TNAG-0930-FCO40-1148-Sanctions-against-Iran-extension-to-Dependent-Territories-1980 — Page 300

CODE 18-77

Ed 12/77

Mr Ayling SOLS A

N. Favell HKG D

M. Lamport, MED

M Mather.

WIAD.

Reference

16W)

CC

Mr Kemmis Mr.Rowe

Mr Brown

Mr Wood

CRE5 SP2 SP3C MAED/FCO

PROPOSED SANCTIONS AGAINST IRAN

We considered the position of Hong Kong. The basic question of whether sanctions should be implemented by Hong Kong is no doubt primarily a matter for FCO. I presume that the Southern Rhodesia sanctions were in fact implemented in the Colonies on the same basis as in the UK. My interest in raising the problem is to alert others to the potential shipping implications for Hong Kong (where there is a significant British-flag fleet but also substantial ownership of vessels registered in Liberia) and for Bermuda (where foreign owners have registered a good deal of tonnage under the British flag).

2

My feeling is that, as a matter of policy, the UK should not seek to inhibit UK interests (citizens or corporate bodies) which own foreign-flag tonnage from using these vessels in trades between Iran and a third country. This reflects our general view that it is for the flag state to determine how vessels on its registry should be employed. If Liberia or Singapore etc were to determine that they would not participate in sanctions against Iran, there would be a straight conflict between the policy of the flag state and attempts by the UK Government to influence the position of UK owners who might have ships on these registers. We would prefer to avoid this. Equally, we would wish to assert the primacy of the British flag-state interest in relation to British-flag tonnage owned by non-British nationals. Whatever the policy of the country from which these nationals. originate, it seems clear to us that British-flag vessels should be caught by sanctions.

3 According to our information, there is, in practice, very little foreign-flag tonnage owned by UK citizens etc. But, because of the amount of Liberian-flag tonnage owned in Hong Kong, it is of some importance that Hong Kong should adopt the same policy as the UK ie should not purport to inhibit these vessels from trading between Iran and third countries. In the (probably unlikely) event of Liberia associating itself with sanctions, it would be for the Liberian authorities to impose obligations upon Liberian-flag vessels.

-

4 As I understand the position, you are not contemplating criminal penalties for any breach of a UK sanctions order occurring outside UK jurisdiction. This seems entirely reasonable in the light of our unsatisfactory experience in trying to implement the Southern Rhodesia sanctions against British vessels suspected of engaging in trade between Rhodesia and third countries.

5

Leaving aside the direct trade between the UK and Iran (where we can have fairly immediate control over the carriage of goods under all flags), it seems to us that civil proceedings can be contemplated against vessels trading between Iran and third countries if they are:

a)

British ships registered in the UK (or in any other country or place to which the Iran enabling act applies);

/ (b

Page 300Page 301