LONDON, Aug 9 (Reuters) - Britain is blocking a move to
place two alleged Somali pirate commanders on a U.N. sanctions
list, fearing it could hurt the British shipping industry,
officials said on Monday.

Britain has asked for a "technical hold" to be placed on a
U.S. proposal to add Abshir Abdillahi and Mohamed Abdi Garaad to
the list of people subject to sanctions under U.N. Security
Council Resolution 1844, Britain's Foreign Office said.

The "technical hold", requested in April and in effect
indefinitely, gives the British government time to look into the
legal implications of implementing the measures.

Security Council Resolution 1844 imposes a travel ban and an
asset freeze on people who "engage in or provide support for
acts that threaten the peace, security or stability of Somalia".

The U.S. proposal marks the first time that alleged pirates
would be targeted by the sanctions, throwing up legal questions
for Britain.

Pirates from Somalia, which is battling an Islamist
insurgency, have made tens of millions of dollars in ransoms for
the release of ships and crews seized in the Indian Ocean and
Gulf of Aden.

Britain does not condone the payment of ransoms and supports
strong action against known pirates, the Foreign Office said.

However, it is not illegal under British law to pay ransom
and if the two alleged pirate commanders were added to the list,
it could create a legal conflict for British-based companies by
outlawing ransom payments that ended up in the hands of the two
suspects, a British government source said.

The move could throw "UK companies open to prosecution," the
source said, adding that the issue created a "difficult
balancing act" between cracking down on piracy and the shipping
industry's commercial interests.

A number of options were being considered for resolving the
problem, the source said without elaborating.

The Financial Times reported on Monday that the proposed
sanctions would affect law firms, insurers and private security
companies in London that arrange ransoms to release kidnapped
ships and crews.

The Gulf of Mexico oil spill from British-based BP's Macondo
well and U.S. concern over the release last year of the
Lockerbie bomber to Libya have caused strains between the United
States and Britain's three-month-old coalition government.
(Reporting by Adrian Croft; Editing by Charles Dick)