Overview
As explained in our previous client alert, on July 14, 2015, the United States, Russia, China, France, the United Kingdom, Germany (the “P5+1”), and the European Union announced that they reached a landmark agreement with the Republic of Iran titled, the Joint Comprehensive Plan of Action Regarding the Islamic Republic of Iran’s Nuclear Program (the “JCPOA”). The JCPOA is intended to significantly restrict Iran’s ability to develop and produce nuclear weapons for at least 10 years, limiting its nuclear program to peaceful uses. However, the relief afforded by the JCPOA is not yet effective. Until Implementation Day-which is not expected to occur until early 2016-Iran will receive no sanctions relief from the UN, U.S., or the EU.
As we move closer towards Implementation Day, we take this opportunity to update you on the process for implementing the JCPOA and what it means for you on a commercial basis.
Adoption Day
October 18, 2015 was “Adoption Day,” which triggered each party’s obligations to begin making necessary arrangements for meeting their respective commitments under the JCPOA such that sanctions may ultimately be lifted. There is no sanctions relief associated with Adoption Day.
Iran must implement the transparency protocols relating to its nuclear program that it develops in conjunction with the International Atomic Energy Agency (“IAEA”), and Implementation Day will occur only upon verification by the IAEA that Iran has met its nuclear-related commitments under the JCPOA.
As for the United States, on Adoption Day the White House released a Presidential Memorandum directing the Secretary of State, the Secretary of the Treasury, the Secretary of Commerce, and the Secretary of Energy to “take all necessary steps to give effect to the U.S. commitments with respect to sanctions described in section 17 of Annex V of the JCPOA.” The Secretary of State issued contingent waivers of most extraterritorial sanctions targeting non-U.S. persons engaged in certain transactions with Iran, which are consistent with the sanctions relief expected under Annex II of the JCPOA.1 The contingent waivers do not take effect until Implementation Day.
Conclusion
Although parties to the JCPOA have begun their preparatory work, there continues to be no practical effect on commercial transaction until Implementation Day. The Office of Foreign Asset Control (“OFAC”) announced that it will provide substantive guidance in advance of Implementation Day. We will issue additional client alerts once such information becomes available, or upon further developments.
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 For additional information about the sanction relief expected on Implementation Day of the JCPOA, see our client alert of July 16, 2015.
