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Arash Shipping v Groupama Transport

27th May 2011

On 7th April 2011, Arash Shipping commenced proceedings against Groupama Transport. Those proceedings raised two principal issues, namely:

  1. Whether the automatic extension of the policy of marine insurance issued by Groupama Transport in respect of 5 fleets of vessels was not prohibited by Council Regulation (EU) No 961/2010 (which entered into force on 27th October 2010). Article 26 of the Regulation prohibited the provision of insurance services to Iranian nationals. Article 26(4) however provided that “This Article prohibits the extension or renewal of insurance or reinsurance agreements concluded before the entry into force of this Regulation, but, without prejudice to Article 16(3), it does not prohibit compliance with agreements concluded before that date.”
  2. Whether Groupama Transport’s notice of cancellation of the policy issued pursuant to the Iran Sanctions Clause in the policy was valid and effective. Under the Iran Sanctions Clause, Groupama Transport had a right to cancel the policy if “the Assured has exposed or may, in the opinion of the Insurer, expose the Insurer to the risk of being or becoming subject to or in breach of any sanction, prohibition, regulation or adverse action in any form whatsoever against or in respect of Iran promulgated by …  the European Union …”.

On 18th April 2011, the action was tried before Burton, J on an expedited basis. On 20th April 2011, Burton, J gave judgment concluding that the Regulation prohibited the automatic extension of the policy and that the notice of cancellation was valid and effective.

On 6th May 2011, the Court of Appeal heard and dismissed an expedited appeal. The Court of Appeal handed down its reasons for its decision on 25th May 2011. The Court of Appeal based its decision on the validity of the notice of cancellation and did not determine the first issue concerning the application of the Regulation, but Tomlinson, LJ offered some preliminary comments on the application of the Regulation and considered that Burton, J was “plainly correct”.

The full judgment can be found here.