EU Sanctions on Iran: Technical Amendments

The European Council has adopted two technical amendments to the EU’s sanctions on Iran. While related to the implementation of the Joint Comprehensive Plan of Action (JCPOA) agreed with Iran on 14 July, their effect is strictly limited. All the main EU sanctions remain in force and will not be lifted unless and until it is confirmed that Iran has fulfilled its obligations under the JCPOA to scale back radically its nuclear programme. 

Assisting Iran in meeting its obligations 

Council Decision (CFSP) 2015/1336 and Council Regulation (EU) 2015/1327, adopted on 31 July, implement the limited, immediate exemptions to the UN’s sanctions introduced by United Nations Security Council Resolution 2231 of 20 July that endorsed the JCPOA. They are intended to enable 

Member States to assist Iran in taking the steps required to reform its nuclear programme. Member States may now authorize the supply, sale, or transfer of items, materials, equipment, goods and technology, and the provision of any related technical assistance, training, financial assistance, investment, brokering or other services to Iran if they are directly related to: 

• the modification of two cascades at the Fordow facility (Iran’s formerly-secret underground nuclear site; under the JCPOA, no uranium enrichment, enrichment research and development or nuclear material will be permitted there); 
• the export of Iran's enriched uranium in excess of 300 kilograms in return for natural uranium (Iran currently holds some 7 tonnes of enriched uranium; most of this will be exported to Russia); or 
• the modernization of the Arak reactor (which will prevent its use to produce weapons-grade plutonium). 

Member States must be satisfied that all such activities are undertaken strictly in accordance with the JCPOA and that they are able to verify the end-use of any supplied item. 

Subject to the approval of the UN Sanctions Committee, Member States may also authorise other activities directly related to the implementation of the nuclear-related actions by Iran specified in the JCPOA or for the preparation of the implementation of the JCPOA. 

Extending the exemption for pre-January 2012 contracts 

Also adopted on 31 July, Council Decision (CFSP) 2015/1337 and Council Regulation (EU) 2015/1328 extend until 14 January 2016 the existing scope for Member States to authorise acts by EU persons or entities carried out with regard to listed Iranian entities to enable the execution of contracts concluded before 23 January 2012. 

What does this mean for you and how can Dechert help? 

The application of these measures is relatively narrow, in practice restricted to EU specialist nuclear energy and engineering companies, their insurers and financiers, and to any EU person holding a pre-23 January 2012 contract with a listed Iranian entity. If you fall into either category, Dechert can advise on how you can take best advantage of these measures in the interests of your business. 

For others, there is no change to the EU sanctions in force. These will not be lifted until ‘Implementation Day’, as defined in the JCPOA, when the International Atomic Energy Agency confirms that Iran has implemented the first set of agreed actions to reduce and to limit its nuclear programme. If the US endorses the agreement and if Iran implements it in good faith, this may be achieved around the end of the first quarter of 2016.