From 7 August 2018, certain US sanctions directed at the Iranian government sector that were lifted under the JCPOA “snapped back” into place.
Of more concern to New Zealand businesses is the re-imposition of sanctions restricting the provision of finance, transportation and the insurance of goods traded to Iran. These sanctions apply to non-US persons including New Zealanders and will be effective from 5 November 2018.
By comparison New Zealand sanctions in relation to trade with Iran are relatively limited. New Zealand imposes sanctions that are mandated by the United Nations. Essentially these sanctions relate to the prevention of nuclear proliferation.
It is important to remember that New Zealand and US sanctions do not prevent legitimate trade with Iranian individuals and businesses. New Zealand companies can continue to trade with Iranian entities, so long as neither the goods nor the Iranian counterparties are subject to sanctions.
The re-imposition of US sanctions does mean that doing business with Iran will become more difficult: this is the intention of the sanctions. President Trump has threatened “severe consequences” for those who trade to Iran.
In particular, New Zealand and international banks and insurers will be even less enthusiastic to support this trade. It is already challenging to find banks in New Zealand who will accept payments from or make payments to Iranian entities.
This might also impact on your ability to fulfil existing and future contractual obligations.
In short, legitimate trade with Iran is not prohibited by sanctions applying to New Zealanders and New Zealand businesses. The re-imposition of US sanctions will, however, make this trade even more challenging and has practical and legal implications.
New Zealanders / New Zealand companies doing business directly or indirectly with Iranian entities should:
- Check whether any sanctions (NZ or US) apply to the entities / persons, goods or services you are dealing in.
- Ensure that you have carried out the necessary due diligence on any Iranian or Iran related persons or entities you deal with. Keep records of this due diligence.
- Identify whether any existing contracts will be performed / outstanding payments will be received, before 5 November 2018.
- Consider the performance of contractual obligations from 5 November 2018. Is it possible to perform the contract(s) using existing service providers (transportation, banking and insurance)? If not, what is your contingency?
- If future performance of contracts is problematic due to sanctions, do your contractual terms excuse performance e.g. do you have sanctions and / or force majeure clauses in your contracts?
- Consider alternative trading structures and payment terms Avoid US dollar transactions.