On November 28, 2011, the United States Senate unanimously adopted an amendment to the 2012 National Defense Authorization Act (the “Act”). The amendment, known as the Kirk-Menendez Amendment, would subject companies transacting business with Iran’s central bank, Bank Markazi, to U.S. sanctions. The Act, including the Kirk-Menendez Amendment, subsequently passed the United States House of Representatives.
On December 31, 2011, President Obama signed the Act into law, but issued a signing statement noting his objections to the Iran sanctions portion of the Act (along with others) and stating that that portion “would interfere with my constitutional authority to conduct foreign relations” because it forces him “to take certain positions in negotiations with foreign governments.” President Obama also noted that “should any application of these provisions conflict with my constitutional authorities, I will treat the provisions as nonbinding.”
The Kirk-Menendez Amendment targets anyone doing business with Bank Markazi in an attempt to force foreign financial institutions to choose between buying oil from Iran or being blocked from the U.S. banking system. Sanctions relating to transactions involving the purchase of petroleum or petroleum products running through foreign financial institutions owned or controlled by a foreign government will take effect within 60 days of December 31, 2011. However, the sanctions relating to transactions with respect to governments purchasing Iranian oil and selling petroleum products will not take effect for six months. This phasing-in period provides foreign institutions with time to transition out of existing Iranian oil contracts running through Bank Markazi and find new sources of oil.
Additionally, President Obama retains some flexibility in administering the sanctions, having authority to waive the imposition of sanctions if he determines a waiver is in the best interest of the U.S.’s national security and provides Congress with a justification for the waiver.
If you have any questions or concerns about U.S. sanctions against Iran, please contact one of the attorneys listed below.
