On July 14, 2015, the E3/EU+3 (United States, United Kingdom, Germany, France, Russia and China) and Iran reached agreement on the final text of a Joint Comprehensive Plan of Action (JCPOA), which will ensure that Iran’s nuclear program will be exclusively peaceful. The JCPOA will produce the comprehensive lifting of all worldwide sanctions related to Iran’s nuclear program including steps on access in areas of trade, technology, finance and energy.
Under the JCPOA, the sanctions against Iran will be lifted in a phased approach. The milestones in this regard are as follows:
- Adoption day: is set for 90 days after the endorsement of the JCPOA by the UN Security Council. Beginning on that date, JCPOA participants will make arrangements and preparations for the implementation of their JCPOA commitments.
- Implementation day: is set for the day that the International Atomic Energy Agency (IAEA) has verified that Iran has taken all of the key nuclear-related steps stipulated in the JCPOA. This will result in the following:
a. The EU will adopt a Regulation lifting most of its Iranian nuclear sanctions (e.g. assets freezes, restrictions on banking, restrictions in trade in oil etc.)
b. The US will cease the application of (most) of their nuclear-related sanctions.
c. The UN Security Council will pass a resolution that will nullify previous resolutions imposing sanctions on Iran.
- Transition day: is set for eight years from Adoption day (or earlier if the IAEA reaches the broader conclusion that all nuclear material in Iran remains in peaceful activities).
a. EU: will lift any remaining sanctions
b. US: will lift or modify their remaining sanctions.
- Termination day: is set for 10 years from Adoption day (provided that no UN sanctions have been reinstated). The UN will no longer be seized of the Iran nuclear issue.
With regard to the above, it is important to note that if at any time Iran fails to fulfill its obligations under the JCPOA, the sanctions will ‘snap’ back into place.
At this stage, it is unclear when ‘Implementation day’ will be. There are many factors that can influence this, such as the time needed by the IAEA to verify whether Iran has taken all of the key nuclear-related steps stipulated in the JCPOA, and the time needed to overcome any legislative hurdles (i.e. the US Congress). For this reason, it is unclear when the lifting of the sanctions will take effect. According to unconfirmed statements by EU officials, this will be in five to 10 months.
Until that time, the EU and US sanctions will remain in place, with the exception of the limited sanction relief agreed by the E3/EU+3 and Iran in the Joint Plan of Action (JPA). One of the more interesting examples of relief included in the JPA is the suspension of the prohibition on the import, purchase or transport of Iranian petrochemical products including related services (e.g. financing and insurance).
What does this mean for your company?
Companies can, in the meantime, consider what future opportunities may open up on the Iranian market. It is important to note that even once sanctions have been lifted, certain goods will remain subject to EU and/or US export control regulations and therefore will still require prior export authorization from the relevant authorities (Military and Dual-Use items). Companies should bear this is mind and take the necessary export control compliance measures.
How can Meijburg & Co help you?
We have advisors specialized in sanctions and export controls, and therefore we are well placed to advise on national and international operating commitments and requirements.
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