Lengthy negotiations in Switzerland between the P5+1 and Iran finally concluded on 2 April 2015 with the announcement that the parties had agreed the key parameters of a Joint Comprehensive Plan of Action (JCPOA) regarding Iran's nuclear programme, which would eventually result in the suspension or lifting of UN, US and EU sanctions against Iran.

The parameters agreed in Lausanne will form the foundation upon which the final text of the JCPOA will be prepared on or before 30 June 2015. The precise implementation details are still the subject of negotiation and, just as with the JPOA deal concluded in Geneva in 2013, the US has stressed that "nothing is agreed until everything is agreed". However, the key parameters of the deal are as follows.

Iran has made various commitments in relation to its nuclear programme, including to a reduction in the number of its installed centrifuges, the conversion of the Fordow facility, restrictions on the enrichment of Uranium at the Natanz facility and to an International Atomic Energy Association (IAEA) inspections regime.

There will, however, be no immediate relief from any US, EU or UN sanctions.  Any relief from US and EU sanctions will take effect only after the IAEA has verified that Iran has complied with its commitments on its nuclear programme.  Further, the relief is likely to take the form of a suspension of the US and EU sanctions.  If Iran breaches its commitments at any point, there will be provisions for  US and EU sanctions to "snap back" into place.

The UN Security Council (UNSC) resolutions concerning Iran's nuclear programme will be removed upon the completion by Iran of its commitments on its nuclear programme. The resolutions will, however, immediately be replaced by a new resolution which will re-establish the key measures related to transfers of sensitive technologies and activities. The new UNSC resolution will endorse the JCPOA and will call for it to be fully implemented. In support of the transparency measures called for, the UNSC resolution will establish a dedicated procurement channel for Iran’s nuclear program. This will be used to monitor and approve, on a case by case basis, the supply, sale, or transfer to Iran of certain nuclear-related and dual use materials and technology. The measure will include restrictions on Iran's access to armaments, as well as related provisions for cargo inspections and asset freezes.

The US sanctions imposed against Iran in respect of issues other than Iran's nuclear programme (such as terrorism, human rights, and ballistic missiles) will remain in place.

What does this mean for businesses wishing to do business in Iran again?

The announcement of the key parameters of an eventual JCPOA deal will generate significant interest for businesses eager to take advantage of a relaxation in sanctions against Iran.  However, they should continue to exercise caution for the time being.

There has not yet been any change in the US or EU sanctions architecture in relation to Iran.  Activities that were prohibited by EU and US before the announcement on 2 April, including those prohibited by the sanctions targeting Iran's finance, energy and shipping sectors, are still prohibited and are likely to continue to be prohibited until the IAEA has verified that Iran has complied with the final agreed text of the JCPOA.  Realistically, it will be months before there is likely to be a suspension of EU and US sanctions.  Businesses should therefore continue to exercise caution in their dealings with Iran and be mindful that concluding deals that breach existing EU and US sanctions against Iran could still expose them to penalties.

If you have any questions or require further information in relation to the effects of the key parameters announced on 2 April, please do not hesitate to get in touch with the authors of this update, any of the key contacts listed on our sanctions microsite or your usual contact.