On 16 January 2016, the EU and the US have lifted the nuclear-related sanctions against Iran. The sanctions lifting follows the verification by the International Atomic Energy Agency (“IAEA“), that Iran has implemented the agreed nuclear-related measures as set out in the Joint Comprehensive Plan of Action (“JCPOA“) nuclear deal and marking it as Implementation Day. A limited number of EU and US sanctions against Iran were already suspended after the Joint Plan of Action of 24 November 2013 was adopted, setting out the course for what led to the JCPOA nuclear deal of 14 July 2015.
With the comprehensive lifting of sanctions under the JCPOA the EU will now:
- Remove the prohibitions on transactions relating to Iranian oil and gas products and related services, provision of engineering and maintenance services to cargo aircraft (not carrying goods on the Common Military List), bunkering and supply services to Iranian vessels, and on certain software;
- Replace the prohibitions on dealing with Iran in dual-use equipment, precious and other listed metals, diamonds, and graphite with a prior authorisation requirement; and
- Lift several restrictions on financial services, including the prohibition on trading in bonds with the government of Iran, the prohibition on providing insurance or re-insurance in Iran or to Iranian persons, and the prohibitions on fund transfers to and from Iran.
EU sanctions imposed in view of the human rights situation in Iran, listings for support for terrorism and other grounds as well as an arms-embargo are not part of the JCPOA nuclear deal and will remain in place.
The US has only lifted its nuclear-related ‘secondary sanctions’ on Iran, which sanctions primarily target non US persons conducting business with Iran. Even now that the JCPOA nuclear deal is implemented, US persons and US-owned or -controlled foreign entities will continue to be prohibited from conducting transactions with Iran regardless of the JCPOA nuclear deal, unless authorised by the Office of Foreign Assets Control (“OFAC“). Annex II of the JCPOA nuclear deal requires the US to cease the application of or terminate nuclear-related sanctions applicable to non-US persons engaged in specified activities, including:
- Financial and banking transactions, including transactions in the Iranian Rial, with the Government of Iran, the Central Bank of Iran, Iranian financial institutions and other Iranian individuals or entities specified in Annex II;
- The provision of underwriting services, insurance, or re-insurance in connection with activities permitted under the JCPOA nuclear deal, including activities in the energy, shipping, and shipbuilding sectors of Iran;
- Engagement in the energy sector of Iran, including the purchase, acquisition, sale, transportation or marketing of petroleum products, petrochemical products, or natural gas to or from Iran; and the investment in or the development of Iran’s energy resources;
- Engagement in the shipping or shipbuilding sector of Iran, including the ownership, operation, control or insurance of a vessel used to transport crude oil, petroleum products, petrochemical products or natural gas from Iran; and the operation of, and the provision of goods and services to, ports in Iran;
- Transactions involving the sale, supply, export or transfer, directly or indirectly, to or from Iran, of gold or other precious metals;
- Transactions involving the sale, supply, export or transfer, directly or indirectly, to or from Iran, of graphite, raw or semi-finished metals, such as aluminium and steel, coal, and software for integrating industrial processes in connection with permissible JCPOA nuclear deal activities; and
- The conduct or facilitation of financial or other transactions for the sale, supply or transfer to Iran of goods and services for use in Iran’s automotive sector.
This US sanctions relief is limited and applies only for nuclear-related sanctions. The US will maintain sanctions (including secondary sanctions) on Iran related to terrorism and human rights violations. This could result in the continuation of significant US sanctions on Iran, at least as to US persons and perhaps more broadly.