On July 14 2015 the Joint Comprehensive Plan of Action (JCPOA) was signed by the E3/EU+3 countries and Iran. The United Nations Security Council endorsed the JCPOA by enacting UN Resolution 2231 (2015). The JCPOA comprises a monitoring system, timetable and steps to be taken by Iran with regard to their Nuclear Program as well as the commitments of the United States (US) and European Union (EU) to provide relief of their current sanctions regimes against Iran.
The JCPOA provides for a phased implementation of the agreement as shown below. Taking into account that that the implementation process is prone to political sentiment, certain dates provided in the below matrix should be considered as estimates.
Click here to view table.
In addition, it is noted that EU sanctions lifted following Implementation Day of the JCPOA agreement can be reversed. UN Resolution 2231 (2015) and JCPOA provide for a so called "snap back" option which, when evoked, would reinstate the EU sanctions regime. If reinstated, the EU sanctions would not apply with retroactive effect to contracts signed between any party and Iran or Iranian individuals and entities prior to the date of its application, taking into account that these activities are consistent with the JCPOA and UN Resolution 2231 (2015) and previous UN resolutions. The "snap back" liability should be taken into account when doing business in Iran, e.g. by including anticipatory contractual provisions.
Can EU companies engage in the commercial aviation sector in Iran prior to the extensive relief of the sanctions under the JCPOA?
As illustrated above, the main EU commitments as set forth in the JCPOA have not been implemented by the EU yet. This means that, at this stage, Iran is still subject to an extensive EU sanction regime regime prohibiting a vast amount of activities, including those related to the aviation sector. Upon reaching agreement on the JCPOA, the EU did prolong the existing EU temporary sanction relief that will continue to be in force until 14 January 2016. In that regard, the EU temporary sanction relief (encompassing relief on certain provisions dealing with petrochemicals, shipping and insurance and funds transfer controls) remains the main playground drawing for doing business with Iran.
Following comments set forth in the above matrix, it can be derived that undertaking any (exploratory) activities in the aviation sector in Iran until the expected lifting of the EU sanction regime by Implementation Day in 2016 is to be handled cautiously. The foregoing means that any (exploratory) activities must be compliant with the (still) existing extensive EU sanction regime, including the earlier mentioned EU temporary sanction relief. Such compliance is to be fully substantiated by the underlying facts and circumstances of activity concerned or, in case of non-compliance, demonstrate that there was no knowledge or reasonable cause to suspect that such (exploratory) activity would infringe any of the provisions of the current EU sanction regime against Iran.
In short, exploring any activities in the aviation sector related to Iran must be weighed against the current EU Iran sanction regime (and possibly US Iran sanction regime) and undertaken in compliance therewith. For example:
Click here to view table.
Furthermore, bear in mind that the US sanction regime against Iran may also be applicable where among others your company is regarded as a US person or the underlying (exploratory) activity has content of US origin or involves an activity falling under the scope of the US Iran sanction regime. We do note that the US has set in place a favourable licensing policy regime through which specific authorization can be obtained in order to engage in transactions to ensure the safe operation of Iranian commercial passenger aircraft, including transactions involving Iran Air, but excluding all other sanctioned and listed Iranian airlines.
In conclusion, Iran remains a challenging place to do business as any preliminary (re-)engagement in the aviation sector in Iran is still subject to the current EU sanction regime against Iran until the expected relief in 2016. Notably, the EU sanction regime is and will be enforced by competent authorities in the EU. This means that compliance should remain on top of the agendas of businesses. In that regard manuals and screening procedures as currently in place within many EU companies must continue to be lived up to whilst contemplating and/or conducting any preliminary (exploratory) activities in the aviation sector in Iran.