US cease participation in the Iran nuclear deal (JCPOA)
Yesterday, US President Trump announced that the US will cease participation in the Iran nuclear deal (JCPOA) involving Iran on the one hand, and the five permanent members of the UN Security Council (US, China, France, Russia, UK), Germany and the EU on the other hand.
For non-US persons, the main implication of the US participation of the JCPOA, which came into effect in January 2016, was that US revoked the majority of its extra territorial sanctions (that is sanctions applying to non-US persons) in respect of Iran. Sanctions pertaining to US persons were essentially not affected by JCPOA. A more detailed explanation of the scope of US sanctions lifted by JCPOA can be found on the Club’s website www.swedishclub.com/Media
It remains to be seen how US will go about this withdrawal, meaning it is too early to say with certainty what the exact implications will be for the Swedish Club as well other non-US persons. However, according to a White House statement issued yesterday it would appear that the intention is to reinstate the US extra territorial sanctions although this may be subject to a transition period of up to 180 days. The statement reads:
Sec. 3. Restoring United States Sanctions. The Secretary of State and the Secretary of the Treasury shall immediately begin taking steps to re-impose all United States sanctions lifted or waived in connection with the JCPOA, including those under the National Defense Authorization Act for Fiscal Year 2012, the Iran Sanctions Act of 1996, the Iran Threat Reduction and Syria Human Rights Act of 2012, and the Iran Freedom and Counter-proliferation Act of 2012. These steps shall be accomplished as expeditiously as possible, and in no case later than 180 days from the date of this memorandum. The Secretary of State and the Secretary of the Treasury shall coordinate, as appropriate, on steps needed to achieve this aim. They shall, for example, coordinate with respect to preparing any recommended executive actions, including appropriate documents to re-impose sanctions lifted by Executive Order 13716 of January 16, 2016; preparing to re-list persons removed, in connection with the JCPOA, from any relevant sanctions lists, as appropriate; revising relevant sanctions regulations; issuing limited waivers during the wind-down period, as appropriate; and preparing guidance necessary to educate United States and non-United States business communities on the scope of prohibited and sanctionable activity and the need to unwind any such dealings with Iranian persons. Those steps should be accomplished in a manner that, to the extent reasonably practicable, shifts the financial burden of unwinding any transaction or course of dealing primarily onto Iran or the Iranian counterparty.
The Club is not aware that any other party intend to cease participation in the JCPOA. However, the Club conclude that should US reinstate its extra territorial sanctions that may have significant adverse impact on the ability for non-US persons to trade with Iran and Iranian interests.
Members are recommended to monitor developments closely and, inter alia, ensure that contracts including charterparties contain suitable sanction clauses. BIMCO and Intertanko have issued standard sanction clauses.
For more information about sanctions please see the Club’s website at https://www.swedishclub.com/lp/legal/sanctions/
Member Alert is published by The Swedish Club as a service to members. While the information is believed correct, the Club cannot assume responsibility for completeness or accuracy.