It is now a month since sanction relief measures were introduced against Iran, after the International Atomic Energy Agency certified in January that Iran had fulfilled its obligations under the Joint Comprehensive Plan of Action (“JCPOA”), resulting in the arrival of Implementation Day, being the first step for business to resume with Iranian companies; particularly relevant for the shipping, international trade and energy sectors.
Sanctions against Iran have not been lifted entirely. The US has only lifted ‘secondary sanctions’ thereby enabling non-US entities to resume business activities with Iranian companies and other entities. ‘Primary sanctions’, which relate to US individuals, most US companies and US controlled foreign entities remain in place, preventing US individuals and companies from doing business with Iranian entities and/or in Iran.
Non-US entities are now able to resume business with Iran, including EU businesses. We are already seeing opportunities for meaningful EU/Iranian co-operation in the insurance markets, with oil and petrochemical transportation and within Iran’s massive energy industry. As well-known Iranian shipping companies are able to re-enter the world shipping markets, we are also expecting knock-on benefits for shipyards.
The JCPOA is a detailed, comprehensive regulation and anyone considering doing business with Iran in this new environment should become familiar with OFAC’s guidelines, as certain types of commercial activity, and certain Iranian entities, remain outlawed even for non-US individuals/companies.
There are also so called ‘snap-back’ provisions which enable the sanctions to be re-imposed at short notice if Iran fails to comply with the JCPOA. In the event of a snap-back new contracts concluded since the sanction relief will be allowed to continue, but would have to be wound down over time. However, exactly how this would work in practice is uncertain as there is little published guidance currently and snap-back is, as yet, untested. Despite this, the lifting of sanctions against Iran has been widely welcomed in many areas of commerce and international trade.
IY LEGAL has been advising marine insurance brokers on the reaction of leading P&I Clubs to the lifting of sanctions, resulting coverage issues, and on the legal and practical implications for ship owners whose vessels are now ordered to Iranian ports, or who wish to do business with Iranian entities. We have also been assisting energy companies keen to undertake production activities in Iran. Please do contact us if you would like to discuss the scope and application of the Iranian sanction relief.
For more information about IY LEGAL and the legal services we can provide, please visit www.iylegal.com or call us on +44 (0)207 1007714.