ARTICLE
20 July 2015

Iran Nuclear Deal Reached; Sanctions Remain In Place

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Jones Day

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With the exception of the limited sanctions relief provided under the November 24, 2013, Joint Plan of Action, which will be extended until the JCPOA is implemented, all sanctions against Iran remain in place...
Worldwide International Law

On July 14, 2015, the European Union, together with the United States, the United Kingdom, Germany, France, Russia, and China (known as the "P5+1 countries") reached an agreement with Iran regarding Iran's nuclear weapons development efforts and sanctions designed to prevent such efforts. In this agreement, Iran committed to take several steps to prepare for and implement inspections and other processes to limit its ability to develop nuclear weapons. The parties agreed to potential phased sanctions relief upon verification by the International Atomic Energy Agency ("IAEA") that Iran has implemented its commitments. The agreement, known as the Joint Comprehensive Plan of Action ("JCPOA"), builds on an April 2015 framework developed by the parties.

With the exception of the limited sanctions relief provided under the November 24, 2013, Joint Plan of Action, which will be extended until the JCPOA is implemented, all sanctions against Iran remain in place, and no sanctions are immediately lifted in connection with the JCPOA. Provided below are brief discussions of the JCPOA's impact on U.S., EU, and UN sanctions on Iran.

U.S. Sanctions

Following the formal adoption process of the JCPOA, U.S. sanctions relief will be provided through the suspension and eventual termination of certain of the secondary sanctions on Iran, which authorize the imposition of sanctions on non-U.S. persons that engage in certain types of dealings or activities relating to Iran. In that regard, the primary U.S. sanctions targeting Iran, which generally prohibit transactions or other dealings with or involving Iran by U.S. persons and non-U.S. entities owned or controlled by U.S. persons, will not be lifted in connection with the JCPOA. Indeed, U.S. officials have emphasized that the deal does not affect U.S. sanctions aimed at combating Iran's support for terrorist groups, its fomenting of violence in the region, and its perpetration of human rights abuses, which the United States will continue to aggressively enforce.

In addition to leaving all current primary sanctions in place, according to Treasury Secretary Jacob J. Lew, the parties retain the ability to "snap back" both U.S. and international sanctions if Iran does not abide by its commitments under the JCPOA. The easing of sanctions pursuant to the JCPOA is conditioned on the IAEA certifying that Iran has met the IAEA's terms. Further, the JCPOA establishes an eight-member joint commission composed of members from the P5+1 countries, the European Union, and Iran to, among other things, address disputes that, if not resolved, could result in the implementation of a mechanism to "snap back" and reinstate current UN sanctions.

The JCPOA must now be submitted to Congress, which has 60 days to review the nearly 160-page document consisting of a principal document and five technical annexes. U.S. President Barack Obama has publicly stated that he will veto any legislation that prevents the successful implementation of the JCPOA.

EU Sanctions

Following announcement of the JCPOA, the Council of the European Union agreed to prolong the existing, limited suspension of certain EU restrictive sanctions measures until January 14, 2016, to "allow the EU to make the necessary arrangements and preparations for the implementation of the JCPOA," arrangements for which will be announced at a later date.

UN Sanctions

One of the key initial steps in the implementation of the JCPOA, after it is formally endorsed by the parties, is to prepare and file a proposed UN Security Council resolution to terminate the existing UN sanctions regime with respect to Iran (which is more limited than the current U.S. and EU sanctions regimes), subject to reimposition in the event of significant nonperformance by Iran of the JCPOA commitments. The JCPOA will not be formally adopted until 90 days after the UN resolution has been passed (although this 90-day period can be reduced by the mutual agreement of all parties).

Conclusion

We will continue to closely monitor developments associated with the JCPOA, including the timeline for implementation.

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.

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