The EU introduced several new regulations1 on 18 October ('Adoption Day') to prepare to eventually terminate Iranian sanctions measures. Adoption Day marked 90 days after the endorsement of the Joint Comprehensive Plan of Action ('JCPOA') by the UN Security Council. Now the JCPOA has finally come into effect and participants are starting to make the necessary arrangements and preparations for implementation. Nevertheless, it should be emphasised that Adoption Day has not brought any immediate sanctions relief. The EU sanctions relief provided by these regulations will apply if and when the IAEA verifies that Iran has implemented the key nuclear-related measures described in the JCPOA ('Implementation Day')2. There is no precise date set for when Iran will feasibly be able to meet these obligations, but it is expected to happen in the first half of 2016.
The regulations do not include any clear 'snap-back provisions'. Nevertheless, the EU does retain the right to reintroduce EU restrictive measures if Iran does not fulfil its obligations. However, in these circumstances, the EU has given some assurances to businesses who engage in Iran. The regulation states that in the case of reintroduction of EU restrictive measures, adequate protection for the execution of contracts concluded in accordance with the JCPOA while sanctions relief was in force will be provided3.
Reduction in restrictions on goods, services and technology
Some restrictions will remain in place after Implementation Day. For instance, the supply of certain goods and technology contained in the Missile Technology Control Regime List (as included in the UK Military List and the EU Dual Use List) shall be prohibited4.
The following restrictions on goods and technology will be changed on Implementation Day:
- The prohibition on dealing with dual-use equipment in Iran will be removed and, instead, prior authorisation will be required to deal in such goods5. The decision whether to grant authorisation will be decided on a case by case basis and will focus on the item's end use6.
- The provision that prohibited any dealings with precious metals, diamonds, graphite and listed raw or semi-finished metals with Iranian counterparties will be removed and, therefore, if companies would like to do business in this area they will require prior authorisation7.
- The prohibition on the import, purchase and transport of Iranian petrochemical, crude oil and petroleum products and natural gas will be removed.
- The prohibition on dealing with certain software will be removed.
- The prohibitions on the provision of goods and services relating to key equipment used in the oil and gas industries and naval equipment will be removed.
- The existing restrictions on providing engineering and maintenance service to cargo aircraft and bunkering and ship supply services to Iranian vessels will be relaxed. However, these services will remain prohibited for ships and aircraft carrying goods listed on the Common Military List.
Removal of financial sanctions
A number of the financial restrictions will be removed on Implementation Day:
- The prohibitions on transferring funds between financial and credit institutions and institutions in Iran and for financial and credit institutions to operate in Iran will be removed. Therefore, credit and financial institutions will, for instance, be able to open new bank accounts, establish new correspondent banking relations and open a new representative office in Iran.
- The prohibition on selling or purchasing public or public guaranteed bonds to or from Iran or its government will be removed.
- The restrictions preventing institutions from granting financial loans to Iranian persons/entities who work with crude oil and natural gas will be removed.
- The prohibitions preventing the provision of insurance or re-insurance in Iran and to Iranian entities will be removed.
- A number of individuals and entities will be removed from the sanctions lists8. Nevertheless, there will be individuals and entities who are still subject to financial sanctions and their assets will remain frozen.