This is an update to our client alerts dated April 8, July 7, and August 23, 2010 regarding the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”), which was signed into law by President Obama on July 2, 2010. The Act applies to non-U.S. persons and prohibits certain transactions that can contribute to the enhancement of Iran’s ability to develop petroleum resources or contribute to Iran’s ability to import refined petroleum products. On September 30, 2010, the U.S. took its first enforcement action with respect to CISADA.

The U.S. State Department announced that it has sanctioned Naftiran Intertrade Company (“NICO”). NICO, which is based in Switzerland, is an international trading company and a wholly owned subsidiary of the National Iranian Oil Company. Drawing from the nine potential sanctions in CISADA, the State Department has prohibited NICO from receiving export assistance in the ExImBank, licenses for export from the United States, private U.S. bank loans exceeding $10 million in any 12-month period, and has barred NICO from any procurement contracts with the United States.

The U.S. State Department has also announced that four international oil companies – Total of France, Statoil of Norway, Eni of Italy, and Royal Dutch Shell of the United Kingdom and the Netherlands – have pledged to end their investments in Iran’s energy sector. By making this pledge, the U.S. State Department noted that these companies are eligible to avoid sanctions under the so-called “Special Rule” in CISADA that is designed to encourage companies to withdraw from activity in Iran.

CISADA has serious consequences for non-U.S. businesses including energy, banking, shipping, insurance and others. If you have any questions or concerns about CISADA, please contact Bruce G. Paulsen (212-574-1533).