Worldwide: The Joint Plan Of Action: A Recap Of The Easing Of Sanctions Against Iran By The United States And European Union

On 24 November 2013, an agreement was reached between the E3+3 (also known as the P5+1, and which includes the United States, United Kingdom, Russia, China, France and Germany) and Iran.

This agreement, known as the Joint Plan of Action (JPOA), was the result of negotiations the aim of which was "to reach a mutually-agreed long-term comprehensive solution that would ensure Iran's nuclear programme will be exclusively peaceful". As part of the agreement, Iran reaffirmed that "under no circumstances would it ever seek or develop any nuclear weapons".

The JPOA stated that this "comprehensive solution" would:

  • Enable Iran to fully enjoy its right to nuclear energy for peaceful purposes under the relevant articles of the Treaty on the Non-Proliferation of Nuclear Weapons in conformity with its obligations therein.
  • Involve a mutually defined enrichment programme with practical limits and transparency measures to ensure the peaceful nature of the programme.
  • Constitute an integrated whole where nothing is agreed until everything is agreed.
  • Involve a reciprocal, step-by-step process.

Produce the comprehensive lifting of all UN Security Council sanctions, as well as multilateral and national sanctions related to Iran's nuclear programme.

The JPOA envisaged a two-step process in relation to relief from international trade sanctions against Iran.

On 12 January 2014, it was announced that the first step, the "interim deal", would begin to run on 20 January 2014, with a time limit of six months renewable by mutual consent. At the end of that initial six month period, when no agreement between Iran and the P5+1 could be reached, all measures were extended for a further six months, to 24 November 2014.

On 24 November 2014, it was announced that in order for discussions between Iran and the P5+1 to continue, all measures would be extended to 30 June 2015. The parties' goal is to have significant points agreed by March 2015, and the final agreement in place by 30 June 2015.
The specific changes brought into effect by the JPOA are summarised below. There are two key points to be aware of when considering these changes:

The EU and U.S. positions are not entirely in line, so caution must be exercised. Although intended business may be clear from an EU perspective it may remain subject to U.S. sanctions, for example if payments are made in U.S. dollars.

The easing of restrictions is currently stated to end on 30 June 2015. U.S. guidance states that transactions under the eased restrictions must be "completed" by that date The EU legislation states that all relevant contracts must be "executed" by 30 June 2015. Prudence dictates that "executed" should be read to mean "occur and be completed" by 30 June 2015.

The EU Position

The following amendments to the EU Iran sanctions regime were brought into force following the JPOA agreement (by EU Regulation 42/2014, Council Decision 2014/21/CFSP, Council Decision 2014/480/CFSP and, most recently Council Decision 2014/829/CFSP).

Crude oil and petroleum products In respect of certain crude oil and petroleum products, it is no longer prohibited to:1

  • Transport those products if they originate in Iran, or are being exported from Iran to any other country.
  • Provide insurance and reinsurance related to the import, purchase or transport of those products.

This suspension only applies to crude oil and petroleum products with HS Code 2709 00 (defined in Annex I to Regulation 42/2014 as "petroleum oils and oils obtained from bituminous minerals, crude").

It is still prohibited to import these products into the EU if they originate in or have been exported from Iran, and to purchase such products which are located in or which originated in Iran.2

The full range of prohibitions (i.e. on the import, purchase, transport and provision of associated services) still apply to all crude oil and petroleum products not specifically listed in Annex I to Regulation 42/2014. These are numerous, and include products with HS Codes 2710, 2712, 2713, 2714 and 2715 00 00.

Petrochemical products The full range of prohibitions in respect of petrochemical products has been suspended.3 This means that parties subject to EU jurisdiction are permitted to:

  • Import these products into the EU if they originate in Iran or have been exported from Iran.
  • Purchase these products which are located in or which originated in Iran.
  • Transport these products if they originate in Iran, or are being exported from Iran to any other country.
  • d. Provide, directly or indirectly, financing or financial assistance, including financial derivatives, as well as insurance or reinsurance related to the import, purchase or transport of these products which are of Iranian origin or that have been imported from Iran.

Cargoes which fall within the EU's definition of "petrochemical products" are listed in Annex V to Regulation 267/2012.

It is important to remember that there have been no amendments to the EU's asset freeze provisions,4 save for the derogation in respect of the Ministry of Petroleum considered below. As such, a transaction in respect of petrochemical products may still trigger sanctions if a designated party is involved.

Gold, precious metals and diamonds The full range of prohibitions has been suspended in respect of the cargoes listed in Annex II to Regulation 42/2014.5 Parties subject to EU jurisdiction are permitted to:

  • Sell, supply, transfer or export these goods, directly or indirectly, whether or not originating in the EU, to the Government of Iran, its public bodies, corporations and agencies, any person, entity or body acting on their behalf or at their direction, or any entity or body owned or controlled by them.
  • Purchase, import or transport these goods, directly or indirectly, whether the item concerned originates in Iran or not, from the Government of Iran, its public bodies, corporations and agencies and any person, entity or body acting on their behalf or at their direction, or any entity or body owned or controlled by them.
  • Provide, directly or indirectly, technical assistance or brokering services, financing or financial assistance, related to these goods, to the Government of Iran, its public bodies, corporations and agencies and any person, entity or body acting on their behalf or at their direction, or any entity or body owned or controlled by them.

Derogations to asset freeze provisions A further derogation has been added to the existing asset freeze provisions. Member State authorities may authorise the release of economic resources, or the making available of funds or economic resources, to the Ministry of Petroleum.6

Authorisation may only be given once the Member State in question has determined that the funds or economic resources are required for the execution of contracts for the import or purchase of petrochemical products.

Financial transfers: increase in notification and authorisation thresholds The notification and authorisation thresholds, for permitted financial transfers between EU and Iranian banks and to Iranian persons, are increased tenfold.

Transfers between EU and Iranian financial and credit institutions7

In respect of transfers due on transactions regarding foodstuffs, healthcare, medical equipment, or for agricultural or humanitarian purposes:

  • Transfers of below Eur.10,000 or equivalent may be carried out without authorisation or notification.
  • Transfers between Eur.10,000 or equivalent and Eur.1 million or equivalent must be notified to the competent Member State authority, but do not require authorisation.
  • Transfers equal to or above Eur.1 million or equivalent require the prior authorisation of the competent Member State authority.

In respect of transfers due on transactions regarding personal remittances:

  • Transfers below Eur.400,000 or equivalent must be notified to the competent Member State authority, but do not require authorisation.
  • Transfers equal to or above Eur.400,000 or equivalent require the prior authorisation of the competent Member State authority.

In respect of any other permitted transfer:

  • Transfers of below Eur.10,000 or equivalent do not require prior authorisation or notification.
  • Transfers of between Eur.10,000 and Eur.100,000 must be notified to the competent Member State authority, but do not require authorisation.
  • Transfers equal to or above Eur.100,000 or equivalent require the prior authorisation of the competent Member State authority.

Transfers of funds to and from Iranian persons8

Transfers due on transactions regarding foodstuffs, healthcare, medical equipment, or for agricultural or humanitarian purposes may be carried out without prior authorisation. The transfer must be notified in advance to the competent Member State authority if it is equal to or above Eur.10,000 or equivalent.

Any other permitted transfer below Eur.400,000 or equivalent may be carried out without any prior authorisation. The transfer must be notified in advance to the competent Member State authority if it is equal to or above Eur.10,000 or equivalent.

Any other permitted transfer equal to or above Eur.400,000 or equivalent requires the prior authorisation of the competent Member State authority.

Transfers of funds below Eur.10,000 or equivalent do not require any prior authorisation or notification.

Making vessels available The prohibition on "making available vessels designed for the transport or storage of oil and petrochemical products"9 has been suspended.10

This prohibition extended to chartering vessels for the transport of such products, where owners did not take sufficient precautions to ensure that the vessel in question would not be used to carry or store oil or petrochemical products originating in or exported from Iran.

The U.S. Position

The U.S. government has introduced measures to temporarily suspend certain sanctions involving Iran's purchase and sale of gold and other precious metals, Iran's export of petrochemical products, Iran's automotive industry, and certain associated services.

As with the E.U., these measures came into force on 20 January 2014, and as matters stand will remain in force until 30 June 2015.

The U.S. is also establishing financial channels to facilitate Iran's import of certain humanitarian goods, payment of medical expenses incurred by Iranians abroad, payments of Iran's UN obligations, and payments of US$400 million in governmental tuition assistance for Iranian students abroad.

The U.S. also published a permissive licensing policy regarding certain transactions related to the safety of Iran's civil aviation industry.

The U.S. has committed to pausing efforts to further reduce Iran's crude oil experts and to enable Iran to access US$4.2 billion in Restricted Funds in instalments over the course of the six-month period beginning 20 January 2014 and ending 20 July 2014.

The loosening of U.S. sanctions primarily involves the "secondary" U.S. sanctions impacting non-U.S. persons. For the most part, U.S. persons (including U.S. financial institutions, reinsurers, banks and U.S. branches of EU banks) continue to be barred from most Iran trade. This means that even if a trade is permitted under the EU measures, payments in U.S. dollars will still be caught.

Further, the relief announced does not authorise transactions with persons on the U.S Treasury Department's Office of Foreign Assets Control's (OFAC) List of Specially Designated Nationals and Blocked Persons (the "SDN List"). However, one notable exception is the petrochemical area; the U.S. has published a white list "Annex" of SDN-listed petrochemical companies with which trade will be permitted without sanctions exposure during the JPOA period.

In the petrochemical area, care must be taken to ensure any trade takes place entirely within the JPOA period (i.e. currently by 30 June 2015), and that the risk of delays or re-imposition of sanctions by the U.S. is accounted for. The relief includes a specific definition of petrochemicals (which does not align exactly with the EU Regulations) so each set of regulations must be closely reviewed before undertaking any petrochemical trading.

What is the effect of the JPOA measures?

The measures introduced by both the EU and U.S. are very specific. Parties cannot take the position that it is legal to conduct any and all business with Iran. It is still essential to thoroughly investigate all trades and transactions.

As indicated above, the measures put in place by the EU and U.S. are not entirely in line with each other. It is important that both regimes are considered. Crucially, U.S. dollar payments in respect of trades permitted by the EU may be caught, as U.S. banks (and U.S. branches of EU banks) are still barred from the majority of trade with Iran.

Only cargoes specifically identified are covered by the suspensions. There have been no amendments to the EU asset freeze list and the U.S. SDN List (subject to the "white list" identified above), and so the list of designated parties, with whom it is effectively prohibited to do business, remains intact.

These relaxed measures are only due to be in place until 30 June 2015. Although previous extensions have been agreed, it should not be assumed that this will continue. If the P5+1 and Iran cannot reach an agreement, the sanctions may well be re-imposed.

The U.S. requires all transactions falling within the eased restrictions to occur and be completed by 30 June 2015. From an EU perspective, all contracts entered into in respect of any of the relaxed measures must be "executed" by that date. Taking a cautious approach, "executed" should be read as the entire performance of the contract being completed by 30 June 2015.

In short, whilst these continuing measures do represent a positive step forward in commercial relations with Iran, they by no means permit all Iranian business and there is still a need for caution.

Footnotes

1 Article 1(1), Regulation 42/2014.

2 Article 11, Regulation 267/2012.

3 Article 1(2), Regulation 42/2014.

4 Article 23, Regulation 267/2012.

5 Article 1(3), Regulation 42/2014.

6 Article 28b, Regulation 267/2012.

7 Article 30, Regulation 267/2012.

8 Article 30a, Regulation 267/2012.

9 Article 37b, Regulation 267/2012.

10 Article 1(7), Regulation 42/2014.

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 Mondaq.com.

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

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (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 www.mondaq.com

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 Mondaq.com’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.

Disclaimer

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.

Registration

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 unsubscribe@mondaq.com 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.

Cookies

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.

Links

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.

Mail-A-Friend

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.

Security

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 webmaster@mondaq.com.

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 EditorialAdvisor@mondaq.com.

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 enquiries@mondaq.com.

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