On July 14, 2015, negotiators from Iran, the EU, and the P5+1 countries—China, France, Russia, the United Kingdom, the United States, and Germany—announced that they had reached a consensus on the final text of the Joint Comprehensive Plan of Action ("JCPOA"). But, initial sanctions relief will not apply equally. For example, while non-U.S. persons are expected to benefit from the sanctions relief upon the JCPOA's adoption by the EU and UN Security Council ("UNSC") set to commence in mid-October, the United States will continue to apply the current prohibitions of the Iran embargo to U.S. persons and foreign entities that are U.S. owned or controlled for at least another six months to a year. More on the applicability of the sanctions relief below.

Notwithstanding the State Department's diplomatic pact, this done deal is not done yet. Many members Congress have already voiced opposition to the JCPOA and may be able to scuttle the plan. Faced with the threat of a Presidential veto overriding legislative opposition, the looming question is whether Congress has the votes necessary to override the veto. 

A Four-Stage Lift-Off

Under the JCPOA, the EU and the P5+1 countries agreed to a gradual lifting of the UNSC sanctions, multilateral sanctions, and national sanctions related to Iran's nuclear program in exchange for Iran's commitment to scale back its existing nuclear operations and limit development of its commercial nuclear program for exclusively peaceful purposes. The JCPOA is slated to proceed in four distinct phases. 

Adoption Day

The first milestone, Adoption Day, is scheduled to take place 90 days after the endorsement of the JCPOA by the UNSC, which will be October 18, 2015, unless all JCPOA parties consent to moving it to an earlier date. After Adoption Day, all parties are required to begin making necessary legal and administrative preparations to implement their JCPOA commitments. As noted above, non-U.S. entities not owned or controlled by U.S. parents are expected to benefit from the sanctions relief as of Adoption Day, while non-U.S. entities with U.S. parents will be forced to stand by the sidelines until Implementation Day.

Implementation Day 

Implementation Day will commence upon the delivery of the United Nation's International Atomic Energy Agency ("IAEA") report verifying that Iran has implemented its nuclear-related commitments. There is no set date for Implementation Day; however, experts predict it will likely occur in the spring or summer of 2016, or perhaps even as late as fall of 2016. Although existing legislation and sanctions not directly related to Iran's nuclear program will remain in place, the United States and the European Union will cease applying certain nuclear-related sanctions on Implementation Day. At that time, the U.S. Government is expected to take certain actions, including the Treasury Department's Office of Foreign Assets Control ("OFAC") issuing one or more general licenses authorizing foreign entities owned or controlled by U.S. persons to engage in activities with Iran permitted under the JCPOA.

With respect to the energy and petrochemical sectors, at this stage the United States has committed to cease the application of sanctions on non-U.S. persons involving the following activities and associated services: (1) investment, including participation in joint ventures, goods, services, information, technology and technical expertise and support for Iran's oil, gas, and petrochemical sectors; (2) purchase, acquisition, sale, transportation, or marketing of petroleum, petrochemical products and natural gas from Iran; (3) export, sale or provision of refined petroleum products and petrochemical products to Iran; and (4) transactions with Iran's energy sector including with the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO) and the National Iranian Tanker Company (NITC). 

The United States is also committed to suspending its efforts to reduce Iran's crude oil sales, including by removing limitations on the quantities of Iranian crude oil sold and the nations that can purchase Iranian crude oil. 

Transition Day 

Transition Day is scheduled to take place eight years after Adoption Day (i.e., October 18, 2023), or the date on which the Director General of the IAEA submits a report stating that all nuclear material in Iran remains in peaceful activities (known as "the Broader Conclusion" in the JCPOA), whichever occurs earlier. After Transition Day, the United States is required to seek appropriate legislative action to terminate the sanctions against non-U.S. persons that it ceased to apply as of Implementation Day. 

Termination Day 

Termination Day is scheduled to take place ten years after Adoption Day (i.e., October 18, 2025), at which time the provisions of UNSC Resolution 2231 against Iran will terminate. This will take place provided that all obligations under the JCPOA have been met by all parties and that sanctions have not been reinstated. 

Verification and Snap Back Sanctions

The JCPOA establishes a Joint Commission to settle any disputes that may arise between the JCPOA parties. In the event that the parties consider the issue unresolved after the Joint Commission's review, the issue may be used as grounds to cease performance under the JCPOA or to notify the UNSC that the issue constitutes significant non-performance. In the event that the UNSC is notified of significant non-performance by Iran, it would have the ability to reinstate sanctions against Iran under the previous UNSC resolutions. That said, the reinstated "Snap Back" sanctions would not apply with retroactive effect to contracts signed prior to the date of reinstatement, and general licenses will be made available for the winding down of activities in Iran.

No Relief for U.S. Companies 

If the JCPOA moves forward in accordance with the stages described above, the anticipated sanctions relief will not have an immediate impact on U.S. companies. U.S. sanctions against Iran currently in effect will continue to apply, as the U.S. Government made no commitment under the JCPOA to lift primary sanctions applicable to U.S. persons up until Termination Day. Although it is not yet clear how OFAC and other relevant U.S. Government agencies will implement the relaxation of the sanctions under the JCPOA, it appears that U.S. companies will not be able to enter the Iranian energy market any time soon.