TNAG-0930-FCO40-1148-Sanctions-against-Iran-extension-to-Dependent-Territories-1980 — Page 238

40

year.

£22.5

Mr Miers

Middle East Department

IRAN SANCTIONS:

CONFIDENTIAL

SHIPPING

Mr. Morice ind

2015

2215

My Department has been in frequent contact with yours over the past week or so on the implications for the shipping industry of the proposed sanctions against Iran. We were particularly concerned at the confusion that might have arisen if trade sanctions had been introduced gradually and if the legal obligations of the shipowner had got out of phase with those of the exporter. Fortunately this type of scheme has been dropped. However, it might be useful at this stage to set down the continuing concerns of this Department and of the part of the DOT responsible for shipping; Miss Brown and I went over the ground with Mr Steele, the responsible Deputy Secretary in the DOT on 15 May and the following reflects our discussion.

2.

The relevant passage in the UN draft Resolution is:-

ment

2(b) 'shall prevent the ship/ [of embargoed goods] by vessel, aircraft, railway or other land transport of their registration, or owned by or under charter to their nationals

$

It is right of course that UK shipping should be expected to bear its fair share of the burden of sanctions. But if this provision of the draft Resolution were implemented as it stood, the consequences would be seriously prejudicial to UK shipping for the following reasons:

i) the reference to vessels 'owned by

their

nationals' raises serious legal implications. The traditional UK view is that sanctions cannot legally be applied to foreign flag tonnage beneficially owned by British nationals, whether resident in the UK or a dependent territory (there has been separate minuting on the implications of the substantial volume of shipping owned by Hong Kong residents sailing under flags of convenience). Our general policy is that it is for the flag state to determine how vessels on its registry should be employed; this avoids possible conflicts with the policy of other flag states and the practical problems of establishing beneficial ownership. There would be a further difficulty over seeking to apply the scope of the Sanctions Orders to shipping not flying the White Ensign (whoever owned the ship in question) since this would raise the vexed question of extraterritoriality over

HKG. 122/324/1

22 MAY 1980

lis J13.6 gr

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CONFIDENTIAL

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