On 16 January 2016, the European Union and the US formally implemented the Joint Comprehensive Plan of Action (JCPOA) nuclear agreement with Iran, lifting a broad range of economic sanctions and clearing a path for Iran to reintegrate itself into the global economy. Most of the sanctions relief is directed at non-US companies and individuals, including non-US subsidiaries of US companies, which are authorised to engage in trade with Iran (subject to certain limitations) for the first time since 2012. Overall, the JCPOA sanctions relief should spur significant economic activity with Iran, although risks remain, including for US dollar payments related to Iran.

EU changes – substantial elimination of sanctions

Until 16 January, the European Union and its member states imposed targeted sanctions on various sectors of the Iranian economy, including nuclear, oil and gas, shipping and financial services. The sanctions also froze the ‘economic resources’ (i.e., assets and other transactional opportunities) of a significant number of listed entities and individuals, and required notification to EU member state authorities of payments to or from Iran of €10,000 or more (even for otherwise permitted transactions).

These sanctions have now been substantially eliminated. The EU does retain an arms embargo on Iran and certain sanctions related to nuclear proliferation, and a smaller number of entities and individual remain subject to a freeze of economic resources. As a result, most commercial trade by EU entities with Iran is now permitted. That is, unless it still falls foul of US sanctions.

Apr-Jun 2016 Issue

Steptoe & Johnson LLP