CICG Ordre des Avocats de Genve 17 March 2016 Sanctions regime - - PowerPoint PPT Presentation

CICG Ordre des Avocats de Genève

17 March 2016

Sanctions regime prior to Implementation Day

Various International, multilateral, regional and national nuclear sanction regimes were imposed on Iran:

• UN : Security Council resolutions 1696 (2006), 1737 (2006), 1747 (2007), 1803 (2008), 1835 (2008), and 1929 (2010)
• EU: Council Decision 2010/413 and Council Regulation 2012/267
• U.S.:
• IranThreat Reduction and Syria Human Rights Act of 2012 (TRA),
• Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2013,
• National Defense Authorisation act for FiscalYear 2012,
• Iran Freedom and Counter-proliferation Act of 2012 (IFCA) and
• Iran Sanctions Act 1996 (ISA)
• Executive Orders 13574, 13590, 13622, and 13645, and sections 5-7 and 15 of Executive Order 13628
• Other Countries : Norway, Japan, Switzerland, Canada, Australia, South Korea etc.

Target of the Sanctions

• Activities

Example: Import of crude oil into Europe, import and export of oil products to and from Iran, banking transactions, insurance, transport of oil and petrochemical products etc

• Individuals and entities

Background: JPOA and JCPOA

In 2013, Iran and the P5+1 countries (China, France, Russia, the United Kingdom, the United States and Germany) agreed on the JPOA that was implemented in 2014 and which gave rise to limited sanctions relief under EU sanctions (Regulation 42/2014) and a similar suspension

• f

US secondary sanctions. On 14 July 2015, Iran and the P5+1 agreed on the JCPOA that provided for a comprehensive sanction relief upon verification by the IAEA that Iran has complied with the nuclear-related commitments it had undertaken in the

• JCPOA. This was achieved on 16 January 2016 (”Implementation Day”).

Joint Comprehensive Plan of Action

Vienna, 14 July 2015

JCPOA, Main text, Para. 19 The EU will terminate all provisions of the EU Regulation, as subsequently amended, implementing all nuclear-related economic and financial sanctions, including related designations, simultaneously with the IAEA- verified implementation of agreed nuclear- related measures by Iran as specified in Annex V, which cover all sanctions and restrictive measures in the following areas, as described in Annex II: JCPOA, Main Text, Para. 21 The United States will cease the application, and will continue to do so, in accordance with this JCPOA of the sanctions specified in Annex II to take effect simultaneously with the IAEA- verified implementation of the agreed nuclear related measures by Iran as specified in Annex

• V. Such sanctions cover the following areas as

described in Annex II:

Joint Comprehensive Plan of Action

Vienna, 14 July 2015

i. Transfers of funds between EU persons and entities, including financial institutions, and Iranian persons and entities, including financial institutions;

• ii. Banking activities, including the

establishment of new correspondent banking relationships and the opening

• f new branches and subsidiaries of

Iranian banks in the territories of EU Member States;

• i. Financial and banking transactions with

Iranian banks and financial institutions as specified in Annex II, including the Central Bank of Iran and specified individuals and entities identified as Government of Iran by the Office of Foreign Assets Control on the Specially Designated Nationals and Blocked Persons List (SDN List), as set out in Attachment 3 to Annex II (including the

• pening and maintenance of

correspondent and payable through- accounts at non-U.S. financial institutions, investments, foreign exchange transactions and letters of credit);

• ii. Transactions in Iranian Rial;

Joint Comprehensive Plan of Action

Vienna, 14 July 2015

• iii. Provision of insurance and reinsurance;
• iv. Supply of specialized financial messaging

services, including SWIFT, for persons and entities set out in Attachment 1 to Annex II, including the Central Bank of Iran and Iranian financial institutions; v. Financial support for trade with Iran (export credit, guarantees or insurance);

• vi. Commitments for grants, financial

assistance and concessional loans to the Government of Iran;

• vii. Transactions in public or public-

guaranteed bonds;

• iii. Provision of U.S. banknotes to the

Government of Iran;

• iv. Bilateral trade limitations on Iranian

revenues abroad, including limitations

• n their transfer;
• v. Purchase, subscription to, or facilitation
• f the issuance of Iranian sovereign

debt, including governmental bonds;

• vi. Financial messaging services to the

Central Bank of Iran and Iranian financial institutions set out in Attachment 3 to Annex II;

• vii. Underwriting services, insurance, or

reinsurance;

Joint Comprehensive Plan of Action

Vienna, 14 July 2015

• viii. Import and transport of Iranian oil,

petroleum products, gas and petrochemical products;

• ix. Export of key equipment or technology

for the oil, gas and petrochemical sectors; x. Investment in the oil, gas and petrochemical sectors; xi. Export of key naval equipment and technology;

• xii. Design and construction of cargo vessels

and oil tankers;

• viii. Efforts to reduce Iran’s crude oil sales;

ix. Investment, including participation in joint ventures, goods, services, information, technology and technical expertise and support for Iran's oil, gas and petrochemical sectors; x. Purchase, acquisition, sale, transportation or marketing of petroleum, petrochemical products and natural gas from Iran;

• xi. Export, sale or provision of refined

petroleum products and petrochemical products to Iran;

• xii. Transactions with Iran's energy sector;

Joint Comprehensive Plan of Action

Vienna, 14 July 2015

• xiii. Provision of flagging and classification

services;

• xiv. Access to EU airports of Iranian cargo

flights;

• xv. Export of gold, precious metals and

diamonds;

• xvi. Delivery of Iranian banknotes and

coinage;

• xvii. Export of graphite, raw or semi-

finished metals such as aluminum and steel, and export or software for integrating industrial processes;

• xiii. Transactions with Iran’s shipping and

shipbuilding sectors and port

• perators;
• xiv. Trade in gold and other precious

metals;

• xv. Trade with Iran in graphite, raw or semi-

finished metals such as aluminum and steel, coal, and software for integrating industrial processes;

• xvi. Sale, supply or transfer of goods and

services used in connection with Iran’s automotive sector;

• xvii. Sanctions on associated services for

each of the categories above;

Joint Comprehensive Plan of Action

Vienna, 14 July 2015

• xviii. Designation of persons, entities and

bodies (asset freeze and visa ban) set

• ut in Attachment 1 to Annex II; and
• xix. Associated services for each of the

categories above.

• xviii. Remove individuals and entities set out

in Attachment 3 to Annex II from the SDN List, the Foreign Sanctions Evaders List, and/or the Non-SDN Iran Sanctions Act List; and

• xix. Terminate Executive Orders 13574,

13590, 13622, and 13645, and Sections 5 –7 and 15 of Executive Order 13628.

EU Information Note and U.S. Guidance

• n Implementation day

On Implementation Day, the European Union published an Implementation Note in accordance with its commitments contained in the JCPOA. The U.S Government also published a Guidance and a list of Frequently Asked Questions relating to the lifting of sanctions.

EU Sanction Lifting

Financial, banking and insurance measures

• Transfers of funds between EU persons, entities or

bodies and non-listed Iranian persons, and entities or bodies, including Iranian financial and credit institutions are permitted requirements for authorisation or notification of transfers of funds are no longer applicable.

• Banking activities, such as the establishment of new correspondent

banking relationships and the opening of branches, subsidiaries or representative offices of non-listed Iranian banks in Member States are permitted.

EU Sanction Lifting

Financial, banking and insurance measures

• The supply of specialized financial messaging services, including

SWIFT, is allowed for Iranian natural or legal persons, entities or bodies is not unlawful anymore.

• The provision of financial support for trade with Iran such as

export credit, guarantees or insurance is permitted.

• The provision of grants, financial assistance and concessional loans

to the Government of Iran is allowed.

EU Sanction Lifting

Oil, gas and petrochemical sectors

• Import, purchase, swap and transport of crude oil and petroleum products, gas

and petrochemical products from Iran is allowed.

• EU persons are able to export equipment or technology, and provide technical

assistance used in the sectors of the oil, gas and petrochemical industries in Iran.

• Investing in the Iranian oil, gas and
• petrochemical sectors, by the granting of any financial loan or credit to any

Iranian person that is engaged in the oil, gas and petrochemical sectors in Iran or

• utside Iran is permitted.

EU Sanction Lifting

Shipping, shipbuilding and transport sectors

• Sale, supply, transfer or export of naval equipment and

technology for ship building, maintenance or refit, to Iran or to any Iranian persons engaged in this sector is allowed.

• Design, construction or the participation in the design or construction
• f cargo vessels and oil tankers for Iran or for Iranian persons is

permitted.

• The provision of vessels designed or used for the transport or

storage of oil and petrochemical products to Iranian persons, entities or bodies is allowed.

• The provision of flagging and classification services is legal.

EU Sanction Lifting

Shipping, shipbuilding and transport sectors

• Shipping, shipbuilding and transport sectors All cargo flights operated by Iranian

carriers or originating from Iran have access to the airports under the jurisdiction of EU Member States.

• Inspection, seizure and disposal by EU Member States of cargoes to and from Iran

in their territories no longer apply with regard to items which are no longer prohibited.

• Provision of bunkering or ship supply services, or any other servicing of vessels, to

Iranian owned or Iranian-contracted vessels is allowed.

• Provision of fuel, engineering and maintenance services to Iranian cargo aircraft

not carrying prohibited items is permitted.

EU Sanction Lifting

Gold, other precious metals, banknotes and coinage

• Sale, supply, purchase, export, transfer or transport of gold

and precious metals as well as diamonds, and provision of related brokering, financing and security services, to, from or for the Government of Iran, its public bodies, corporations and agencies, or the Central Bank of Iran is allowed.

• Delivery of newly printed or minted banknotes and coinage

for the Central Bank of Iran is permitted.

EU Sanction Lifting

Metals and Software

• Sale, supply, transfer or export of certain graphite and raw or

semi-finished metals to any Iranian person, entity or body or for use in Iran is no longer prohibited but subject to an authorisation regime.

• Sale, supply, transfer or export of Enterprise Resource Planning

software, including updates, to any Iranian person, entity or body, or for use in Iran, in connection with activities consistent with the JCPOA is no longer prohibited but subject to an authorisation regime as of if the software is designed specifically for use in nuclear and military industries.

EU Sanction Lifting

De-listing of persons, entities and bodies

• 336 legal and natural persons were relieved of restricting

measures and removed from EU sanction lists including all Iranian banks and financial institutions except for 3.

• On 16 January 2016 Bank Sepah was also delisted by UN

and EU

U.S. Sanction Lifting

General Note:

U.S. Government is committed to lift its nuclear related Secondary Sanctions as well as certain primary sanctions related to:

• U.S. civil aviation industry
• Iranian Foodstuff and Carpets
• Engagement of U.S. owned or controlled entities

established outside the U.S. in business with Iran

U.S. Sanction Lifting

Financial and Banking-related Sanctions

The following activities by non-U.S. persons are no longer sanctionable:

• All financial activities with Iranian entities and persons including Iranian

banks and financial institutions except for those who remain on U.S. SDN list.

• Transactions involving the Iranian rial or maintaining funds or accounts
• utside of Iran denominated in the Iranian rial.
• The purchase, subscription to, or facilitation of the issuance of Iranian

sovereign debt, including governmental bonds.

• Providing specialized financial messaging services to the CBI and Iranian

financial institutions.

U.S. Sanction Lifting

Iran’s Energy and Petrochemical Sectors

The following activities are not sancationable anymore:

• Investment, including participation in joint ventures, goods, services, information,

technology and technical expertise and support for Iran’s oil, gas, and petrochemical sectors.

• The purchase, acquisition, sale, transportation, or marketing of petroleum,

petrochemical products and natural gas from Iran.

• The export, sale, or provision of refined petroleum products and petrochemical

products to Iran.

• Transactions with Iran’s energy sector, including with NIOC, NICO, and NITC.

U.S. Sanction Lifting

Iran’s Shipping and Shipbuilding Sectors U.S sanctions do not apply anymore to non-U.S. persons who:

• Are part of the shipping or shipbuilding sectors of Iran.
• Own, operate, control, or insure a vessel used to transport crude oil, petroleum

products, petrochemical products, or natural gas to or from Iran.

• Operate a port in Iran.
• Provide bunkering and inspection, classification, and financing, and the sale, leasing,

and provision of vessels to Iran, including to IRISL, NITC, and South Shipping Line or their affiliates.

U.S. Sanction Lifting

Gold and Other Precious Metals Non-U.S. persons can sell, supply, export, or transfer, directly or indirectly, to or from Iran, gold and other precious metals, or conduct or facilitate a financial transaction or provide services for the foregoing, including any security, insurance, and transportation.

U.S. Sanction Lifting

Metals and Software U.S. Does not sanctions anymore non-U.S. persons who sell, supply, or transfer, directly or indirectly, graphite, raw

• r semi-finished metals such as Aluminum and steel, coal,

and software for integrating industrial processes, to or from Iran in connection with activities consistent with the JCPOA.

U.S. Sanction Lifting

Automotive Sector Non-U.S. persons are allowed to conduct or facilitate financial or other transactions for the sale, supply, or transfer to Iran of goods and services used in connection with the automotive sector of Iran.

U.S. Sanction Lifting

Insurance and Re-insurance

provision of underwriting services, insurance, or reinsurance to Iranian entities and persons in connection with all permitted activities mentioned above are permitted.

U.S. Sanction Lifting

De-listing of persons, entities and bodies

• 444 legal and natural persons, 76 airplanes and

227 vessels had been relieved of restricting measures and removed from EU sanction lists including all Iranian banks and financial institutions except for 3.

What is Snapback?

In the event of a significant non- performance by Iran

• f

its commitments under the JCPOA and after having exhausted all recourse possibilities under the JCPOA Dispute Resolution Mechanism, the European Union and United States reintroduce the lifted Sanctions.

Iran will treat reintroduction or re-imposition of of sanctions specified in Annex II

• r

imposition

• f

new nuclear- related sanctions as grounds to cease performing its commitments under JCPOA in whole or in part.

Balance of commitments

Certain limitation on Uranium Enrichment V. Lifting of all nuclear related sanctions

Snapback is highly hypothetical

• JCPOA was achieved after years of very hard negotiation
• Iran and P5+1 will be committed to the full performance of the JCPOA
• A proper implementation of its commitments by the Iranian side requires

Iran’s full integration in the world economy

• Snapback on either side will affect the basis of the deal

If snapback nevertheless happens it will have limited impacts

• Will not impact areas which were not subject to prior sanctions;
• Will not have retroactive effect;
• Investments were be allowed under EU regulations to continue to operate

and expand

Paragraph 37 General Provisions JCPOA: …In such event, these provisions would not apply with retroactive effect to contracts signed between any party and Iran or Iranian individuals and entities prior to the date

• f

application, provided that the activities contemplated under and execution of such contracts are consistent with this JCPOA and the previous and current UN Security Council resolutions…

Paragraph 14 UNSCR 2231:

Affirms that the application of the provisions of previous resolutions pursuant to paragraph 12 do not apply with retroactive effect to contracts signed between any party and Iran

• r Iranian individuals and entities prior to the date of application,

provided that the activities contemplated under and execution of such contracts are consistent with the JCPOA, this resolution and the previous resolutions.

Paragraph 15 UNSCR 2231:

Affirms that the application of the provisions of previous resolutions pursuant to paragraph 12 do not apply with retroactive effect to contracts signed between any party and Iran or Iranian individuals and entities prior to the date of application, provided that the activities contemplated under and execution of such contracts are consistent with the JCPOA, this resolution and the previous resolutions; and decides if the provisions of previous resolutions are applied pursuant to paragraph 12 not to impose measures with retroactive effect on individuals and entities for business activities with Iran that were consistent with the JCPOA, this resolution and the previous resolutions prior to the application of these provisions.

EU Decision 2015/1863 (§10, introduction) and EU Regulation 2015/1861 (§7, introduction) provide: In case of reintroduction of Union restrictive measures, adequate protection for the execution of contracts concluded in accordance with the JCPOA while sanctions relief was in force will be provided consistent with previous provisions when sanctions were originally imposed.

In the event of the reintroduction of EU sanctions, sanctions will not apply with retroactive effect. The execution of contracts concluded while the JCPOA sanctions relief was in force and in accordance with the EU legal framework will be permitted consistent with previous provisions when sanctions were

• riginally imposed, in order to allow companies to wind down their activities.

Details about the period of time allowed for the execution of prior contracts will be specified in the legal acts providing for the reintroduction of EU sanctions. For example, the reintroduction of sanctions on investment activities would not retroactively penalise investment made before the date of snapback, and the execution of investment contracts concluded before the reintroduction of sanctions will be permitted consistent with previous provisions when sanctions were originally imposed. Contracts that were permitted when the sanctions regime was still in place will not be targeted by the reintroduction of sanctions.

The United States has committed not to retroactively impose sanctions for legitimate activity undertaken after Implementation

• Day. Transactions conducted after the snapback occurs, however,

could be sancationable to the extent they implicate activity for which sanctions have been re-imposed. The JCPOA does not grandfather contracts signed prior to snapback. The U.S. government has a past practice of working with U.S. or third-country companies to minimize the impact of sanctions on the legitimate activities of those parties undertaken prior to the imposition of sanctions, and we anticipate doing the same in the event of a JCPOA sanctions snapback.

After Implementation Day

• Investment in all economic sectors
• f Iran is allowed.
• Expansion of Business is

Permitted.

• Capital and Benefits may be

repatriated.

In Case of Snapback

• New Investments may be

prohibited in areas previously subject of sanctions.

• Expansion of already made

investment is permitted even in areas previously subject of sanctions.

• Capital and benefits may be

repatriated.

• An investment in a pharmaceutical plant, in the food industry,

railroad construction, road construction, airport project in Iran will not be affected by snapback. The investor may continue to perform and even expand the investment, repatriate capital and profits.

• An investment in the oil, gas or petrochemical industry will be

allowed to continue to operate until the original term and even expand if so provided under the original agreement. The investor may repatriate capital and profits.