On November 24, 2014, the United States, the United Kingdom, France, China, Russia and Germany (collectively, the “P5+1”) announced that they will continue current negotiations with Iran regarding its nuclear program and will extend the Joint Plan of Action (the “JPOA”) for an additional seven months – until June 30, 2015. As a result, certain sanctions against Iran which have been suspended since November 2013 will remain suspended until mid-2015.
As background, one year ago the P5+1 entered into the JPOA with Iran, pursuant to which the P5+1 agreed to temporarily suspend certain sanctions against Iran in exchange for commitments regarding Iran’s nuclear program. Six months later the parties agreed to extend the JPOA until November 24, 2014, to permit continued negotiations toward a long-term deal. While no agreement has yet been reached, the JPOA will be extended in order to permit continued negotiations.
This extension does not involve any changes to the scope of US or EU sanctions covered by the JPOA.
The United States will continue to temporarily suspend the application of certain extraterritorial sanctions that authorize imposition of penalties against non-US entities engaging in certain activities involving Iran’s automotive, petrochemical and crude oil industries. At the same time, the majority of US sanctions against Iran have been and remain in effect, and US persons remain broadly prohibited from engaging in most transactions involving Iran without prior authorization. It remains to be seen how the US Congress will react to today’s announcement of an extension of negotiations – or to any long-term agreement among the negotiating parties, should it ever occur – as many Members of Congress have expressed significant misgivings about entering into any long-term agreement with Iran and some have expressed an intention to increase sanctions against Iran even in the near term.
The EU will also continue to temporarily suspend certain oil and petrochemical related sanctions, as well as maintaining an increase in the notification/authorization thresholds for financial transfers to and from Iran. The suspension, as extended, continues to cover the provision of insurance and transport in relation to Iranian crude oil sales to current customers, the import, purchase or transport of Iranian petrochemical products and the trade in gold and precious metals with the Iranian government and its public bodies. For EU companies considering doing business with Iran, it is critical to note that all other EU restrictions in relation to Iran, including an extensive asset freeze, remain in full force and effect.