The recent lifting of US and EU sanctions against Iran will give many companies the opportunity to do business with a market that has been closed for years.

Mattias Hedwall, Chair of Baker & McKenzie’s Global Trade & Commerce Group, shares insights on what to watch for in the coming weeks:

“The EU has already announced and published the relevant legislation about how the lifting of the sanctions will be materialized. … The impact on US companies, however, will be a bit more limited as many sanctions will remain for them due to human rights and terrorism aspects. In general, it is still a trade embargo for US persons, even if there will be license opportunities in some areas. What appears clear is that the US will not interfere with foreign companies’ business with Iran from now on.

One of the most interesting practical issues will be to see how the European banks will react. While it is clear that a huge amount of monetary funds will be released to Iran, it is not clear if the European banks will start to accept payments to and from Iran immediately, especially not payments in US dollars, where the connection to the US is still to close.

From a EU perspective, almost all persons on the sanctions lists will be taken off, including Iranian state-owned companies. Many but not all banks will be taken off.

Even if, especially from a EU perspective, the Iran market now is open, companies should continue to follow the development closely. It is still a country subject to sanctions even if they are relaxed to a great extent.

It is therefore important to have a plan and relevant knowledge when entering into this market. There is also a risk for sanctions to come back for various reasons, and it can be recommended to have a plan and contractual rights to pull out again if there is a ‘snap-back.'”