On 23 November 2013 the United States, United Kingdom, Germany, France, Russia, and China facilitated by the European Union (the P5+1), reached an interim agreement with Iran (Iran Agreement or Agreement). While this agreement may ease sanctions in certain limited areas in the future, the provisions of the Agreement must be implemented by the United States, EU, and other countries. In addition, the opportunities for U.S. companies (and their operations outside the United States) generally will not be materially changed as a result of this Agreement.

Key points of interest:

  • U.S. and EU sanctions remain fully in force, as of today — no suspension of sanctions is yet in effect, either on the EU or U.S. side
  • The EU expects the limited suspension to be implemented in January 2014; the U.S. informally has indicated that it would take anywhere from a few weeks to several weeks for negotiations and verifications to be completed (confirming that Iran has taken the required steps) before the U.S. government will implement a temporary suspension of certain sanctions
  • The suspension, once implemented, likely will not result in a significant impact on the operations of a broad range of companies. Certain exceptions include:
    • Non-U.S. companies providing non-U.S. origin goods or services to Iran’s auto industry
    • Non-U.S. companies purchasing certain Iranian petrochemical products
    • U.S. or non-U.S. companies providing, subject to U.S. government’s authorization, safety-related repairs for certain Iranian airlines, including spare parts
  • On the U.S. side, the temporary suspension will primarily relate to certain “secondary” U.S. sanctions that target the activities of foreign persons with no U.S. nexus, but the majority of those extra-territorial sanctions will remain in place and will continue to restrict the activities of foreign persons with Iran, even if the activity has no U.S. nexus
  • The broad U.S. sanctions that apply to U.S. persons (including non-U.S. entities owned or controlled by U.S. persons) as well as activities by any persons involving U.S.-origin goods/software/technology and/or U.S. currency transfers will continue to be fully in effect
  • The suspension could be reversed after a six-month period and the same or even more stringent sanctions could be imposed at that time (there is no guarantee that the suspension will be renewed)
  • There should be no expectation that the U.S. government will tolerate a “wind down” period after the suspension expires if there is no renewal of the suspension and yet the limited transactions that were permitted during the suspension period have not been completed in their entirety (e.g., it is not likely that there would be “grandfathering” of contracts entered into during the suspension period if the suspension is not renewed)
  • The U.S. and EU have agreed to refrain from imposing new nuclear-related sanctions during the six-month period (sanctions related to human rights abuses or terrorism activities are not necessarily covered by the Agreement and it is possible that such measures could be imposed in the interim)
  1. U.S. sanctions

The U.S. is currently considering methods of implementing the plan of action for the Iran Agreement. In addition to the Joint Plan of Action that was published, the White House has issued a Fact Sheet providing a general description of the measures that would provide “limited, temporary, targeted and reversible relief” to Iran.

The suspension of sanctions primarily relates to certain “secondary” (or extra-territorial) U.S. sanctions that target the activities of foreign persons with no U.S. nexus. Not all of the secondary sanctions would be suspended. In fact, the majority of those sanctions targeting the activities of foreign persons will remain in place, including the restrictions on dealings with Iranian persons designated on the list of Specially Designated Nationals. Moreover, most of the transactions involving U.S. persons, foreign-incorporated subsidiaries of U.S. companies, U.S. goods, software, and technology, and U.S. currency transfers will remain prohibited. The U.S. government has indicated that all the sanctions that remain in place will be vigorously enforced.

The most significant suspension, in terms of monetary value, would relate to Iran’s ability to gain access to funds from oil sales that are currently held in restricted accounts within countries that have been purchasing Iranian oil pursuant to country-based exemptions granted by the U.S. State Department. Once implemented, Iran will be able to access approximately US$4.2 billion of its oil revenues, which are held in accounts in third party countries pursuant to the restrictions implemented by section 504 of the Iran Threat Reduction and Syria Human Rights Act (ITRA). As previously reported in our Iran-related alerts, section 504 became effective on 6 February 2013, amending section 1245(d)(4)(D) of the National Defense Authorization Act for Fiscal Year 2012 (NDAA), enacted on 31 December 2011, that targets foreign financial institutions who process transactions involving purchases or sale of Iranian crude oil (or other petroleum products). Although certain countries have received a temporary exemption under the NDAA for significant reduction of their purchases of Iranian oil, section 504 effectively narrowed the exemption only to transactions (1) that involve bilateral trade in goods or services between Iran and the country granted the exemption, and (2) where the funds owed to Iran as a result of such trade are credited to an account located in the country granted the exemption. The temporary suspension would effectively allow Iran to access some of those oil-related proceeds held in third countries without having to use those funds to buy goods and/or services from those countries. The deal would not allow for an increase in Iran’s oil sales in the next six months and the majority of proceeds from such sales will continue to be placed in restricted accounts in third countries. The countries that have obtained an exemption could continue to purchase Iran’s oil at the same level and U.S. secondary sanctions will not target the provision of (re)insurance or transportation services associated with such crude oil sales.

In addition, the temporary U.S. measures would include the following:

  • Gold and precious metals: Suspending certain secondary sanctions on Iran’s purchases and sales of gold and precious metals;
  • Automotive sector: Suspending certain secondary sanctions imposed under Executive Order 13645 on foreign persons who provide goods and services to Iran’s auto sector;
  • Petrochemicals: Suspending certain secondary sanctions on foreign persons who purchase Iran’s petrochemical products (including the associated provision of (re)insurance and transportation services);
  • Airlines: Licensing safety-related repairs, including spare parts, and inspections inside Iran for certain Iranian airlines;
  • Tuition assistance: Allowing US$400 million in governmental tuition assistance to be transferred from restricted Iranian funds directly to recognized educational institutions in third party countries to cover the tuition costs of Iranian students; and
  • Food, agricultural commodities, medicine, medical devices: Facilitating humanitarian transactions that are already allowed by U.S. law, including those related to Iran’s purchase of food, agricultural commodities, medicine, and medical devices, and facilitating transactions for payments by the Iranian government of medical expenses incurred by Iranians abroad. The goal is to establish a financial channel whereby Iran’s oil revenues held in third party countries could be used to pay for these humanitarian transactions (and tuition assistance noted above), with no involvement of designated Iranian banks.
  1. EU sanctions

The EU has agreed to a number of commitments including the suspension of the restrictions on Iran's export of petrochemical products, gold and precious metals, and associated services; and the restrictions on insurance and transportation services associated with Iran's crude oil sales. These commitments include the following actions:

  • To suspend the sanctions on petrochemical products, gold and precious metals (and associated services, which could involve any non-designated Iranian entity);
  • To suspend the sanctions on insurance and transportation services relating to Iran's crude oil sales;
  • To increase the authorization thresholds for transactions regarding non-sanctioned trade; and
  • To refrain from adopting new EU nuclear-related sanctions against Iran.

The EU has not made yet any official detailed statement on the impact and the timing of the Iran Agreement on the EU sanctions regime. According to certain sources, the actual date for the beginning of the six-month period established in the Joint Action Plan, including the suspension of sanctions, has yet to be decided. The starting date will depend on the outcome of the forthcoming technical discussions with Iran about the implementation of the Iran Agreement.

The French Minister for Foreign Affairs, Laurent Fabius, told a French radio station that the lifting of EU sanctions will be limited, targeted, and reversible.

The UK Foreign Secretary William Hague was quoted in a press release stating that the main part of the EU sanctions regime will remain in place "until there is a comprehensive and final agreement". Secretary Hague also alluded to the fact that the EU and U.S. sanctions relief will amount to around US$7 billion, part of which involves unfreezing of assets on a one-off basis over a six-month period. He also commented that the sanctions relief offered to Iran can easily be reversed if it does not abide by the commitments of the Iran Agreement.

Under EU law, the suspension of certain Iran sanctions would require the adoption of a decision by the European Council (which may take place in one of the Foreign Affairs Council scheduled in December) to be followed by an implementing Council Regulation, which would be fully applicable in all 28 EU Member States. The adoption of a Council Regulation may take few weeks from the date of adoption of the Council Decision.

Additionally, the EU has recently re-listed more than 20 Iranian companies and one individual that had their initial listings under the Iran sanctions overturned by the General Court (full list below). The re-listed entities are mainly shipping lines and financial institutions related to the government of Iran.


  • Islamic Republic of Iran Shipping Lines
  • Bushehr Shipping Company Limited
  • Hafiz Darya Shipping Lines (HDSL)
  • Irano Misr Shipping Company
  • Irinvestship Ltd
  • IRISL (Malta) Ltd
  • IRISL Europe GmbH
  • IRISL Marine Services and Engineering Company
  • ISI Maritime Limited
  • Khazar Shipping Lines
  • Marble Shipping Limited
  • Safiran Payam Darya Shipping Company
  • Shipping Computer Services Company
  • Soroush Saramin Asatir
  • South Way Shipping Agency Co. Ltd
  • Valfajr 8th Shipping Line
  • Post Bank of Iran
  • Iran Insurance Company
  • Export Development Bank of Iran
  • Persia International Bank Plc
  • Iranian Offshore Engineering & Construction Co.
  • Bank Refah Kargaran
  • Good Luck Shipping Company LLC
  • Hanseatic Trade Trust & Shipping


  • Naser Bateni

Furthermore, the following companies have been deleted from the list

  • Qualitest FZE
  • Iran Transfo
  • Oil Turbo Compressor Company (OTC)
  • Sakhte Turbopomp va Kompressor