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P&I clubs can decline cover for losses on Qatar trade, warns Gard

Situation is more like a trade embargo than a sanctions regime, says P&I club

GARD P&I club says its cover will not include liabilities and losses arising out of breach of the trade embargo implemented by Middle East Gulf countries against Qatar.

“If a P&I liability should arise as a result of the entered ship having violated the trade embargo, the club can decline cover,” Gard said in an advisory dated June 8.

The club said the situation remained volatile and advice concerning operational and legal consequences of this diplomatic crisis might change rapidly.

It has advised its members to make frequent checks with local sources of information, such as ships’ agents and P&I correspondents, for the latest updates on the diplomatic crisis in Qatar that has resulted in several Middle Eastern countries severing ties with it.

Gard said that the crisis in the Middle East was not a sanctions regime against Qatar similar to the ones implemented against Iran or Syria.

“What we are seeing now is a trade embargo,” Gard said.

The embargo means that in practice, Qatari-flagged vessels are barred from certain other ports in the region and the ban may also extent to ships destined to or coming from Qatar regardless of the flag the ship is flying.

“No reference is made to insurance as far as we can see in the published port circulars. Thus, it is not in itself prohibited to insure a ship trading on Qatar,” Gard said.

But it also highlighted a provision, Rule 74, that states: “The Association shall not cover liabilities, losses, costs or expenses arising out of or consequent upon the Ship carrying contraband, blockade running or being employed in or on an unlawful, unsafe or unduly hazardous trade or voyage.”

“Blockade running” refers to attempts to call at ports or places where access is denied by naval or other military forces, or which are declared to be blockaded by a country or an international organisation such as the UN, it said.

Additionally, a trade or voyage may be unlawful if it contravenes the laws of one or more countries, according to the circular.

What constitutes “lawful” will depend on the laws of the country where the member is domiciled or carries on business, the country of the ship’s registration, the country where the vessel trades, or the country whose law applies to the contract of carriage.

 
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