On 15 October 2012, the EU Council adopted additional restrictive measures against Iran, “in view of Iran’s failure to engage seriously in negotiations in order to address international concerns about its nuclear programme.1” The new provisions are set out in Council Decision 2012/635/C FSP (the “Decision”) and Council Implementing Regulation (EU) 945/2012 (the “Regulation”).
The Decision strengthens the current EU sanctions against Iran in several key ways, including:
- An asset freeze of 35 individual and entities, including Iranian entities engaged in the oil and gas sector. The entities affected include the National Iranian Oil Company (“NIOC”) and its subsidiaries, and the National Iranian Tanker Company (“NITC”);
- A ban on financial transactions between the EU financial sector and Iranian banks, including their branches and subsidiaries outside Iran (similar to the measures already in place in the UK2), unless such transactions are authorised in advance by the relevant Member State or fall under certain exemptions;
- A ban on the import, purchase or transport of Iranian natural gas (similar to the past prohibitions in relation to crude oil and petroleum products);
- A ban on the direct and indirect financing; insurance and reinsurance; brokering services relating to insurance and reinsurance, related to the import, purchase or transport of Iranian natural gas;
- A ban on the sale, supply or transfer to Iran of graphite, and raw or semi-finished metals such as aluminium and steel, which are relevant to industries controlled directly or indirectly by the Iranian Revolutionary Guard Corps or which are relevant to Iran’s nuclear, military and ballistic missile programme3;
- A ban on the sale, supply or transfer to Iran of key naval equipment and technology for shipbuilding, maintenance or refit;
- A ban on the entering of new commitments by EU member states for financial support for trade with Iran, be they short-, medium- or long-term;
- A ban on the construction or participation in the construction of new oil tankers for Iran, or Iranian persons or entities, as well as the provision of technical assistance or financing or financial assistance to the construction of new oil tankers;
- A ban on the provision of flagging and classification services to Iranian oil tankers and cargo vessels from 15 January 2013;
- A ban on the supply of vessels designed for the transport or storage of oil and petrochemical products to Iranian persons and entities or to other persons and entities for the purpose of transporting or storing Iranian oil and petrochemical products.
Of these restrictive measures, only the asset freeze measures against the 35 additional Iranian entities and individual (and some deletions to the list of designated entities) came into direct effect on 16 October 2012 throughout all Member States (that is, without a need for further implementing measures) by virtue of the Regulation. The Decision states that ‘’further action by the Union is needed in order to implement certain measures provided for in this Decision”.
It is likely that an implementing Regulation which brings into direct effect the remaining measures of the Decision will be adopted soon, although at present it is unclear when.
Effect on the shipping, insurance and oil and gas industries
The latest measures will clearly have both direct and indirect effects on the shipping, insurance and oil and gas industries within the EU – direct in terms of what is actually permitted and indirect in terms of how payments to or from Iran could be processed even if the activity in question is permitted.
Moreover these sanctions target quite specifically Iran’s oil and gas industry. The sanctioning of NITC and NIOC will severely restrict an EU national’s ability to trade in Iranian oil and gas.
Whilst the regime of EU sanctions prior to these latest measures significantly restricted the ability of EU companies and EU nationals to engage in transactions involving Iran, the Council’s latest measures are likely to limit the EU shipping industry’s dealings with Iran even more. It is clear that the EU Council continues to align itself with the US in adopting increasingly restrictive measures to squeeze Iran’s economy as much as possible, making it very difficult, if not impossible, for an EU national to do business involving Iran/an Iranian, and potentially dangerous in terms of possible penalties if in breach. We recommend always seeking legal advice before entering into transactions with an Iranian element, and maintaining thorough diligence and internal checks as to any Iranian links in a transaction.