The United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) has added a general license to the Weapons of Mass Destruction Sanctions Regulations (“WMD Sanctions”) which allows for the “arrest, detention, and judicial sale” of three vessels which have been designated as Specially Designated Nationals under the WMD Sanctions.

The three vessels, the MV Sabalan, the MV Sahand, and the MV Tuchal, were designated in 2008 and are believed to be part of the fleet of the Islamic Republic of Iran Shipping Lines (“IRISL”). The new general license authorizes a variety of transactions including bidding on the purchase of the vessels; paying deposits; providing financing, insurance, or funding in connection with the purchase; and, in furtherance of the arrest, detention, and judicial sale of the Vessels, providing vessel management services; providing port agency services; purchasing of bunkers; repairing or modifying the Vessels for commercial use; providing crewing; and hiring surveyors to inspect the vessels. The general license expires on January 31, 2012.

There is a caveat to this general license however. If the vessels are sold pursuant to judicial sale, the purchaser of the vessels may provide OFAC with conclusive evidence demonstrating that the basis for the blocking is no longer applicable in order to expedite the removal of the vessels from OFAC’s Specially Designated Nationals and Blocked Persons List (“SDN List”).

What’s somewhat unclear from the general license is why these three ships have been authorized for judicial sale and other designated ships within the IRISL fleet have not. It will be interesting to see if more ships are added to this license down the road and who will be willing to buy them if they are. Moreover, given the OFAC SDN removal process being notoriously slow, it should be interesting to see what they mean by “expedited processing.”

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.