In January 2014, both the EU and U.S. brought into force measures which temporarily suspended and relaxed (for an initial period of six months) some of the sanctions in place against Iran. This reflected the Joint Plan of Action (JPOA) agreed to in November 2013 between Iran and the E3+3, also known as the P5+1, which includes, the U.S., Russia, China, the UK, France, and Germany. Those measures were discussed in our alerts of 24 July 2014 and 23 January 2014.
At the end of that initial six month period, when no agreement between Iran and the P5+1 could be reached, all measures were extended for a further six months, to 24 November 2014.
On 24 November, it was announced that in order for discussions between Iran and the P5+1 to continue, all measures would be extended to 30 June 2015. The parties have noted that the goal is to have the significant points agreed to by March 2015, and the final agreement in place by 30 June 2015.
The suspension and relaxation of sanctions remains in place in identical form, except that Iran will be able to access an additional $700 million worth of assets each month that had previously been frozen. No additional sanctions have been suspended.
Health warning! As previously, there are two key points to be aware of in respect of the extension of the JPOA measures:
- The EU and U.S. positions are not entirely in line. Caution must be exercised, as although intended business may be clear from an EU perspective, it may remain subject to U.S. sanctions.
- U.S. guidance states that transactions under the eased restrictions must be “completed” by 30 June 2015. The EU legislation states that all relevant contracts must be “executed” within 30 June 2015. Prudence dictates that “executed” should be read to mean “completed”, i.e. all obligations under a contract falling within the eased restrictions must have been fully carried out by 30 June 2015.
Finally, it is also possible that the U.S. government may impose additional sanctions against Iran during this extension period. Certain legislators have indicated a desire to enact more sanctions against Iran if an agreement could not be reached by the 24 November 2014 deadline. We will publish further alerts should any additional sanctions be imposed.
Client Alert 2014-315