On Saturday 16 January 2016, the International Atomic Energy Agency (IAEA) reported to representatives from the US, UK, France, China, Russia and Germany (the P5+1) and the High Representative for the EU for Foreign Affairs and Security Policy that Iran had performed its obligations under the Joint Comprehensive Plan of Action (JCPOA) with respect to its nuclear programme. As a result of this announcement, made on what is known as ‘Implementation Day’, the US and EU lifted many of the economic and financial sanctions which have closed international markets to Iranian business and trade. However, it is important to note that US sanction relief is not as generous as the EU and that dealing with certain Iranian individuals and corporate entities remains prohibited.

Council Decision 2015/1863 and Council Regulation 2015/1861, which the EU adopted on 18 October 2015 but delayed applying until Implementation Day, have lifted many of the sanctions imposed by the EU. Certain transport sector activities are allowed from Implementation Day onwards and include the sale, supply, transfer or export of commercial aircraft. State airline, Iran Air, had already announced that it had agreed to purchase up to 114 Airbus A320 and A340 family aircraft, as well as exploring options with Boeing, with a view to making further narrow and wide-body orders over the next decade. Elsewhere, cargo flights being operated either by Iranian carriers or originating from Iran will now also have access to Member State airports.

However, EU sanctions relating to arms, missile technology and certain nuclear-proliferation transfers currently remain in place as do dealings with any Iranian individuals or corporate entities on EU banned lists. Relief from EU sanctions may also be reversed if Iran fails to adhere to the JCPOA. Known as the ‘snapback’, it will not have retroactive effect. For example therefore, contracts concluded when sanctions had been lifted would not automatically be unenforceable.

The US approach is more complex. US nationals and US companies, especially banks and financial institutions, largely remain subject to restrictions in doing business with Iran. This is the case even if certain restrictions on non-US subsidiaries of US companies have now been relaxed. However the Office of Foreign Asset Control (OFAC) has established a favourable licensing regime for US companies to sell, supply, transfer or export commercial aircraft to Iran, provided recipients are not those individuals or corporate entities on the Specially Designated Nationals (SDN) list. This will no doubt be welcome news to Boeing.

As Implementation Day passes and the parties all hope that the next stages of the JCPOA stay on course, please do not hesitate to contact us if you require assistance in navigating through the changing regulatory landscape or in reviewing contractual provisions to address different scenarios resulting from the historic agreement.