Introduction

The United States, along with the EU, the P5+1 partners¹ and Iran, have decided to extend the Joint Plan of Action to November 24, 2014.

Extension of the Temporary Agreement

The United States, along with the EU, the P5+1 partners and Iran, have agreed to extend the Joint Plan of Action for four more months until November 24, 2014. The original deadline to the temporary agreement was Sunday, July 20, 2014.

Under the JPOA agreed to last November, Iran committed to halting the process of its nuclear program, rolling it back in key aspects, and allowing access to international inspectors in exchange for sanctions relief. Iran met its commitments under the agreement, however, the parties have been unable to reach an agreement imposing long-term restrictions on Iran’s uranium enrichment and plutonium production during the period of the temporary agreement. A long-term deal could lead to the lifting of oil and trade sanctions on Iran.

On July 18, 2014, the White House Press Secretary released that the negotiators had decided to extend the JPOA to November 24, 2014, explaining that the extension would allow the U.S. to continue negotiations while ensuring that the progress of Iran’s nuclear program remains halted. Negotiations will resume in September.

Under the extension, all parties have committed to upholding their obligations under the JPOA. Secretary John Kerry has publically announced that the extension will allow Iran to have access to $2.8 billion in assets that had been frozen in the United States, which is the four-month prorated amount of the original JPOA commitment, in return for Iran continuing to convert its stocks of 20%-enriched uranium into fuel. Sanctions against oil sales and other major sources of income will not be lifted.

Secretary Kerry made clear that Iran would not be receiving any more money during the extension than it did during the past six months, and the vast majority of its frozen oil assets will remain inaccessible. The U.S. will continue to enforce the sanctions that remain in place.

The U.S. State Department has emphasized that the JPOA is not an acceptable endpoint for either side, but it does provide a space for negotiation to take place going forward. The relief in the JPOA is temporary, limited and reversible.

Consequences of the Extension

The extension of the JPOA until next November indicates that non-U.S. persons may engage with Iran under the circumstances set forth in the JPOA for another four months. It is important to note that the JPOA relates only to activities that are initiated and completed within the lifespan of the JPOA agreement, now ending November 24, 2014. As we explained in our previous client alert, any conduct or transaction that is undertaken before or after such date, regardless of whether the activity is undertaken pursuant to a contract entered into during the JPOA period, may be sanctionable. The U.S. retains the authority to impose sanctions for activities that are materially inconsistent with the sanctions relief described in the JPOA. Any transaction done pursuant to the JPOA must be carried out with caution as if at any time Iran fails to fulfill its obligations under the JPOA, the U.S. retains the power to revoke all relief, potentially making certain transactions previously allowed under the temporary agreement sanctionable.

If you have any questions or concerns about U.S. sanctions against Iran, please contact Bruce G. Paulsen (212-574-1533) or Michael W. Broz (212-574-1272) at Seward & Kissel.

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¹ Britain, France, Germany, China and Russia.