Sanctions Clause
The sanctions clause clarifies that the insurer provides no cover and makes no payment to the extent that doing so would expose it to economic sanctions or embargoes.
- Clause type
- Exclusion
- Origin/Market
- London Market (LMA/NMA/Lloyd’s)
- Favours
- Insurer
- Negotiability
- Market standard
Standard wordings
- LMA3100
- LMA3100A
- LMA3200
Purpose
Insurers are subject to the sanctions regimes of their home and business countries (for example UN, EU, US OFAC, Swiss SECO). The clause prevents contractual payment obligations from colliding with mandatory sanctions law and protects the insurer from fines and loss of licence.
Effect and limits
The clause suspends cover and payments to the extent, and for as long as, a sanctions rule is engaged. It therefore does not act as a general exclusion but situationally – depending on parties, goods, territories and applicable law. The versions LMA3100A and LMA3200 published in 2023 clarify that this is a suspension, not a permanent exclusion; LMA3200 is additionally drafted as a condition to improve enforceability in civil-law jurisdictions (e.g. France).
Negotiation and practice
Internationally active companies should check which sanctions law the clause references (only mandatorily applicable law, or also US law without a US nexus) and which version (LMA3100/3100A/3200) is used – this significantly affects coverage certainty for deliveries into sensitive markets.