Sanctions clauses and the effect of sanctions on insurance policies

Produced in partnership with Daniel Martin of HFW and James Neale of HFW

Practice notes

Sanctions clauses and the effect of sanctions on insurance policies

Produced in partnership with Daniel Martin of HFW and James Neale of HFW

Practice notes

The Practice Note entitled UK financial and trade sanctions for insurers outlines the sanctions applicable to insurers, the nature of those sanctions, the role of the Financial Conduct Authority, and screening and due diligence for insurers to adopt.

This Practice Note looks more closely at issues relating to policy wording and in particular the effect of sanctions on insurance policies and the role of sanctions clauses.

Lloyd's Market Association Sanctions Clauses

Much of the focus of this Practice Note will be on the market standard wording: the Lloyd's Market Association (LMA) 3100A clause (LMA 3100A) and the LMA 3200 clause (LMA 3200). These were introduced in October 2023 following an LMA consultation on the LMA 3100 clause, which was first issued in 2010.

LMA 3100A adopts the same wording as provided for by LMA 3100 but the title was amended by removing the words ‘and exclusion’ to better reflect that the clause operates to suspend coverage rather than exclude it. LMA 3100A provides as follows:

Sanctions

Daniel Martin

Solicitor, HFW

Daniel advises traders, shipowners, freight forwarders, insurers and brokers on a host of regulatory and compliance issues, including international trade sanctions, export controls, customs and anti-corruption legislation. He advises on all aspects of the EU and UK sanctions legislation, and he is also familiar with the application of US sanctions to non-US persons.

Daniel also advises clients on disputes arising from charterparties, sale contracts, bills of lading, marine insurance and logistics operations, and he uses that experience and expertise to provide detailed, practical advice which is tailored to clients in the commodities, shipping, logistics and marine insurance sectors.

As well as advice on dispute resolution, customs and regulatory compliance (including ways to engage effectively with HMRC and other regulators), he also advises on compliance procedures and controls which traders, shipowners, logistics companies, banks, insurers and brokers should adopt to minimise risk.

Acritas Star Lawyers describes Daniel as “Down to earth, commercially minded, understands my business and thinking outside the box.”

James Neale

Solicitor, HFW

James is an associate in HFW's London office. He specialises in regulatory and compliance matters, including economic and financial sanctions, export controls, and customs. His clients include shipowners, charterers, insurers, and commodity traders.

James also advises in respect of shipping and logistics disputes, including charterparties, ship sale and purchase, and sale of goods.

During his training, James spent time in HFW's commodities and EU regulatory departments, as well as six months in HFW's Piraeus office advising on shipping disputes.

Prior to joining HFW, James worked on financial sanctions policy and implementation in HM Treasury and the Office of Financial Sanctions Implementation (OFSI).

James is qualified in England and Wales.

Jurisdiction(s):

United Kingdom

Key definition:

Sanction definition

What does Sanction mean?

An adverse consequence to a party of failing to comply with a rule, practice direction or court order.

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