• Home
  • Latest
  • News
  • Iranian Sanctions – The Fate of the JCPOA (continued)

Iranian Sanctions – The Fate of the JCPOA (continued)

Posted on 09 August 2018 by James Watson and Kate Newson

Iranian Sanctions – The Fate of the JCPOA (continued)

On 7 August 2018, following months of escalating tensions between the US and Iran over the future of the Joint Comprehensive Plan of Action (JCPOA), the Trump administration re-imposed sanctions against Iran. Much of the international community remains committed to the JCPOA and in response the EU has updated the "blocking statute" to counteract the impact of these sanctions on entities to who the regulation applies.

Background

On 14 July 2015 the JCPOA was agreed, under which international restrictions and sanctions against Iran were gradually rolled back, including US secondary sanctions which had previously prohibited non-US entities from engaging with Iran. This was an exciting prospect for those looking to do business in Iran. Further details on the JCPOA can be found in our earlier article here.

On 8 May, President Trump announced that the US would withdraw from the JCPOA and reinstate all previous sanctions as expeditiously as possible.

The US allowed a grace period and is implementing its decision in two stages, the first after a wind down period of 90 days and the second stage after a period of 180 days.

The First Stage of Iran Sanctions

The 90 day wind down period ended on midnight 6 August 2018 (PST) from which time the following sanctions were re-imposed:

  1. sanctions against the purchase or acquisition of US dollar-denominated banknotes by the Iranian government,
  2. sanctions against trade in gold and other precious metals,
  3. sanctions against the direct or indirect sale, supply, or transfer to or from Iran of graphite, raw or semi-finished metals such as aluminium and steel, coal, and software for integrating industrial processes,
  4. sanctions against significant transactions related to the purchase or sale of Iranian rials, or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial,
  5. sanctions against the purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt, and
  6. sanctions against the automobile industry.

Commenting on this first stage of sanctions President Trump tweeted "[t]he Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States…"

The Second Stage of Iran Sanctions

The 180 day wind down period will end at midnight on 4 November 2018. After this date an additional set of sanctions will snap back, including a significant number of secondary sanctions. These focus on Iran's oil industry and banking sector. These sanctions will prohibit, for example,

  1. foreign financial institutions facilitating the purchase of petroleum from Iran, and
  2. significant transactions by foreign financial institutions with the Central Bank of Iran.

A foreign financial institution which breaches these US sanctions runs the risk of having its correspondent or payable-through banking facilities withdrawn. In effect it would be shut out of the US.

EU Blocking Statute

In response the EU has added the US Iranian sanctions to those covered by the "Blocking Statute". This council regulation seeks to protect EU interests by neutralising the effects of unlawful foreign legislation.

Under the Blocking Statute those operating in the EU can recover damages arising from the extraterritoriality of the US sanctions from the person causing them and any foreign court rulings based on the sanction will be nullified in the EU. Furthermore, EU persons are prohibited from complying with the US sanctions unless they have been authorised by the Commission to do so.

Advice should be sought before conducting business in Iran, or from withdrawing from Iran, in order to avoid falling foul of the contradiction created by the US and EU responses to Iran.

An
How can we help you?

How can we help you?

Subscribe: I'd like to keep in touch

If your enquiry is urgent please call +44 20 3321 7000

Crisis Hotline

Emergency number:

I'm a client

Please enter your first name
Please enter your last name
Please enter your enquiry
Please enter a value

I'm looking for advice

Please enter your first name
Please enter your last name
Please enter your enquiry
Please select a department
Please select a contact method

Something else

Please enter your first name
Please enter your last name
Please enter your enquiry
Please select your contact method of choice