Legislation

U.S.: The U.S. and others extend temporary sanctions relief for Iran

On July 19, 2014, the United States, the United Kingdom, Germany, France, Russia and China (“the P5+1”) renewed the Joint Plan of Action (“JPOA”) temporarily suspending certain Iran-related sanctions during ongoing negotiations related to Iran’s nuclear program. As a result of the renewal, the temporary sanctions relief period, originally created on November 24, 2013, was extended to cover the period beginning July 21, 2014, and ending November 24, 2014.

On November 24, 2013, the P5+1, together with the Islamic Republic of Iran (“Iran”), reached an initial understanding as outlined in the JPOA. The goal of the JPOA is to reach an agreement with Iran that ensures that Iran’s nuclear program will be for peaceful purposes and will be rolled back in certain respects. The JPOA can be accessed here.

In connection with the JPOA, the U.S. Department of State and the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) implemented temporary sanctions relief in respect of certain activities and associated services taking place exclusively within the six month relief period, which began on January 20, 2014.

The renewal of the JPOA will extend the terms of the initial sanctions until November 24, to allow for continued negotiations around Iran’s nuclear program. Under the extension, the United States Government (“the USG”) retains its authority to revoke the temporary sanctions relief at any time. In addition, none of the sanctions relief outlined in the JPOA may involve a U.S. person, or, as applicable, a foreign entity owned or controlled by a U.S. person, if the activity engaged in is otherwise prohibited under U.S. sanctions.

Broadly summarized, and subject to certain exceptions, the sanctions relief essentially provides for:

  • the temporary suspension of U.S. sanctions on Iran’s petrochemical exports, as well as on any associated services;
  • the temporary suspension of U.S. sanctions on Iran’s auto industry, as well as associated services;
  • the temporary suspension of U.S. sanctions on gold and precious metals, as well as associated services;
  • the temporary licensing of the supply and installation in Iran of spare parts for Iranian civil aviation and associated services; and
  • certain sanctions relief related to Iran’s crude oil sales.

Guidance relating to the provision of the temporary sanctions relief can be accessed here.  

It should be noted that the sanctions relief authorized by the JPOA is limited, and the rules governing it are complicated. As such, the advice of counsel should be sought before engaging in activity encompassed by the JPOA.

U.S.: Obama administration extends sanctions against Russia

On July 16, 2014, President Barack Obama announced the imposition of a new round of US sanctions against Russia. The new sanctions target major sectors of Russia’s financial, energy and defense industries.

The new sanctions, issued pursuant to Executive Order 13662, are aimed at altering Russia’s global financial relationships and will restrict access to US capital markets for Russian enterprises such as state-owned Rosneft, Russia’s largest oil producer, and state-controlled Gazprombank, the financial arm of gas giant Gazprom. Other targets of the sanctions included Vnesheconombank or VEB, the State Economic Development Bank and Novatek.

The Office of Foreign Assets Control’s (“OFAC”) Sectoral Sanctions Identifications (“SSI”) list sets out further businesses and individuals who are impacted by the new sanctions. The SSI list is available here.

In summary, the measures will prohibit transactions by U.S. persons or persons within the United States, in respect of the persons listed in the SSI, which amount to transacting in, providing financing for, or otherwise dealing in new debt of longer than 90 days maturity or new equity of these persons, their property, or their interests in property.

The extension of U.S. sanctions against Russia come as the European Council in Brussels unveiled its own list of measures cutting European investment in Russia and specifically instructing the European Investment Bank to suspend the financing of new projects in Russia.

Earlier U.S. sanctions were primarily targeted at individuals through a series of Executive Orders issued by President Obama in March of this year. Our earlier publication outlining the details of this Executive Order can be accessed here. Additional information regarding OFAC’s Ukraine-related sanctions can be accessed here.