Steven Kay QC has advised on the effect of US sanctions for a major UK/EU business contract in Iran. On 8 May 2018 President Trump announced the US withdrawal from the Joint Comprehensive Plan of Action (“JCPOA”) for Iran with two wind-down periods of 90 to 180 days (6 August 2018 and 4 November 2018) after which the US will re-impose the secondary sanctions that were lifted when the JCPOA was implemented. These principally concern the secondary sanctions regime that affects foreign businesses and banks and opened up their ability to trade with Iran.
The US Office of Foreign Assets Control (OFAC) within the US Department of the Treasury administers and enforces these sanctions and will enforce them against foreign businesses. Substantial fines have been imposed by OFAC upon foreign companies outside the US breaching these national laws that provide for extraterritorial jurisdiction.
The US secondary sanctions regime can have a significant impact upon UK/EU companies that breach any of its provisions and require careful navigation and if necessary an application to OFAC for relief. The UK along with EU revoked most financial and economic sanctions against Iran on 16 January 2016 under the JCPOA in exchange for curbs on Iran’s nuclear program, following the International Atomic Energy Agency’s verification on 14 July 2015 that Iran had completed all necessary steps to reach Implementation Day. The businesses taking advantage of the new opportunities for trade now have to contend with the US laws that impose financial and criminal liabilities.
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