Russian cargoes, including coal and fertilizer.
In its Circular No. 22-012-1 dated September 21st 2022
Japan Club set out how the EU had further amended its FAQs of August 2022 on
September 19th 2022 to show that the transport of coal and certain specified
goods in Annex XXI of Council Regulation /2014 (the “subject goods”)
and related insurance was in fact not prohibited when the goods were being
carried to third countries. Japan Club said that, notwithstanding this EU
clarification, it was not possible for it to say with certainty that there was
no obstacle to insurance coverage for the transportation of the “subject
goods” from Russia to third countries other than the EU.
Japan Club noted that as of October 18th 2022,
in principle, it would be able to provide insurance coverage for claims below
$10m, the amount retained by each Club on its own account, arising out of the
transportation of subject goods from Russia to third countries. At the same
time, the Club said that it believed it to be important to respect the
objectives of sanctions against Russia by the EU, USA and other countries in
light of the changed international situation. “Our interpretation of the
insurance coverage situation does not imply that we are encouraging members to
transport subject goods from Russia to third countries”, Japan Club said.
If a Japan Club-entered vessel causes claims in the range
$10m to $100m, part of those /damages will become a Pool claim, shared
with the other 12 Clubs in the International Group. The IG also arranges
reinsurance in the commercial market for claims exceeding USD100 million. As
each Club and reinsurer operates under different legal circumstances, including
national regulations and authorities’ guidelines, Japan Club said that there
remained uncertainty whether any other Club or reinsurer would be able to pay
any reinsurance money to the Club for losses or damage concerning the carriage
of subject goods from Russia to third countries.
In addition, Japan Club arranges its own reinsurance for
losses below $10m, and it was also uncertain whether any reinsurance money
could be paid in respect of this programme.
If a Japan Club-entered vessel caused /damages
arising out of the carriage of subject goods from Russia to third countries and
there was a shortfall of reinsurance money payable from other Clubs /or
reinsurers due to sanctions, the Club noted that, in accordance with Rule 36
(9), the members could not recover this shortfall from the Club.
Sanctions
Because of the instability surrounding Russia and
Ukraine, including the sanctions imposed by the EU and other entities against
Russia, which change quite frequently, plus the variety of regulations of
different nations, guidelines of relevant authorities and the policies of
respective Clubs and reinsurers, whether insurance coverage could be provided
(or not) was also subject to change. “Under such circumstances, we cannot
affirm that any Club or reinsurer can provide coverage in the event of loss or
damage concerning the carriage of subject goods from Russia to third
countries”, the Club said.
“Moreover, even if a Club and reinsurer thought they were
able to provide insurance coverage, it is likely that a bank, with a different
risk appetite, would refuse to process the transaction.”
EU sanctions－clarification of questions of cover for the carriage of certain Russian cargoes including coal and fertiliser (additional explanation)
