The United States Department of the Treasury Office of Foreign Assets Control (“OFAC”), in a much anticipated move, has issued another general license under the Weapons of Mass Destruction Proliferators Sanctions Regulations (“WMD Sanctions”) authorizing the sale of two vessels which were formerly part of the fleet of the Islamic Republic of Iran Shipping Lines (“IRISL”). These vessels were previously designated as Specially Designated Nationals (“SDNs”) on September 10, 2008.

The general license authorizes all transactions related to the arrest, detention, and judicial sale of the MV Dandle (a.k.a. Twelfth
Ocean, IMO No. 9209348). Included within the scope of these authorized transactions are 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. This general license expires at 11:59 p.m. eastern standard time, January 31, 2012.

Despite this laundry list of authorized transactions this general license does not authorize any provision of services, or any transfer of funds or other property, directly or indirectly, that would otherwise be prohibited by 31 C.F.R. Chapter V, including to any entity or individual whose property and interests in property are blocked pursuant to any Executive order, statute, or 31 C.F.R. Chapter V.

In the event that one of these vessels is sold pursuant to judicial sale, the purchaser may provide OFAC with evidence demonstrating that the basis for the blocking is no longer applicable. This evidence is required to expedite the removal of the vessels from the SDN List. Such evidence should consist of (1) documentation demonstrating completion of the vessel sale, such as a bill of sale or other evidence provided by a sheriff or court; (2) documentation demonstrating the source of funds for the vessel purchase, such as evidence of any financing associated with purchasing the vessel and the parties associated with such financing; (3) corporate and other documentation to substantiate the identity of the buyer; and, if applicable, (4) information or documentation regarding plans to lease the vessel to any party other than the buyer.

It seemed obvious that when OFAC issued the first general license allowing for the sale of other vessels formerly owned by the IRISL, that we would see another general license issued authorizing the sale of additional vessels. The question now is whether further general licenses will be issued or if OFAC will issue a general license for all IRISL vessels previously designated under the WMD Sanctions. Another interesting development will be to watch who purchases the IRISL vessels and if Iran will try to take advantage of the general license by using outside agents to purchase the vessels, removing the SDN designation in the process, and then regaining control of the vessels without seeking to remove the SDN designation directly; a course of action which would probably never work.

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.