In our previous note “Export control and sanctions guidance” published in our e-briefing dated 18 January 2012 we provided information relating to the impact of EU sanctions on Iran, in particular, the extent of such sanctions, to whom they apply and the penalties for breach.
The EU has since, on 23 January 2012, published a new Council Decision (Council Decision 2012/35/CFSP) which makes numerous amendments to the previous EU sanctions regime against Iran. This note should therefore be read in conjunction with our previous one.
The amendments to the EU regime may have a direct impact on any companies who trade with Iran or Iranian individuals, particularly those in the oil, petroleum, petrochemical and related insurance industries.
The main changes are:
- A ban on the import, purchase or transport of Iranian crude oil, petroleum products and petrochemical products.
- A ban on the provision, directly or indirectly, of financing or financial assistance, as well as insurance and reinsurance related to the import, purchase or transport of Iranian crude oil, petroleum products and petrochemical products.
- A ban on the sale, supply or transfer of key equipment and technology to, and the provision, directly or indirectly, of technical and financial assistance for, the petrochemical industry in Iran (or Iranian-owned entities engaged in that industry outside Iran) for contracts executed from 23 January 2012 onwards.
- The addition of the Central Bank of Iran, Bank Tejerat and Tidewater Middle East Co. (which operates seven of Iran’s main ports) to the EU’s asset freezing list (although certain of Central Bank of Iran and Bank Tejerat’s transactions are carved out).
While the new additions to the EU asset freezing list are effective immediately, the aspects of the EU Decision regarding import, purchase and transport prohibitions (i.e. points 1 to 5 above) are currently only binding on the governments of the 27 Member States of the EU and an implementing Regulation will be required before the measures are directly binding on companies and individuals.
It is likely that the implementing Regulation will be published shortly, although it is unclear whether the effective date for individuals and companies (i.e. the date on which the prohibition will directly impact on individuals and companies) will be the date of the implementing Regulation or the date of the original EU Decision (i.e. 23 January 2012). For that reason, a number of insurance companies have already expressly stated that they will not cover any contracts or ancillary contracts in respect of trade with Iran of prohibited goods as from 23 January 2012. For many, there is simply too much uncertainty, particularly given the serious legal and reputational consequences of being found in breach of EU sanctions.
Syria sanctions update
Of equal importance is the amended Syrian sanctions regime. On 18 January 2012, the EU published Council Regulation (EU) No. 36/2012 which is now considered the main EU sanctions regime against Syria. This may have a real impact on business transactions of many individuals and companies owing to the sweeping prohibitions put in place.
The new Regulation prohibits, among other items:
- the sale, supply, transfer and export of specific goods and the provision of financial assistance and brokering services in relation to those goods;
- the purchase, import or transportation of crude oil and petroleum products from Syria;
- the participation and investment in specific infrastructure projects; and
- the sale, supply, transfer or export of any equipment or technology to the Syrian oil and gas industry, as well as related financial or technical assistance.
There are also new restrictions on the transfer of certain funds and the provision of certain financial services.
It is highly likely that, given the recent surge in violence in Syria, the EU will instigate further rounds of sanctions against the country in the hope of persuading the government to cease such hostilities, notwithstanding the recent veto of UN action by China and Russia. There have been reports that the new measures may include bans on the import of Syrian phosphates, on commercial flights between Syria and Europe, and on financial transactions with the country's central bank. It is therefore important for individuals and companies to keep abreast of any developments.