On 14 July 2015, Iran, the EU and the P5+1 (the United States, United Kingdom, France, China, Russia and Germany) reached a historic deal for Iran to wind down its nuclear programme in exchange for sanctions relief. This agreement has been memorialised in the Joint Comprehensive Plan of Action (JCPOA).

On 20 July 2015, the United Nations Security Council took the first step contemplated by the JCPOA by unanimously adopting Resolution 2231 (2015), which endorsed the JCPOA and urged its full implementation. The UN Security Council’s adoption of Resolution 2231 marks the beginning of the 90 days until “Adoption Day” under the JCPOA. On the Adoption Day, Iran will be required to start certain decommissioning steps relating to its nuclear weapons programme. In a press release, the Security Council characterised its resolution as setting out a “rigorous monitoring mechanism and timetable for implementation, while paving the way for the lifting of United Nations sanctions” against Iran.

That same day, the EU Council published a statement announcing its full support of the JCPOA and the Security Council resolution. The US has begun the legislative review process required to approve the JCPOA under its own law (see “US Congress Begins Review of Iran Agreement”, below).

The JCPOA does not provide any immediate sanctions relief to Iran. Instead, US and EU sanctions will be withdrawn in a phased manner, based on Iran’s achievement of certain milestones. The first phase of sanctions relief will take place on the “Implementation Day”, after the International Atomic Energy Agency (IAEA) verifies that Iran has completed certain decommissioning steps relating to its nuclear weapon programme. This is expected to take six to nine months. Further sanctions relief will follow based on the passage of time or further confirmation from the IAEA of Iran’s compliance with restrictions on its nuclear programme. If Iran materially fails to comply, the suspended sanctions will “snap back.” For more information on the sanctions relief to be provided under the JCPOA, please see the Debevoise Client Update of 17 July 2015.

To cover the period of time before the Implementation Day, the limited relief already provided to Iran under the Joint Plan of Action of November 2013, which includes the temporary suspension of certain EU and US sanctions, has been extended. The EU, through Council Decision (CFSP) 2015/1148, has extended the EU temporary sanctions relief for six months to 14 January 2016. The US, through a statement issued by the Treasury Department’s Office of Foreign Assets Control (OFAC) on 14 July 2015, has confirmed that the US temporary sanctions relief remains in effect through the Implementation Day.

The JCPOA marks a landmark step towards reopening the Iranian market for Western businesses, though within limits. The existing US embargo affecting Americans’ trade with Iran is not expected to be fully lifted, as that embargo is based in large part on concerns about terrorism and regional destabilisation rather than nuclear proliferation.