On November 24, Iran entered into a Joint Plan of Action with the United States, China, the Russian Federation, France, Germany, and the United Kingdom (the “E3/EU+3”), whereby in exchange halting to certain uranium enrichment activities and agreeing to be monitored by the International Atomic Energy Agency, the E3/EU+3 agreed to, among other things, suspend U.S. and E.U. sanctions on Iran’s petrochemical exports and associated services (“Joint Plan”).  The Joint Plan is subject to renewal in six months and calls for a “final step of comprehensive solution” to be agreed upon by the parties within one-year after the adoption of the Joint Plan.

Specifically, the Joint Plan of Action calls for a pause to the efforts to further reduce Iran’s crude oil sales, thus “enabling Iran’s current customers to purchase their current average amounts of crude oil,” and a “repatriation of an agreed amount of revenue held abroad.”  For such oil sales, the Joint Plan calls for the U.S. and E.U. to suspend sanctions on “associated insurance and transportation services.”  Elsewhere in the document, the Joint Plan requires a suspension of U.S. and E.U. sanctions on “Iran’s petrochemical exports, as well as sanctions on associated services.”  The Joint Plan defines “sanctions on associated services” in relevant part as “any service, such as insurance, transportation, or financial, subject to the underlying U.S. or EU sanctions applicable, insofar as each service is related to the underlying sanction and required to facilitate the desired transactions.”

The Office of Finance and Asset Control (“OFAC”) of the U.S. Department of the Treasury (“U.S. Treasury”), which is charged with enforcing U.S. sanctions, has not yet released any official guidance on how it will modify its enforcement mandate, if at all, in light of the Joint Plan.  Questions have arisen as to which specific sanctions have been suspended and what previously sanctionable activities are now permissible.

In an interview regarding the Joint Plan on December 11, 2013, David Cohen, U.S. Treasury Under Secretary for Terrorism and Financial Intelligence, said “the vast bulk of our sanctions - and really, the entire international sanctions framework - remains in place.  So, any oil company that thinks now is the time to get back into Iran will find out that they are on the wrong side of the sanctions.”  When asked whether the sanctions can be re-imposed should Iran not keep to its end of the Joint Plan, Mr. Cohen stated, “it’s reversible in that the sanctions that we have suspended on the petrochemical imports, for instance, can be reinstated with the stroke of a pen.”

On December 12, 2013, the U.S. Treasury and U.S. Department of State (the “State Department”) announced in a press release announcing the names of companies and individuals linked to Iranian weapons of mass destruction proliferation and sanctions evasion.  According to Mr. Cohen, the actions by the U.S. Treasury and State Department “should be a stark reminder to businesses, banks, and brokers everywhere that we will continue relentlessly to enforce our sanctions, even as we explore the possibility of a long-term, comprehensive resolution of our concerns with Iran’s nuclear program.”