The lifting of sanctions in Iran under the JCPOA and effects on your business
Tuesday’s historic nuclear agreement between Iran and the E3+3 countries (USA, UK, France, Russia, China and Germany) marks a seismic shift in international relations, which, if successful, will enable Iran to open its doors to foreign businesses. The Joint Comprehensive Plan of Action (JCPOA) will produce the comprehensive lifting of all UN Security Council sanctions as well as multilateral and national sanctions relating to Iran’s nuclear programme, including steps on access in areas of trade, technology, finance and energy. Key opportunities Anyone doing business in Iran or who has been impacted by Iranian sanctions is advised to monitor the progress of the JCPOA and consider the impacts on business in the post-sanctions era.If all goes well, the implementation of the JCPOA will enable foreign investment in a market which, in addition to the country’s oil fields, is ripe for development in areas such as financial services, aviation, and infrastructure development, to name but a few.
Some of the world’s biggest companies are already analysing the JCPOA agreement to see how it will affect their ability to do business in Iran.It should be noted that the provisions lifting sanctions do not have immediate effect – Iran must first take a number of steps in respect of its nuclear program which must be verified by the International Atomic Energy Agency. The agreement also calls for a snap back of sanctions if Iran doesn’t live up to its side of the bargain. The UK Government has already announced that they will continue to robustly enforce all sanctions that currently remain in place.
The current estimate is that the first termination of sanctions will not take effect for at least 6 to 9 months, but in the meantime those impacted by Iranian sanctions are advised to plan ahead.Which sanctions are due to be lifted?The full list, relating to EU and US sanctions, is contained at Annex 2 of the JCPOA. European Union Member States have committed to terminate all provisions of Council Regulation (EU) No 267/2012 (as subsequently amended). By no means exhaustive, the following activities illustrate the breadth of the sanctions which are due to be lifted: ¢ Financial sanctions against designation of persons, entities and bodies (asset freeze and visa ban); ¢ Transfers of funds between EU persons and entities, including financial institutions, and Iranian persons and entities, including financial institutions; ¢ Banking activities, including the establishment of new correspondent banking relationships and the opening of new branches and subsidiaries of Iranian banks in the territories of EU Member States; ¢ Financial support for trade with Iran (export credit, guarantees or insurance); ¢ Import and transport of Iranian oil, petroleum products, gas and petrochemical products; ¢ Export of key equipment or technology for the oil, gas and petrochemical sectors. Note however that not all EU sanctions will be lifted; for instance, sanctions concerning human rights violations shall remain in place.
The US has also agreed to lift sanctions in corresponding areas. What next?Iran has a reputation of being a challenging place to do business. It ranks 136th on the Transparency International’s corruption scale. Those already operating in Iran will be familiar with the cultural and legal barriers in place. That being said, Tuesday’s landmark agreement marks a new chapter in Iran’s history, as can be seen in the celebrations of its citizens across the country. The eventual lifting of economic sanctions will enable Iranian businesses and consumers to engage more effectively with the West. The UK Government has stated that it will help businesses and the financial sector take advantage of the opportunities and will promote trade and investment between the UK and Iran.
If you have been affected by Iranian sanctions, if you currently do business in Iran, or are planning to do so, Peters & Peters can keep you up-to-date with the latest developments. Please contact Head of the Business Crime Department and Partner Michael O’Kane email: firstname.lastname@example.org or +44 (0)207 822 7777. Michael also writes a Blog on Sanctions at www.europeansanctions.com or Miranda Ching, Associate, Business Crime Department email: email@example.com or +44 (0)207 822 7728.