In the early hours of 24 November, the P5+1 (the UK, US, Germany, France, Russia and China, facilitated by the EU) announced that they had reached a set of initial understandings with Iran. In exchange for limits on Iran's nuclear programme, the P5+1 have given undertakings to relax sanctions, including agreeing that no new nuclear-related sanctions will be imposed for six months and that certain existing sanctions (including the restrictions on the Iranian automotive sector and petrochemical exports from Iran) will be suspended, provided Iran abides by its commitments under the deal. Details of how and when the understandings will be implemented have not yet been made public. We summarise below the planned relaxations and the sanctions that will remain in place, based on current information.

This briefing also analyses a number of recent developments to the EU sanctions against Iran, Belarus and Somalia. In summary:

  • Seven companies have been relisted under the EU's Iranian asset freeze. These companies had obtained judgments from the EU General Court that their listings should be annulled but have been relisted with new reasons being given to support their listing.
  • Three individuals have been added to the Belarus asset freeze list, whilst a number of individuals and entities have been delisted.
  • The EU has relaxed the general ban on the provision of technical advice, assistance, training, financing and financial assistance related to military activities in Somalia by creating new derogations in relation to assistance with weapons and military equipment intended for the support of the United Nations Assistance Mission in Somalia, and the European Union Training Mission in Somalia.
  1. Iran – Geneva negotiations

Following negotiations between the P5+1 and Iran in Geneva on 23 and 24 November, an initial understanding has been reached with respect to Iran's nuclear programme. The White House has released a summary of the agreement.

As a first step, lasting for six months, Iran has agreed to limits on its nuclear programme to address key concerns. In return, the P5+1 will provide limited sanctions relief. However the majority of the sanctions, including key oil, banking and financial sanctions, are to remain in place and will continue to be enforced by the relevant authorities.

Specifically, the P5+1 have committed to:

  • not impose new nuclear-related sanctions for six months, if Iran abides by its commitments under the deal;
  • pause efforts to further reduce Iran's crude oil sales, enabling Iran's current customers to purchase their current average amounts of crude oil, enable the repatriation of an agreed amount of revenue held abroad and, for such oil sales, suspend the EU and US sanctions on associated insurance and transportation services;
  • suspend US and EU sanctions on:
    • Iran's petrochemical exports, as well as sanctions on associated services; and
    • gold and precious metals, as well as sanctions on associated services;
  • suspend US sanctions on Iran's auto industry, as well as sanctions on associated services;
  • license safety-related repairs and inspections inside Iran for certain Iranian airlines (which could include any non-designated Iranian airline and Iran Air); and
  • establish a financial channel for humanitarian aid. This could also enable governmental tuition assistance to be transferred from restricted Iranian funds directly to recognised educational institutions in third countries to defray the tuition costs of Iranian students.

The US authorities have made it clear that the above relaxations are limited, temporary, targeted and reversible and that a number of key sanctions will remain in force, including (among others):

  • restrictions on the export of petroleum products to Iran;
  • sanctions against major Iranian banks;
  • secondary sanctions imposed on banks doing business with designated persons;
  • restrictions on access to the US financial system; and
  • sanctions on long-term investment in and provision of technical sevices to Iran's energy sector.

There is no indication that there will be any delistings from the US SDN or EU designated persons lists.

There has not yet been any further detail released to indicate when and how these relaxations are to be effected, however, from a US perspective, we would expect the provisions of the Geneva agreement to be implemented principally through Executive Orders. We note that some press reports have indicated that some members of Congress are opposed to this deal and so there is likely to be a certain amount of political controversy in the coming weeks which may shape the way in which the relaxations are effected. Whilst there is, in theory, a risk that Congress could pass additional sanctions legislation derailing the Geneva agreement, preliminary indications are that any renewed US sanctions legislation is likely to include some combination of delayed implementation and Presidential waiver authority, such that the temporary provisions of the Geneva agreement would be unaffected.

As regards implementation of this agreement by the EU, press reports indicate that the sanctions are to be relaxed in December on a similar temporary basis but no further details on the specifics have yet been announced. As well as the proposed relaxations to the restrictions on the insurance and transportation of oil, and the suspension of the petrochemicals embargo (see above), there is an EU-specific relaxation in that the interim agreement states that the P5+1 have agreed to increase the EU authorisation thresholds for non-sanctioned trade (i.e. the financial transfer restrictions discussed in our previous briefing) to an (as yet unspecified) agreed amount. Given that the difficulties in making payments to and from Iran tend to be more influenced by the US secondary sanctions than the EU authorisation limits, it is unclear whether this will make much practical difference in any event.

Any amendments to the current EU sanctions regime would require a decision of the EU Council.

David Cameron publicly stated today that the remaining measures against Iran will continue to be "robustly" enforced.

We will issue a further update once announcements have been made as to how these changes are to be implemented.

  1. Iran – recent sanctions developments

Separately, the EU has recently amended the Iran asset freeze list. In a Decision on 15 November (implemented on the same day by Regulation 1154/2013), eight companies and one individual were relisted under the asset freeze list imposed by Council Regulation (EU) No 267/2012. The companies and individual were previously removed from the list following decisions by the EU General Court in September, principally in light of defects in the reasoning given by the EU Council when they were originally listed. The companies and individual have been relisted with new reasons. HMT has issued a notice in respect of this development.

The companies concerned (a mix of banks, shipping companies and an energy company) are:

  • Persia International Bank plc;
  • Export Development Bank of Iran (including all its branches and subsidiaries);
  • Post Bank Iran;
  • Bank Refah Kargaran;
  • Good Luck Shipping LLC;
  • Hanseatic Trade Trust & Shipping (HTTS) GmbH;
  • Iranian Offshore Engineering & Construction Co; and
  • Iran Insurance Company (Bimeh Iran).

The companies identified have been re-added to the list and are now subject to the provisions of the EU asset freeze due to their provision of financial and logistical support to the Iranian Government. Good Luck Shipping and Hanseatic Trade Trust & Shipping (HTTS) GmbH are both listed as agents for entities designated as acting on behalf of the Islamic Republic of Iran Shipping Lines ("IRISL").

The above measures also amended the identifying information for one entity (Onerbank ZAO), amending details of its ownership (and therefore the reason for its listing) and also confirmed that Qualitest FZE (which was delisted following an appeal against its listing in December 2012) will not be relisted.

The relisting of the above entities may go some way to countering reported international concerns about the robustness of the EU sanctions regime, as mentioned in our previous sanctions update.

  1. Belarus

The EU has published Council Implementing Regulation (EU) 1054/2013, which has made a number of changes to the sanctions against Belarus imposed by Regulation 765/2006. The EU Council has determined that the Belarus sanctions should remain in force until 31 October 2014.

Regulation 1054/2013 also brought into effect the addition of three individuals to the asset freeze list. The individuals in question are all said to be responsible for the torture of political prisoners, upon whom pressure was put to sign appeals for pardon.

In addition, various individuals and entities are to be removed from the asset freeze list on the basis that the EU Council no longer considers there to be grounds for their listing. The identifying information for a number of designated persons has also been updated.

The EU issued a press release confirming that potential EU candidate countries Montenegro, Serbia, Iceland, Albania and the Former Yugoslav Republic of Macedonia, plus Liechtenstein and Norway, have agreed that their national policies will conform to the underlying Council Decision (2013/534).

4. Somalia

With the publication of Council Decision 2013/659 and Regulation 1153/2013 the EU has relaxed the general ban on the provision of technical advice, assistance, training, financing and financial assistance related to military activities in Somalia.

The relaxation takes the form of the introduction of new licensing grounds in relation to the supply of such advice and assistance. The above regulation introduces a new Article 2a to EU Regulation 147/2003 (the "2003 Regulation") providing that the competent authority of each Member State may authorise:

  • the provision of financing financial assistance, technical advice, assistance or training relating to military activities if it has determined that such financing, advice, assistance or training is intended solely for the support of, or use by, the African Union Mission in Somalia ("AMISOM") or for the sole use of states or other organisations undertaking measures in accordance with paragraph 10(e) of UNSCR 2111 (2013);
  • the provision of financing financial assistance, technical advice, assistance or training relating to military activities if it has determined that such financing, advice, assistance or training is intended solely for the support of, or use by, AMISOM's strategic partners;
  • the provision of financing financial assistance, technical advice, assistance or training relating to military activities if it has determined that such financing, advice, assistance or training is intended solely for the support of, or use by, UN personnel;
  • the provision of technical advice, assistance or training if (a) the competent authority determines that such advice assistance or training is intended solely for the purpose of helping to develop security sector institutions; and (b) the Member State notifies the UN Sanctions Committee of its intention to grant an authorisation and the Committee does not object;
  • the provision of financing, financial assistance, technical advice, assistance or training relating to military items other than those in Annex III of the 2003 Regulation if (a) the competent authority determines that such advice, assistance or training is intended solely for the development of the Security Forces of the Federal Government of Somalia to provide security for the Somali people and (b) advance notification is made to the UN Sanctions Committee; and
  • the provision of financing, financial assistance, technical advice, assistance or training relating to military activities if it has determined that such financing, advice, assistance or training is intended solely for the support of, or use by, the European Union Trading Mission in Somalia.

The EU's relaxation follows a similar amendment to the United Nations Security Council's Resolution 733 (1992) (as subsequently expanded and modified) in July of this year which permitted the provision of assistance related to weapons and military equipment intended for the support of or use by the United Nations Assistance Mission in Somalia and the European Union Training Mission in Somalia.

The EU asset freeze against certain Somali individuals and entities remains in force.