Insurance: Iran Sanctions/Policy Renewals

The Court of Appeal has upheld a decision that insurers were entitled to cancel a marine insurance policy based on the conclusion that they were exposed to the risk of breaching Iran sanctions if the policy was renewed.  Although one of the issues on appeal was more generally whether the extension of the period of the policy was prohibited by the Iran Sanctions Regulations, the Court declined to answer the point, which leaves insurers facing similar issues on renewal without a definitive answer on the issue.

Arash Shipping (a company controlled by an Iranian entity) was a representative of co-insureds under a composite marine insurance covering hull and machinery risks.  Groupama and a number of other underwriters subscribed to the 12 month policy which incepted in early May 2010 and contained an Iran Sanctions Clause allowing insurers to cancel their participation in circumstances where the insured had exposed or may have exposed the insurers to the risk of being or