On April 2, 2015 representatives from the US, EU and Iran announced that, following extensive negotiations, the "P5+1" (China, France, Germany, Russia, the UK and the US) and Iran had agreed parameters (the "Parameters") for a joint comprehensive plan of action regarding Iran's nuclear program (the "JCPOA"). Whilst the final provisions of the JCPOA have yet to be agreed, the Parameters set out the framework around which the JCPOA will be drafted between now and June 30 and include the provision for significant relaxations of UN, US and EU sanctions currently in force against Iran.

This briefing summarizes the proposed JCPOA provisions regarding the suspension of existing sanctions against Iran. It is important to note that no steps have yet been taken by the US, EU or UN to alter the current sanctions framework and so all sanctions in force prior to publication of the Parameters remain in place.

Please see our previous briefing on the implementation of November 2013's Joint Plan of Action for further details of the current US and EU sanctions against Iran.

Proposed relaxation of sanctions – US

The Parameters state that US "nuclear-related" sanctions will be suspended after the IAEA has verified that Iran has taken all of its key nuclear related steps as specified in the JCPOA. It confirms that US sanctions against Iran regarding terrorism, human rights abuses and ballistic missiles will remain in place. President Obama has stated that these remaining sanctions will continue to be fully enforced Whilst some of the US's asset freeze targets are clearly designated in response to human rights concerns and/or their role in developing weapons of mass destruction (including those thought to be involved in ballistic missile proliferation), it is less easy to readily divide the other sanctions currently in place between nuclear- and terrorism/human rights/ballistic missile-related measures so as to predict which will be lifted. We expect that further information on this will become available as and when additional details of the JCPOA are agreed between all parties.

At a domestic level, it also remains to be seen whether Congress will support the JCPOA and associated sanctions relief. The House Speaker has been quoted as saying that Congress must be permitted to fully review the details of any agreement before sanctions are lifted. In this regard, a bipartisan bill (the Iran Nuclear Agreement Review Act of 2015) is scheduled to be reviewed by the Senate Foreign Relations Committee later in the month. If passed, this Act would provide for a 60-day period in which Congress can review any agreement reached with Iran. Congress would have the ability to block action involving relief from those aspects of the US sanctions regime which are mandated by statute if it adopts a joint resolution not in favor of the agreement during this review period.

On April 3, OFAC issued guidance relating to the announcement of the Parameters. This confirms that the Parameters do not immediately relieve, suspend or terminate any sanctions on Iran and that all US sanctions (other than the relief agreed to in November 2013) remain in place and will continue to be vigorously enforced.

Proposed relaxation of sanctions – EU and UN

The joint statement issued by the EU High Representative Federica Mogherini and the Iranian Foreign Minister Javad Zarif says that the EU "will terminate the implementation of all nuclear-related economic and financial sanctions". This may therefore involve the suspension of the majority of the restrictions set out in EU Regulation 267/2012 (as amended) (although this Regulation includes certain restrictions on military goods which may remain in force as they are human right/ballistic missile-related). EU Regulation 359/2011 (which relates to human rights) appears more likely to remain in place. As with the US measures, we expect further information on which EU restrictions are to be lifted to become available as and when the detailed provisions of the JCPOA are agreed.

As regards sanctions imposed by the UN, all nuclear-related UN Security Council Resolutions are to be lifted, simultaneously with Iran's completion of certain (non-specified) actions addressing the key concerns covered by the JCPOA. However, the Parameters provide for the adoption of a new Security Council Resolution endorsing the JCPOA, imposing restrictions on arms and ballistic missiles and introducing provisions allowing for an asset freeze.

"Snap-back" provisions

The Parameters confirm that sanctions will "snap back" into place if Iran fails to fulfill its commitments under the JCPOA at any time, stating that the architecture of US nuclear-related sanctions will be retained to allow this. Whilst it is not clear from the information released to date exactly how the mechanism will operate, it may be that the Executive Orders and Regulations imposing sanctions will remain in place but with the publication of some form of General License or guidance from OFAC to confirm that the measures will not be enforced unless and until sanctions are re-imposed. This would be similar to the material published in relation to the previous relaxation of sanctions against Iran following the Geneva Agreement of November 2013.

The Parameters are silent on the mechanism by which the relaxation and snap-back are to be executed in the EU.

Previous UN sanctions may also be re-imposed in the event of disagreements about the performance of JCPOA obligations, if such disagreements cannot be resolved through a specified dispute resolution process.

Timing

There is no clear indication in the Parameters of when sanctions relief is to be introduced; they simply state that relief will be introduced "after the IAEA has verified that Iran has taken all of its key nuclear-related steps". A statement by President Obama on the JCPOA referred to sanctions relief being "phased" as Iran takes steps to adhere to the deal, suggesting that all nuclear-related sanctions will not be removed in a single step.

The period during which the US sanctions "architecture" will remain in force is also unclear. Many of Iran's commitments under the JCPOA have a duration of 10-25 years. The Parameters state that the US sanctions architecture will remain in force for "much of the duration of the deal", suggesting that the relevant legislation may well remain in place for a number of years, allowing for re-imposition of sanctions if required.

Until a timeline for Iran's commitments is published, it will not be possible to confirm when sanctions are likely to be suspended. We expect that further information will be released when the detailed provisions of the JCPOA are agreed (by June 30).

In the meantime, companies that are subject to US and/or EU sanctions should ensure that they continue to comply with all restrictions currently in force in relation to Iran. World leaders commenting on the JCPOA have been at pains to emphasize that "nothing is agreed to until everything is agreed" and so there remain significant steps to be taken before the proposed relaxations will come into force.