Reed Smith Client Alerts

Yesterday, January 14, 2020, the UK, France and Germany (the E3) triggered the Joint Comprehensive Plan Of Action’s (the JCPOA) dispute resolution mechanism by referring issues of Iranian non-compliance to the Joint Commission of the JCPOA. While the dispute resolution mechanism is designed to promote and maintain the JCPOA, a failure to resolve non-compliance issues could quickly result in the collapse of the JCPOA and the re-imposition of UN and EU sanctions on Iran.


Under the terms of the JCPOA, which took effect in January 2016, the United States, the UK, Russia, Germany, France, China and the EU agreed to lift sanctions on Iran in exchange for Iran limiting its nuclear program. 

In May 2018, the United States announced it was withdrawing from the JCPOA and, following wind-down periods, it fully re-imposed secondary sanctions on Iran in November 2018. Further sanctions have followed, most recently on January 10, 2020. Since the U.S. withdrawal, relations between Iran and the other parties to the JCPOA have deteriorated and in May 2019 Iran announced that it would cease meeting some of its commitments under the JCPOA.

Tensions have flared over recent weeks following the death of Qassem Soleimani on January 3, 2020 and Iran’s retaliatory missile strikes on U.S. airbases in Iraq. On January 6, 2020, Iran announced that it would no longer abide by any of the restrictions imposed under the JCPOA. Although the E3 have consistently supported the JCPOA, their joint statement yesterday noted that they have been “left with no choice… but to register today our concerns that Iran is not meeting its commitments under the JCPOA and to refer this matter to the Joint Commission under the Dispute Resolution Mechanism.” Despite what appears to be a significant step, the E3 have confirmed that they are not taking the “maximum pressure” approach advocated by the United States.

The dispute resolution mechanism

The dispute resolution mechanism set out in the JCPOA is designed to assist the parties in resolving any issues of non-compliance by referring the dispute to the Joint Commission, which consists of the E3, Iran, Russia, China and the rest of the EU, and to the Advisory Board and the Ministers of Foreign Affairs of the parties to the JCPOA. If the issues cannot be resolved, the matter could be referred to the UN Security Council to vote on the maintenance of the sanctions relief currently in place under the JCPOA. If the Security Council does not pass a resolution maintaining the lifting of sanctions on Iran within 30 days of referral, there will be an automatic sanctions “snapback.”