While the ship's detention was not directly caused by the international sanctions against Iran, the incident shows how Iranian companies are struggling to maintain operations in the face of punitive policies.

The US imposed new sanctions against Tehran on Tuesday, adding more Iranian companies to its financial blacklist. These include Moallem Insurance, which provides marine insurance for vessels of Islamic Republic of Iran Shipping Lines (IRISL), a primary target of the sanctions.

IRISL was formerly the Decretive's shipping manager and a guarantor of loans that funded the ship's construction in 2008.

The Decretive is one of five vessels linked to IRISL that the European banks want to seize as part of loan foreclosure proceedings over the alleged defaults, according to an insider familiar with the case. Another of the ships, the Dandle, was detained in Malta last month.

Western powers led by the US have accused IRISL of transporting missile-related and proliferation- related military cargo for Iran's government in defiance of sanctions.

A case is pending in Hong Kong but no date has yet been fixed for a hearing as the parties attempt to reach a settlement.

The ship was yesterday anchored 2.3 kilometres southeast of Lamma. On the stern, standing out from the ship's black and red livery, bright white capital letters spell out the ship's name and Valletta, the Maltese capital where it was registered.

No cargo was visible aboard the ship, although three men were seen on board. They would not say who they were or where the rest of the ship's former cargo and crew were.

The ship's nominal owner, Malta-based Sixth Ocean, and shipping manager Hafiz Darya Shipping, have been designated by the US as front companies for IRISL.

In 2006, the European banks issued the loans, for which IRISL is a guarantor, for the construction and delivery of five ships. The loans were issued in US dollars, which became a source of difficulty for IRISL after the US in September 2008 placed the shipping line on the US Treasury's Office of Foreign Assets Control list, which imposes controls on transactions and freezes assets under US jurisdiction.

A spokesman for HSH Nordbank declined to comment on the case and the lawyer representing the bank in the case, S. Mohan, was not available to answer questions.

Hong Kong's impounding of this ship follows similar action against three IRISL ships in Singapore. That case, brought by Credit Agricole Corporate and Investment Bank, seeks US$210 million in alleged loan defaults and additional costs. The three German-flagged container ships - the Sabalan, Sahand and Tuchal - were held in September on a warrant issued by Singapore's High Court. IRISL is fighting to prevent the sale of the ships at open auction.

IRISL has faced increasing difficulties operating since March 2008, when the United Nations Security Council issued a resolution calling on member states to inspect cargoes to and from Iran on ships operated by IRISL when there was suspicion that prohibited goods were being carried.

Last year member states reported two incidents in which ships chartered by IRISL were found to be carrying arms-related material.

The Israeli navy last year intercepted an Antigua-flagged vessel carrying containers with the IRISL logo, which was also found to be carrying arms of Iranian origin, according to the Israeli Ministry of Foreign Affairs. IRISL denied knowledge of the contents of the containers in the Israeli incident.

In June, the UN listed three subsidiaries of IRISL in the latest round of sanctions against Iran, and the US, European Union, Japan and Australia soon implemented even stronger unilateral sanctions against the beleaguered shipping line.

Held at anchor

The number of ships linked to Iran that were seized in Singapore in September: 3