As previously advised, on January 20, 2014, Iran and the group of nations known as the P5+1 (United States, U.K., France, Russia, China and Germany) implemented a Joint Plan of Action (JPOA) whereby Iran agreed to accept limits on its nuclear program in exchange for limited, temporary relief from economic sanctions. The JPOA implementation was to last six months, during which time the parties would seek to negotiate a comprehensive agreement regarding Iran’s nuclear program. On November 24, 2014, Iran and the P5+1 countries extended the JPOA for a second time, thus leaving in place through June 30, 2015 the limited sanctions relief provided under the original JPOA while the parties continue negotiations. As a result of this extension, the U.S. State Department and the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) have again published guidance reiterating the limited relief from certain U.S. economic sanctions against Iran as provided for under the JPOA.
More specifically, the latest guidance reiterates that the United States will continue to refrain from imposing sanctions on non-U.S. persons with regard to their participation in Iranian petrochemical exports, Iran’s purchase or sale of precious metals, and the provision of goods or services to Iran’s automotive industry. As with the original implementation guidance, sanctions relief does not extend to persons identified on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN list), unless otherwise noted in the JPOA. The United States will also continue to refrain from seeking further reductions of Iranian crude oil exports to China, India, Japan, the Republic of Korea, Taiwan and Turkey. Non-U.S. entities that facilitate existing exports to the listed countries, including through transactions involving the National Iranian Oil Company (NIOC) and the National Iranian Tanker Company (NITC), will not be subject to sanctions, provided the transactions do not involve persons on the SDN list other than NIOC, NITC or Iranian depository institutions listed solely pursuant to Executive Order 13599.
With regard to Iran’s aviation sector, extension of the JPOA also extends the P5+1 commitment to license the supply and installation of spare parts for safety of flight for Iranian civil aviation and the provision of associated services. From a U.S. perspective, this includes OFAC’s favorable licensing policy under which U.S. persons, U.S.-owned or -controlled foreign entities, and non-U.S. persons involved in the export of US-origin goods can apply to OFAC for a license to engage in transactions “to ensure the safe operation of Iranian commercial passenger aircraft, including transactions involving Iran Air.” Such transactions must be initiated and completed entirely within the JPOA Relief Period (January 20, 2014 through June 30, 2015). In general, sanctions relief for aviation-related activities includes the following:
- Allows the supply and installation in Iran or a third country of spare parts for safety of flight for Iranian commercial aircraft;
- Allows the provision of associated services such as safety of flight inspections, repairs, and the provision of aircraft servicing in Iran or a third country;
- Suspends the imposition of correspondent or payable through account sanctions on foreign financial institutions that conduct or facilitate financial transactions relating to the type of activities covered under OFAC licensing that are conducted on behalf of non-U.S. persons not otherwise subject to the Iranian Transactions and Sanctions Regulations, provided that the transactions do not involve persons on the SDN list other than Iran Air or any Iranian depository institutions listed solely pursuant to Executive Order 13599; and
- Suspends the imposition of blocking sanctions with respect to persons that provide goods, services or support to Iran Air in connection with activities intended to ensure the safe operation of Iranian commercial passenger aircraft, as long as such activities are outlined in the JPOA and do not involve persons on the SDN list other than Iran Air or any Iranian depository institutions listed solely pursuant to Executive Order 13599.
It is important to note that, with the limited exceptions relating to Iran’s civil aviation sector, none of the relief from sanctions applies to U.S. persons or entities, or foreign entities owned or controlled by U.S. persons or entities. U.S. persons and U.S.-owned or -controlled foreign entities continue to be prohibited from conducting transactions with Iran, including any transactions of the types permitted pursuant to the JPOA, unless licensed to do so by OFAC. Moreover, but for the limited relief from sanctions provided in the JPOA, the full range of U.S. sanctions remains in effect and is being implemented.
Those wishing to take advantage of the sanctions relief in order to transact business with Iran must continue to exercise considerable caution. The complexities of the various JPOA provisions suggest that each anticipated transaction should be scrutinized on a case-by-case basis to ensure that it involves only authorized activities and entities. You should also be aware that the relief specified in the JPOA can be immediately revoked should the United States decide that Iran has reneged on its obligations under the agreement.