US could look to seize Grace 1, says lawyer

The US government could well use civil asset forfeiture procedure to seize Grace 1 (IMO 9116412), the tanker seized by British marines while assisting the Gibralter government, according to shipping lawyer Stephen Askins of Tatham Macinnes.

Writing in a LinkedIn post, Askins said that the US government recently took similar action against bulk carrier Wise Honest (IMO 8905490) – a sanction busting North Korean vessel that was detained by the Indonesian port authorities in May 2019.

The Wise Honest was seized by the Indonesian port authorities for what was described as a major deficiency under SOLAS, and the master was charged under local law for fraud.

Contrary to the US sanctions laws, the vessel was transporting a cargo of coal bound for North Korea.

In that case, payments in respect of the cargo had been made in US dollars, thus giving the US court jurisdiction. The US government then applied for forfeiture under the civil asset forfeiture procedure. This was the first time it had been used against a ship and led to speculation at the time that it would be used in other cases.

An argument was made under the US International Emergency Economic Powers Act, which gives wide-ranging discretion to the US Court to issue a warrant of forfeiture.

Akins said that “given the political leaning of so many judges appointed by President Trump it seems reasonable to assume that the US will be looking to do the same thing again. This will require an application before the same court in New York. If given then the US will take control of the vessel. The crew would be repatriated.”

Panama-flagged VLCC Grace 1 was boarded and arrested by Royal Marines on July 4th. The operation appears to have been led by the Gibraltar police, which in turn sought support from the UK government. The logical military force to back up the police was the Royal Marines. There has been speculation that the US had been pushing for this, supported by Spain’s immediate statement that the detention was at the request of the US, and once the vessel entered into EU waters then there was an excuse to act. That justification was not the US sanctions on the source (Iran) but EU sanctions on the purported destination (Syria).

A direction under the EU Syrian Sanctions (EU36/2012) would have been difficult for the UK to refuse.

Askins noted that the Iranian accusation of piracy came up against the international definition of piracy, which provides that an attack must be for “private ends”. It means that an act by a state cannot be an act of piracy.

He also noted that, although the vessel seemed to be flying the Panamanian flag, which meant that Panama would ordinarily have been informed of the operation and permission sought before it took place. However, Panama has said that the vessel’s registration was cancelled in May this year because the vessel was implicated in illegal activity. Askins said that if the vessel was flagless, it could have been seized quite legally, without reference to the source or destination of the cargo.

At the moment there is a police-led enquiry to ascertain what was loaded and when. Cargo documents and the ship’s computer will be scrutinized and the Indian and Pakistani crew were expected to be co-operative. Askins said that “it may be that the master will face some form of administrative offence under Gibraltar law depending on documentary discrepancies on board. The crew are unlikely to know anything of the financial payments in respect of the cargo.”

Both the UK and US seemed to have been tracking the vessel for some time, particularly as it was routed laboriously around South Africa rather than through Suez, where often oil is discharged at one end and piped to the other and can be more closely monitored.

However, Askins said that, were the vessel forfeited by a warrant of the US Court, the concern would be the extent to which Iran would continue to blame the UK.

It will be a situation also watched with some concern by the war risk insurance market, Askins concluded.

1997-built, 156,880 gt Grace 1 is owned by Grace Tankers Ltd care of manager Iships Management Pte Ltd of Singapore.

1989-built, North Korea flagged, 17,061 gt Wise Honest is owned by Korea Songi Shipping.