IF the tanker seized by Gibraltar earlier this month is uninsured, and the current status of flag and class remain uncertain, it presents the British overseas territory with a host of regulatory “what ifs” for the ship’s continuing detention.

The Iranian-controlled very large crude carrier Grace 1 remains at anchor off Gibraltar under a Supreme Court order that expires on Friday.

Royal Marines joined Gibraltar’s police to impound the vessel on July 4 as it slowed down in territorial waters to take on supplies on the basis that its Syria-bound cargo of Iranian crude breached European Union sanctions.

Gibraltar’s first minister held talks this week in London with British prime minister Theresa May following indications that the vessel could be released if Tehran can guarantee that the ship and its cargo will not go to Syria. 

In the meantime, says London-based maritime lawyer Stephen Askins, Gibraltar may potentially be sitting on an uninsured tanker with a full cargo on board, raising issues about liability. 

“Most insurance policies will have a sanctions clause which will not allow underwriters to pay a claim if it puts them in breach of sanctions,” said Mr Askins, a partner at Tatham & Co.

“I am not sure Gibraltar has a clear exit strategy on this and if third parties see this as a way of seeking reparation for previous claims against Iran and that is accepted by the Gibraltar court, then the vessel could be really stuck. That is before any sort of forfeiture process.”

Mr Askins has said that the US may also be able to apply for a warrant for the forfeiture of Grace 1 in a US court, using the precedent set in another case involving a North Korean vessel detained in Indonesia with a sanctioned coal cargo.

The cargo on board the Wise Honest was paid for in US dollars in breach of US sanctions, thus providing courts there with jurisdiction.

The country under which Grace 1 is now flagged remains a mystery, as is the classification society.

Both the flag and class of the vessel were suspended in late May and the vessel owners have not provided any further updates. 

Overseas Marine Certification Services, based  in Balboa, Panama, told Lloyd’s List it cancelled provisional certificates foGrace 1 on May 30. That was a day after Panama’s flag registry notified the recognised organisation that it had de-registered the tanker.

The provisional certificates were first issued on March 25 and the vessel had been classed by Lloyd’s Register.

Its marine and hull, and cargo insurer are also unknown.

While a 2m-barrel cargo of Iranian crude is worth about $120m, the 1997-built vessel is likely to be worth well below the $70m value for a five-year-old second-hand VLCC.

The beneficial owner is another mystery, with a complex corporate structure incorporating management and companies in Russia, Singapore, St Kitts and Nevis, and Dubai.

The detention can be extended up to 90 days under new regulations passed by Gibraltar a day before the Grace 1 seizure. They also allow for the ship to be held and not released until the settlement of other legal proceedings in other jurisdictions against the owners of the cargo or tanker.

An Israeli non-government organisation this week sought an injunction to keep the vessel in Gibraltar.