Iran’s military-backed seizure of a VLCC was rubber-stamped by “deranged officials” in a case that flagrantly flaunted international maritime rules, according to a lawyer for the owners.
Iranian troops seized the 309,000-dwt Niovi (built 2005) in May 2023 and have held it since then over an apparent long-running cargo dispute, according to court papers.
Details of the efforts to free the ship emerged in legal documents after the Piraeus, Greece-based Niovi owner Grand Financing Co and ship manager Smart Tankers sued insurers that refused to pay out on their $43.75m claim for constructive total loss.
TradeWinds has previously reported that the suppliers of war risks cover, a Lloyd’s of London insurer and Fidelis Insurance Ireland, claim they were not obliged to pay because they say the owner and operator ignored the advice of their Iranian lawyer.
The insurers say the owner’s failure to attend an Iranian court hearing in April in Iran to try to recover the ship meant it had failed to act to avert or minimise loss.
The owner and operator have responded with a second opinion from a UK-based lawyer who said that attending the hearing could backfire by giving Iran more legal support to enforce any award outside of Iran.
Mohammad Nayyeri, an Iranian law expert and academic based at London’s Brunel University, told the owners that the behaviour of “Iranian authorities is as bad as it gets” in the case of the Niovi, according to a legal document.
The Islamic Revolutionary Guard Corps (IRGC) seized the tanker in Oman’s territorial waters, he said in his advice.
“There is not even a pretence of compliance with many legal requirements and rules of criminal law,” Nayyeri said.
The lawyer said the investigating judge involved in the subsequent legal dispute was responsible for the “farcical” case that saw US agencies ordered to pay more than $49bn in damages for the killing of top Iran general Qasem Soleimani in a targeted drone strike on Baghdad in 2020.
Deranged officials
“We cannot expect more from such deranged officials,” the lawyer said. He added the judge had simply “rubber-stamped what the IRGC Intelligence Organisation has dictated”.
In his advice to the owner and operator, Nayyeri said: “There is no doubt that this is a political case instigated by the Iranian state, rather than by any private actor.
“The judicial system is being abused and exploited to merely provide a facade of legitimacy for those actions.”
He said that engaging with any trial was unrealistically “clinging to a slim chance and hoping that someone will listen to reason”.
The insurers have also said they could not pay out because of US sanctions rules, an issue contested by the owner and operator.
The owners said the seizure of the Niovi was illegal under Iranian and international law as the ship was exercising the right of innocent passage.
Iran has seized ships as a way of dealing with commercial disputes often linked to US and European Union sanctions.
Last month, shipping’s top regulator visited Iran and pressed officials over the fate of four ships seized and held for months by its military.
Arsenio Dominguez, the secretary general of the International Maritime Organization, did not identify the ships but said he received information about two of them.
Iranian officials told Dominguez they would supply further details for the reasons the vessels were seized.
Lawyers for both sides in the Niovi dispute have been approached for comment.
Read more
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