JAPAN UNABLE TO ACT AGAINST MARITIME INSURER SEPIA

S E C R E T TOKYO 004559

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/14/2016
TAGS: EFIN ETTC MNUC PARM PGOV PREL KN JA
SUBJECT: JAPAN UNABLE TO ACT AGAINST MARITIME INSURER SEPIA

REF: A. STATE 124127

B. TOKYO 04306

C. TOKYO 01446

D. TOKYO 00800

E. STATE 22855

F. 05 TOKYO 06357

G. 05 STATE 204250

Classified By: Ambassador J.Thomas Schieffer. Reasons 1.4 (B) (D)


1. (S) Summary. Further to reftels (A) and (B),MOFA NE Asia
Division Deputy Director Yutaka Kashiwabara advised Embassy
Tokyo Political Officer August 8 that Japan was unable to
take further action against suspect maritime insurance
company SEPIA. MOFA officials believe that Panama,s
issuance of "Certificates of Insurance or Other Financial
Guarantee Regarding Civil Liability for Oil Pollution Damage"
containing SEPIA,s name means that Panama recognizes SEPIA
as a legal company, thus satisfying Japanese regulations.
Additionally, authorities would like to exploit a possible
loophole in Japan's regulations relating to SEPIA,s legal
status in Bermuda, but absent further information are unable
to move forward. End Summary.


Insurance Law & Regulations
--------------


2. (S) Embassy Tokyo Political Officer met August 8 with
MOFA NE Asia Division Deputy Director Yutaka Kashiwabara. He
explained that, as noted reftels, the 1975 Law on Liability
for Oil Pollution Damage (LLOPD) (revised April 2004)
(referred to in reftels as the Protection and Indemnity law)
governs the manner in which vessels are insured. A 1976
Japanese executive ordinance (revised in April 2006),expands
upon the LLOPD by specifying the other specific laws and
regulations that insurance companies must comply with in
order to be qualified to insure vessels that enter Japanese
ports, Kashiwabara explained.


3. (S) According to the executive ordinance, to be legally
insured, a vessel must:

a) have a "Certificate of Insurance or Other Financial
Guarantee Regarding Civil Liability for Oil Pollution Damage"
(CLC) issued by a country that adheres to the International
Convention on Civil Liability for Oil Pollution Damage, or;

b) be covered by an insurance company that has been
established under Japanese insurance law.

Panama
--------------


4. (S) The CLC must contain the name of a legally recognized
insurance company, Kashiwabara continued. Panama, a party to
the International Convention on Civil Liability for Oil
Pollution Damage, has issued the required certificates to
several DPRK ships with SEPIA listed as the insurer. "The
fact that Panama has issued the certificates means that
Panama recognizes SEPIA as a legal company," he said. The
DPRK ships with Panama-issued certificates (containing
SEPIA's name) thus technically satisfy Japanese law.

Bermuda Connection
--------------


5. (S) While the executive ordinance limits Japan's ability
to respond to the U.S. request, Kashiwabara said that
officials are looking for ways to be helpful. For example,
even when an insurance company's name appears on a
certificate issued by a country that adheres to the CLC
(e.g., as SEPIA,s does in Panama),Japanese government
officials would find it difficult to recognize that insurance
company (i.e., SEPIA) if the company is not considered to be
legitimate under the laws of another country, he said.


6. (S) Kashiwabara stated that SEPIA had been "established"
in Bermuda. (Comment: He could not confirm whether SEPIA was
actually "registered" there.) As long as SEPIA remains a
legal insurance company based on Bermudan insurance law,
Japan has "little room for maneuver." If Bermudan officials
were to rescind SEPIA's legal status in Bermuda, Japanese
authorities would find it "easier to move" against SEPIA, he
said. Absent additional negative information about SEPIA's
status in Bermuda, MOFA officials believe that "there is not
much we can do" at the present time, he said. He hinted that
Japan would welcome additional "negative information" so it
could exploit this potential loophole.

SCHIEFFER