Diplomatic storm brewing,Iran ships row headed for arbitration

India has pitched for arbitration in a neutral country,arguing that bilateral talks could become ‘a continuing irritant’ in relations.

Written by Amitav Ranjan | New Delhi | Published:September 3, 2013 1:06 am

New Delhi plans to seek arbitration in a neutral country rather than negotiate bilaterally with Tehran for the release of MT Desh Shanti that has been detained in that country since August 12. Iran is expected to retaliate through stiff measures in the oil and gas sector,sources said.

On August 22,Foreign Secretary Sujatha Singh suggested that the Shipping Corporation of India,which owns the ship,write to Iran that it would pay damages “only after proper legal procedure”. India’s ambassador to Iran,D P Srivastava,advised her that “arbitration is a better option than bilateral negotiations”.

On August 26,Srivastava pitched for arbitration in a neutral country under English law,arguing that bilateral talks could become “a continuing irritant” in relations. Besides,it would also allow the ship’s insurers P&I Club to escape responsibility,because P&I Club claims that it cannot transfer money to Iran due to US sanctions.

Both Singh and Srivastava are opposed to issuing a guarantee against the fine. The apprehension is that once the guarantee is issued,Tehran would not accept either negotiations or arbitration.

“The quick solution being promoted by Iran would create serious complications for India,apart from conveying the impression that we have accepted guilt,” Srivastava wrote.

It would also imply that India paid up because it was at fault,and thereby set a precedent affecting Indian shipping in the Gulf,he advised.

“The combination of a draft letter from SCI,offer of working with Iran to get UN Security Council permission for release of Diyanat,should provide an attractive package for release of the ship and the crew,” he said.

On Sunday,Iranian minister Seyed Ataollah Sadr said that if SCI and P&I Club gave a written guarantee,the ship would be able to continue its journey. It is believed that Iran’s detention of Desh Shanti is linked to the confinement of the Iranian ship Diyanat in Mumbai for the last two years. Srivastava was summoned last week over the continued detention of the cargo vessel and its crew.

The Indian ambassador has suggested that Iran could be allowed to pay the fine imposed by the court on Diyanat out of the rupee funds belonging to Central Bank of Iran with UCO Bank.

New Delhi finds it difficult to accept transferring money out of rupee funds to pay the ship’s creditors on whose complaint a worldwide red corner notice was issued and the vessel detained.

In the diplomatic standoff between the nations,New Delhi asserts that Tehran had detained the SCI tanker without providing any evidence to prove that it discharged oily ballast into Iranian waters.

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