UK: International Law Advisory - New European Sanctions on Iran Target Insurance, Oil and Gas Goods and Services

Last Updated: 8 November 2010
Article by David S. Lorello

On 26 July 2010, the European Council passed two new measures that will further expand the scope of EU economic sanctions against Iran.

Implementing Regulation 668/2010

First, the Council enacted Implementing Regulation (EU) No 668/2010, which expands the EU's existing financial sanctions regime against Iran by targeting a new group of Iranian entities. The regulation went into effect immediately upon publication.

The newly-designated entities include those listed in last June's United Nations Security Council Resolution 1929, as well as a number of additional parties who the EU have blacklisted on a unilateral basis. Notably, the new list includes the Islamic Republic of Iran Shipping Lines (IRISL), which conducts extensive business outside of Iran and has offices in Belgium, and a number of Iranian banks with international presence, including Bank Saderat Iran and its London-based subsidiary, BankSaderat PLC.

Certain of those entities already were subject to more targeted sanctions by individual EU Member States (for example, since October 2009 UK financial and credit institutions have been restricted under UK anti-terrorism legislation from doing business with some of the designated entities). However, the EU-Iran financial sanctions regime is more comprehensive – all EU persons and entities are now prohibited, subject to narrow exceptions and licensing requirements, from transferring any funds, assets or other "economic resources" to parties designated under Regulation 668/2010, and must block any assets or resources belonging to, owned, held or controlled by sanctioned parties that they come into possession of.

Council Decision on Supplemental Iran Sanctions

In addition, the Council also issued a Decision outlining a new set of export controls and other economic sanctions against Iran. The Decision does not come into force immediately – the EU must issue an implementing regulation, which is expected in early September. Much of the necessary detail has been left to the subsequent regulation, but the Decision signals a potentially substantial enhancement of European sanctions against Iran.

By way of background, the EU has imposed economic sanctions on Iran since 2007.1 The EU sanctions regime has, however, been fairly targeted, focusing on certain Iranian government and government-affiliated entities, as well as the export of a discrete range of goods and services that could assist Iran in pursuing its nuclear and weapons of mass destruction ("WMD") programmes. Last week's Council Decision, however, extends beyond WMD-related activities, and targets whole EU industries – including, in particular, insurance and oil and gas – that had not previously been a focus of Iran sanctions. The Decision includes the following key measures, in particular:

Insurance and Reinsurance Services

Article 12 of the Decision prohibits the provision of insurance and re-insurance by EU providers to the Government of Iran or to any entities worldwide that are "acting on behalf of" or "owned or controlled by" any public or private entity subject to Iran's jurisdiction. The Decision exempts health and travel insurance provided to individuals.

EU insurers had not previously been subject to a broad-based ban on providing services to Iran, and the scope of the new insurance restriction in Article 12 is, in many respects, unclear. For example, the Decision does not address how ongoing contractual commitments should be handled by EU insurance and reinsurance providers, including payment of claims under existing coverages and the termination of policies that are in force. The Decision also leaves unclear whether the sanctions will extend to reinsurance and retrocessional coverages that involve underlying Iranian beneficiaries. Finally, the suggestion in Article 12 that the insurance sanctions would extend to any entity worldwide that is owned or controlled by an Iranian entity will need to be addressed – for example, there are many entities operating in the EU that are owned or controlled by Iranians, who are subject to compulsory insurance requirements (e.g., motor insurance and occupational injury coverage).

Given the potential scope of Article 12, those and other issues will need to be considered and clarified in the implementing regulation.

Dual-Use Export Restriction

Article 1 imposes a new restriction on the export to Iran of any goods, or related technical data, services, or financing, that fall within the EU Dual-Use List (Council Regulation (EC) No 428/2009), with the exception of certain telecommunications and encryption items. The EU had not previously imposed a blanket restriction on the export of dual-use items to Iran, and most Member States have been issuing licenses regularly for exports to Iran of many dual use items.

The Decision will permit Member States to authorize the export of items covered under Article 1, on a case-by-case basis, where it is determined that the exports clearly will not contribute to Iran's WMD capability, and where (1) contracts for the delivery of the items in question include end-user guarantees, and (2) Iran has committed not to use the items in question for nuclear weapons activities.

Oil and Gas

Similar to insurers and reinsurers, the EU oil and gas industry is targeted squarely in the Decision. Oil and gas producers and service providers had not previously been targeted by the EU for Iran sanctions, although certain items used by oil and gas service providers have been covered under earlier EU sanctions regulations, given that those items also were capable for use in nuclear or chemical weapons applications. However, the Decision imposes new sanctions that focus squarely on oil and gas producers and service providers, irrespective of any potential weapons-related dual use considerations. In particular:

  • Article 4(1) introduces a new export controls regime restricting the export of "key equipment and technology" for the oil and gas refining, liquefied natural gas, exploration and production sectors. It remains to be determined which products will constitute "key equipment and technology."
  • Associated financing, technical assistance, training, and services relating to the aforementioned "key equipment" also will be restricted.
  • Article 6 prohibits (1) the granting of any financial loan or credit to Iranian oil and gas enterprises, (2) the acquisition or extension of participation in Iranian oil and gas enterprises, or (3) the creation of any joint venture with such enterprises.

Articles 4 and 6 are subject to a grandfathering provision, in Article 7 of the Decision, which permits transactions pursuant to contracts concluded before the date of the Decision (i.e. 26 July 2010).

Additional Requirements For Financial Institutions

Article 10(2) requires EU financial institutions to engage in enhanced due diligence and a variety of new financial controls in respect of their activities with Iranian-affiliated banks. For example:

  • Article 10(2) requires financial institutions to maintain records of financial transactions for 5 years, and to make those records available to national authorities "on request" – this may provide national authorities with greater rights of access to European financial records than had been the case previously.
  • Article 10(2) also requires that all information fields on payment instructions be completed before transactions are processed. This requirement may have been motivated by a practice, adopted in the past by many European financial institutions, of removing the names of Iranian entities from payment instructions before forwarding those instructions to affiliates for further processing. Notably, that practice was the subject of a number of very large U.S. sanctions enforcement actions in recent years, including fines in the hundreds of millions of USD against a number of major European banks.2
  • Finally, Article 10(2) requires that financial institutions report to the competent authority of their Member State if the institution suspects that funds are related to Iran proliferation financing.

Funds Transfer Restrictions

Article 10(3) requires that EU persons and entities report transfers of funds to or from Iran, in amounts above €10,000, to their relevant Member State government. Moreover, transfers above €40,000 require the prior approval of the Member State. Depending on how this requirement is implemented, it could potential require prior government approvals for most commercial sales between EU and Iranian entities.


The new EU measures come on the heels both of Security Council Resolution 1929, and new legislation in the United States that expands U.S. extra-territorial sanctions on business activities by non-U.S. companies with Iran. (The new U.S. measures are summarized in our June 28, 2010 alert.) Collectively, the UN, EU, and US measures present new challenges both for companies that remain in the Iranian market, as well as for those who do not do business with Iran but are involved the same markets where Iranian companies operate.


1. The primary EU sanctions regulation against Iran is Regulation (EC) No 423/2007, which is summarized in our client alert at the attached link.

2. Steptoe International Law Advisory - Swiss Bank to Pay $536 Million Fine in Largest Ever U.S. Economic Sanctions Penalty

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.