Newsflash: Relaxation of sanctions against Iran - what needs to be done?
- The JCPOA offers a great opportunity both for the European and the
- It will, however, take at least several months before the relaxation of
the imposed sanctions is implemented; until then, the current sanctions regime
will continue to exist unchanged.
- With view to the period after the relaxation of sanctions, it is nonetheless
sensible and also permissible to already begin establishing contacts.
- Since at present the current sanctions regime is still fully in force,
one has to bear in mind that all activities must be conducted in compliance
with such regime.
With great interest the public has acknowledged the adoption on 14 July 2015 of the Joint Comprehensive Plan of Action (“JCPOA”) between Iran and the “P5+1” Group (with China, France, Russia, the United Kingdom, the US and Germany as members) as well as “Senior EU Representatives for Foreign and Security Affairs”. Please click here for the wording of the JCPOA.
Aim of the JCPOA is a relaxation of the sanctions on Iran in the foreseeable future – only, however, if a number of conditions precedent (and in some cases also conditions subsequent) contained in the JCPOA are fulfilled.
In view of the complex implementation prerequisites of the JCPOA, which, among others, include approval of the respective agreements by the UN Security Council and the adoption of respective council resolutions, approval by Iran, approval by the EU, and approval by the US Congress, a speedy relaxation of the sanctions is not to be expected.
This is all the more true in light of the fact that the JCPOA provides that Iran has to implement a considerable number of nuclear-related measures beforehand. The implementation of such measures will probably require several months. Of key importance will be the so-called Implementation Day on which the IAEA will confirm that Iran has implemented such “nuclear-related measures”.
Against this background, it cannot be expected that the relaxation of sanctions will be realised prior to the end of 2015 or the beginning of 2016.
Such appraisal is backed by the fact that the EU has prolonged the limited suspension of certain sanctions adopted a couple of weeks ago until 14 January 2016.
Nonetheless, we would like to already present an outlook on the expected relaxation of sanctions.
The JCPOA provides for a repeal of EU Directive EU/267/2012 with respect to the nuclear-related, economic and financial sanctions contained therein. Since EU Directive EU/267/2012 covers the key sanctions against Iran, the expected relaxations will encompass the majority of all sanctions and restrictive
measures currently in place. In particular, these are the following:
- Capital transactions with Iran without prior approval or notification;
- other banking transactions, in particular the re-establishment of relations to correspondent banks and the establishment by Iranian banks of branch offices or subsidiaries in the economic area of the EU;
- the possibility to take out insurances and reinsurances
- export of key equipment or key technology (partly contained in Annex II) to oil-, natural gas-, and petrochemical industries located in Iran;
- investments in these industrial sectors;
to name only the most important ones.
Moreover, the envisaged relaxation of sanctions will include the removal of numerous persons from the sanctions list.
Finally, we would like to point out one obvious, but still often overlooked aspect: Within the scope of the relaxation of sanctions, the current ban on the export of dual-use goods will not be lifted, but only be transformed from a prohibition to a permission requirement. As experience regarding permission practice in the Mid and Near East has shown, the export of dual-use goods to Iran will, also subsequent to the relaxation of sanctions, certainly not become a “matter of course”. This should be taken into account when envisaging future business relations with Iran.
What needs to be done?
With view to the expected relaxation of sanctions, it is certainly sensible and also legally permissible to start establishing contacts with potential business partners in Iran right away. However, it should be kept in mind that the still validly existing sanctions must strictly be adhered to.
In our view, a particular risk lies in an – inadvertent – transfer of technology, which can e.g. occur if in the framework of conferences or meetings in preparation of future transactions technical documentation – in whichever form – is transmitted.
Furthermore, it should be considered that any contact to persons, organisations or other institutions indicated on the current sanctions list is at present still subject to the sanctions regime.
In this context we would like to point out that a violation of sanctions may also occur out of negligence (i.e. “inadvertently”). Moreover, it should be kept in mind that also the attempted violation of valid sanctions is liable to prosecution. Therefore, the nature of all activities undertaken with view to the time after the relaxation of sanctions should be such as not to give rise to suspicions regarding a violation of currently existing sanctions.
For this purpose, it will certainly be helpful to clearly define and set out in writing any proposed contents and respective timeframes when initiating business contacts with Iran.