The 'joint comprehensive plan of action' (JCPOA) was designed to ensure that Iran's nuclear programme will be exclusively peaceful in return for the comprehensive lifting of all UN Security Council sanctions as well as multilateral and national sanctions related to Iran's nuclear programme.
Sanctions will remain in place until at least December 2015, and possibly longer. They will not be removed until the International Atomic Energy Agency verifies that Iran has implemented measures to reduce its nuclear related activities. An assessment of the steps taken by Iran is due to be produced by 15 December 2015.
If Iran is found to have implemented its past of the deal, the following sanctions will be removed:
- UN sanctions, and;
- the EU sanctions - this includes regulations which designate people and entities in relation to Iran's nuclear activities (for example, the National Iranian Oil Company) and trade restrictions relating to oil, gas, petroleum, petrochemical, shipping, ship building, metals, banking activities, insurance, specialised financial messaging services, financial support for trade with Iran, imports, investments, and transfer of funds to or from an Iranian person.
The US position is less certain. The US has committed to take "legislative action" to terminate its nuclear related sanctions. The US Congress has two months to scrutinise the deal.
If the legislative action is approved a number of people and entities will be removed from the Specially Designated Nationals list that is maintained by the Office of Foreign Funds Control, and most of the recent trade restrictions, particularly those applying to non-US persons and entities, will also be removed or subject to presidential waivers.
However, two Executive Orders that impose general US export and import bans on Iran are not covered by the agreement and therefore much trade by US persons or involving US-origin technology or equipment will still require a licence.
Potential reintroduction of sanctions
There are 'snap back provisions to the agreement that enable the sanctions to be reintroduced within 65 days of any violation of the agreement by Iran. The reintroduction would only follow the exhaustion of a dispute resolution procedure and a decision of the UN Security Council.
Any reintroduction of sanctions would not have a retroactive effect on contracts signed between any party and Iran or an Iranian entity or individual prior to the date of the reintroduction of the sanctions.
Business opportunities and risks
Businesses are starting to explore opportunities to enter the Iranian market. Travelling to Iran and having meetings is lawful. However, paying money to or for the benefit of a person on a sanctions list, supplying technical data or entering into contracts could still be subject to sanctions and restrictions agreed with lenders.
We have seen that companies are seeking to appoint local agents or consultants to help arrange meetings and to facility discussions. Companies should check that those agents or consultants are not sanctions targets or a front for a person who is currently the subject of sanctions.
Companies should be aware that the Financial Action Task Force considers Iran to be a high risk country for money laundering and terrorist financing. Also, Transparency International's country perceptions index assesses Iran as having a high risk of corruption. High value contracts from government bodies or which require a licence to operate, and agency appointments are particular areas of risk from a bribery perspective.
Pre-transaction due diligence and taking legal advice prior to market entry remains essential.
George Booth and Tom Stocker are regulatory experts at Pinsent Masons, the law firm behind Out-Law.com