Considering business with Iran? Proceed with caution

29 January 2016

16 January 2016 saw a significant change in the international sanctions regime against Iran. On so-called Implementation Day, all EU (and some US) economic and financial sanctions against Iran were lifted.  Iran, a country roughly the size of the UK, France, Germany and Spain combined and with a population of over 78 million is replete with natural resources.  The lifting of sanctions therefore offers real commercial opportunity. Some sanctions, however, remain in force and those wishing to do business involving Iran should therefore still proceed with caution. This blog post considers the latest developments. 

Sanctions against Iran were first imposed by the US in 1979 following the Iranian revolution. The sanctions regime was broadened considerably in 2006 following international concern about Iran’s nuclear programme. In 2010, EU sanctions were applied to restrict the activities of the Iranian oil industry. In 2012, the EU agreed a complete oil embargo of all Iranian oil-related products.

What happened on Implementation Day?

Implementation Day  was a milestone in the “Joint Comprehensive Plan of Action” (JCPOA) and marked the date on which the International Atomic Energy Agency reported that Iran was complying with its nuclear-related obligations. As a result, EU economic and financial sanctions against Iran were lifted. US secondary legislation imposing nuclear-related economic sanctions were also suspended.
JCPOA is an agreement made between Iran and the E3/EU+3 (i.e. China, France, Germany, Russia, the UK and the USA, with the EU) providing for the comprehensive lifting of all UN Security Council sanctions as well as multilateral and national sanctions related to Iran's nuclear programme.

JCPOA was reached on 14 July 2015 (so-called Finalisation Day) and on 18 October 2015 (Adoption Day) the EU adopted the legal acts to prepare for the lifting of nuclear-related economic and financial EU sanctions. These regulations have now come into effect with the UK implementing The Iran (European Union Financial Sanctions) Regulations 2016.

Suspension of EU sanctions

As of 16 January 2016, all EU economic and financial sanctions against Iran are suspended. Individuals can now, for example, import, purchase, swap and transport crude oil and petroleum products, gas and petrochemical products from Iran.

Some of the sanctions, however, remain in place, creating a complicated field of provisions for those considering new opportunities in Iran. It will be necessary to consider whether persons are still designated, or whether particular trade products or materials are restricted.

Proceed with caution 

Sanctions relating to breaches of human rights, proliferation and support for terrorism remain in place. In addition to appropriate due diligence, persons wishing to do business with Iran will need to check the lists of designated persons and consider in detail whether any of the activities that they wish to undertake remain banned. It remains unlawful, for example, to invest in an enterprise engaged in the manufacture of military goods, or to provide services in relation to the trade of equipment which might be used for internal repression. In some cases, it will be necessary to obtain a licence before doing business.

Sanctions could be re-imposed in the event of non-Iranian compliance. In the EU context, this is known as “EU snapback”. According to the Commission, “in the event of the reintroduction of EU sanctions, the execution of contracts concluded in accordance with the JCPOA while sanctions relief was in force will be permitted consistent with previous provisions when sanctions were originally imposed, in order to allow companies to wind down their activities”.

Notwithstanding Implementation Day, US primary sanctions remain in force. This means that, for example, US financial institutions will continue to be blocked from carrying out transactions that involve Iranian entities. The US block on dollar transactions will also remain in place, and US persons continue to be prohibited from carrying out most activity with Iran.


Failing to comply with financial sanctions legislation, or seeking to circumvent their provisions, is a criminal offence in the UK, carrying a possible prison sentence. Any potential breach of US provisions carries the risk of exciting the interest of the US prosecutor, who is, typically, not shy of instituting extradition proceedings. Whilst the lifting of Iranian sanctions following Implementation Day presents opportunities for renewed business with Iran, EU persons should therefore still consider carefully the legal ramifications of falling foul of sanctions legislation.

Share insightLinkedIn Twitter Facebook Email to a friend Print

Email this page to a friend

We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.

Leave a comment

You may also be interested in:

Skip to content Home About Us Insights Services Contact Accessibility