Almost six months following the signature of the Joint Comprehensive Plan of Action (JCPOA) by the P5+1 and Iran, coordinated by the European Union, it appears that Implementation Day, i.e. the day that sanctions will be lifted, amended or suspended in accordance with the JCPOA, is imminent.

On 15 December 2015, the “Final Assessment on Past and Present Outstanding Issues regarding Iran’s Nuclear Programme” of the International Atomic Energy Agency (IAEA) was presented to the IAEA Board of Directors. A consensus was reached in adopting the resolution to close the IAEA’s 12-year-long investigation into the possible military dimensions (PMD) of Iran’s nuclear programme, effectively closing the PMD case and ending the IAEA investigation. Whilst the PMD issue is not directly linked to the JCPOA, the JCPOA was only able to move forward once the IAEA’s PMD case was closed.

With regard to the remaining steps leading to Implementation Day, U.S. Secretary of State John Kerry released a statement on 28 December 2015 according to which there had been “important indications of significant progress towards Iran completing its key nuclear commitments under the deal”. Other U.S. public officials have made more specific statements. Earlier in December 2015, Senator Ben Cardin said at a hearing of the Senate Foreign Relations Committee that it appeared that sanctions relief could start as early as January 2016, and not in the spring or early summer of 2016, as originally anticipated. Similarly, on 2 January 2016, U.S. Deputy National Security Adviser Ben Rhodes said that he “would expect the Iranians to complete the work necessary to move forward with implementation in the coming weeks”.

Iranian public officials have echoed the view that Implementation Day is expected to occur imminently. Iran’s Deputy Foreign Minister for Euro-American Affairs Majid Takht-Ravanchi said in late December 2015 that implementation is set for January 2016; a similar statement was made in early January 2016 by Iran’s Deputy Foreign Minister for Legal and International Affairs Abbas Araqchi.

What will happen on Implementation Day: Current Guidelines

Hence, businesses will have less time than perhaps initially thought in order to prepare themselves to take advantage of the opportunities that will arise.

As to what will happen on Implementation Day, this is of course set out in general terms in the JCPOA and its annexes. However, certain legal instruments and/or related guidelines which provide orientation to persons seeking to do business in or with Iran have already been published.

On 18 October 2015, the date on which the JCPOA entered into force, the EU published two EU Council Regulations (2015/1861 and 2015/1862) and an EU Council Decision (2015/1863) providing for the lifting of most EU sanctions and the delisting of most listed persons. These instruments entered into force on the date of their publication, but will only become applicable as from Implementation Day.

On the same day, the U.S. Secretary of State issued contingent waivers of certain statutory sanctions provisions, relating principally to the secondary sanctions in place, i.e. those that are directed against non-U.S. persons. Like the EU instruments, the waivers will only take effect on Implementation Day.

However,  a general licence, expected to exempt non-U.S. subsidiaries owned or controlled by U.S. persons from U.S. primary sanctions, has not yet been published and the scope of any such relief therefore remains uncertain at present.

More recently, on 30 December 2015, the UK Government issued updated sanctions guidance in the form of “Frequently asked questions on doing business with Iran”. This guidance had a distinctly supportive tone with respect to trade with Iran, and provided, inter alia, with regard to the possibility of entering into conditional contracts prior to Implementation Day, that “HMG [Her Majesty’s Government] is of the view […] that it may not necessarily be prohibited for UK economic operators to enter into contracts covering currently prohibited activity where no obligation under the contracts arises until after Implementation Day.”

Expected Further Actions on or before Implementation Day

It is expected that detailed guidelines on sanctions relief will be issued by both the U.S. and the EU simultaneously on or just before Implementation Day. These guidelines are expected to provide significant further clarification as to what can and cannot be done, both by EU and U.S. businesses.

These guidelines are also expected to go some way towards clarifying important issues such as whether, in the event of a re-imposition of sanctions as a result of “significant non-performance” by Iran of its commitments (the so-called “snap back”), contracts entered into during the period of non-imposition will remain valid and be allowed to run their normal term, or whether such agreements will have to be wound down within a reasonable time, but not be penalised by retroactive application of re-imposed sanctions.

Unlike with regard to the PMD issue, Eversheds understands that there will be no need for an IAEA vote in order for Implementation Day to occur, and the announcement of Implementation Day may therefore occur very suddenly. Hence, with sanctions relief seemingly approaching sooner than expected, the need for businesses to prepare themselves for entry or re-entry into Iran has become pressing.