January 30, 2012
On January 23, 2012,[i] the Council of the European Union agreed to impose additional restrictive measures against Iran in the range of industrial sectors, inter alia: in the energy sector, including an embargo of Iranian crude oil imports to the EU; in the financial sector, including against the Central Bank of Iran; in the transport sector; additional export restrictions on gold and on sensitive dual-use goods and technology; as well as additional designations of specific persons and entities.[ii] The Decisions adopted by the Council were in response to ongoing Iranian activities relating to the suspected development of military nuclear technology, particularly its acceleration of uranium enrichment activities, in violation of six UNSC Resolutions and eleven IAEA Board Resolutions. They take the form of Decision 2012/35/CFSP (“the Decision”),[iii] Regulation 54/2012[iv] and Regulation 56/2012.[v] The Decisions were adopted in the aftermath of the Council conclusions of December 1, 2011, which expressed “serious and deepening concerns over the nature of Iran’s nuclear programme,” which were, in turn, endorsed by the European Council’s conclusions of December 9, 2011.
Revised Restrictions
1. Aside from those contracts which have already been concluded and which can still be executed until July 1, 2012, it is prohibited to import, purchase or transport Iranian crude oil and petroleum products. In addition, it is prohibited to provide, directly or indirectly, financing or financial assistance, including financial derivatives, as well as insurance and reinsurance, related to their import, purchase or transport.
2. The Decision extends the list of dual-use goods and technology which cannot be sold to Iran. Moreover, the sale, supply or transfer of key equipment and technology for the petrochemical industry in Iran, or to Iranian or Iranian-owned enterprises engaged in that industry outside Iran, by nationals of EU Member States, or from the territories of Member States, or through the use of vessels or aircraft within EU Member States jurisdictions, is also prohibited. This also means that the provision of technical assistance or training and other services related to key equipment and technology, as well as the financing or financial assistance offered for any sale, supply, transfer or export of key equipment and technology for the provision of related assistance or training, is not allowed.
3. Moreover, the direct or indirect sale, purchase, transportation or brokering of gold and precious metals to, from or for the Government of Iran, its public bodies, corporations and agencies, the Central Bank of Iran, as well as to, from or for persons and entities acting on their behalf or at their direction, is prohibited. The same applies to the deliveries of Iranian-denominated banknotes and coinage to the Iranian Central Bank.
4. The Council has also outlawed the granting of any financial loans or credits to enterprises in Iran that are engaged in the Iranian petrochemical industry or to Iranian or Iranian-owned enterprises engaged in that industry outside Iran. The acquisition or extension of participation in enterprises in Iran that are engaged in the Iranian petrochemical industry, or to Iranian or Iranian-owned enterprises engaged in that industry outside Iran (including the acquisition in full of such enterprises and the acquisition of shares and securities of a participating nature), is prohibited. Finally, joint ventures with enterprises in Iran that are engaged in the Iranian petrochemical industry can no longer be concluded.
5. The Decision freezes the assets of the Iranian Central Bank situated within the EU, while providing certain limited exceptions to which strict conditions are attached. These exceptions are, for example, transfers related to payments falling due by non-designated financial institutions in connection with a specific trade contract, provided that the relevant Member State has determined that such payment is not being directly or indirectly received by a person or entity referred to in the restrictive measures. Furthermore, the asset freeze does not apply to a transfer made by or through the Central Bank of Iran of frozen funds or economic resources where such transfer is made for the purpose of providing financial institutions under the jurisdiction of Member States with liquidity for the financing of trade, provided that the transfer has been authorized by the relevant Member State.
6. Finally, the Council has subjected three more individuals to an asset freeze and a visa ban. It has also frozen the assets of eight further entities, including Bank Tejarat.
Conclusions
The Council Decisions complement the already existing sanctions imposed on Iran,[vi] based on Article 215 of the Treaty on the Functioning of the European Union (“TFEU”),[vii] particularly by Decision 2011/235/CFSP,[viii] Regulation 359/2011,[ix] Decision 2010/413/CFSP[x] and Regulation 961/2010.[xi] The scope of sanctions was already considerable before January 23, 2012, encompassing, among many: an embargo on most dual-use goods and technologies as well as other arms-related equipment; a ban on the provision of certain services and investment, an embargo on key equipment and technology for the oil and natural gas industries; a ban on new commitments for grants, financial assistance and concessional loans to the Government of Iran; enhanced monitoring over the activities of EU financial institutions with banks domiciled in Iran and their subsidiaries, branches and other financial entities outside Iran; restrictions on transfers of funds to and from Iran; restrictions on the provision of insurance and re-insurance; vigilance over business with Iran; the inspection of and prior information requirement on cargo shipments; the freezing of funds of listed persons, entities and bodies; and, finally, a prohibition on the satisfaction of claims made by certain persons, entities or bodies.[xii]
The European Union is likely to pass additional laws in the near future to further implement some of the sanctions. For example, it will need to provide lists and definitions for the goods and services restricted by the Decision. Furthermore, while certain countries have already diminished their trade relations with Iran in anticipation of the new EU rules, the exact consequences of these developments remain to be seen.[xiii]
Although they do not represent a US-type general prohibition to trade with Iran, the sanctions are expressed to be consistent with the steps the US has taken against Iran to date.[xiv] Their passage can be expected to strongly impact upon the sectors identified in the Decision, as well as the overall trade flows with Iran. In particular, companies involved in business with or connected to Iran should take into account these new developments and seek legal assistance in order to determine how their commerce may be affected.
[i] For their general description, see Council of the European Union Press Release – Iran: New EU sanctions target sources of finance for nuclear programme (Brussels, 23 January 2012, 5457/12).
[ii] Council of the European Union – Council conclusions on Iran, 3142th Foreign Affairs Council meeting (Brussels, 23 January 2012).
[iii] Council Decision 2012/35/CFSP of 23 January 2012 amending Decision 2010/413/CFSP concerning restrictive measures against Iran, OJ L 19, 24.01.2012, p. 22.
[iv] Council Implementing Regulation (EU) No 54/2012 of 23 January 2012 implementing Regulation (EU) No 961/2010 on restrictive measures against Iran, OJ L 19, 24.01.2012, p. 1.
[v] Council Regulation (EU) No 56/2012 of 23 January 2012 amending Regulation (EU) No 961/2010 on restrictive measures against Iran, OJ L 19, 24.01.2012, p. 10.
[vi] See, Gibson, Dunn & Crutcher Client Alert “European Union Adopts Comprehensive Iran Sanctions” of November 3, 2010.
[vii] Article 215 TFEU provides a legal basis for the interruption or reduction, in part or completely, of the Union’s economic and financial relations with one or more third countries, where such restrictive measures are necessary to achieve the objectives of the Common Foreign and Security Policy (CFSP).
[viii] Council Decision 2011/235/CFSP of 12 April 2011 concerning restrictive measures directed against certain persons and entities in view of the situation in Iran, OJ L 100, 14.4.2011, p. 51.
[ix] Council Regulation (EU) No 359/2011 of 12 April 2011 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Iran, OJ L 100, 14.4.2011, p. 1.
[x] Council Decision 2010/413/CFSP of 26 July 2010 concerning restrictive measures against Iran and repealing Common Position 2007/140/CFSP, OJ L 195, 27.7.2010, p. 39.
[xi] Council Regulation (EU) No 961/2010 of 25 October 2010 on restrictive measures against Iran and repealing Regulation (EC) No 423/2007, OJ L 281, 27.10.2010, p. 81.
[xii] European Union – Restrictive measures (sanctions) in force (measures adopted in the framework of the Common Foreign and Security Policy), as of 18.1.2012.
[xiii] See, for example, Financial Times article on Iran’s decision to pre-empt EU sanctions by cutting off oil supplies immediately (http://www.ft.com/intl/cms/s/0/a3c736b0-4788-11e1-b646-00144feabdc0.html#axzz1kYaPMQjb)
[xiv] Joint Statement by Secretary Geithner and Secretary Clinton Welcoming Additional EU Sanctions on Iran (23 January 2012).
This Alert was prepared by Attila Borsos, a member of the Trade Practice in our Brussels office, who can be contacted on: +32 2 554 7211 or at [email protected]. If you would like more information on Regulation 961/2010 and the sanctions it brings into effect, our team at Gibson, Dunn & Crutcher LLP is ready to provide detailed advice. Please contact the Gibson Dunn attorney with whom you work, or any other member of the firm’s International Trade Regulation and Compliance Practice Group or the firm’s Antitrust and Trade Regulation Practice Group for further, in-depth assistance. Any of the following lawyers in the firm’s Washington, D.C. or Brussels offices are specifically available to assist:
Judith A. Lee – Washington, D.C. (+1 202-887-3591, [email protected])
Peter Alexiadis – Brusssels (+32-2-554-7200, [email protected])
John J. Sullivan – Washington, D.C. (+1 202-955-8565, [email protected])
Attila Borsos – Brussels (+32-2-554-7211, [email protected])
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