IRANIAN SANCTIONS
1. Sell or provide to Iran refined petroleum products that have a fair market value of more than US$1 million or US$5 million over a 12 month period; or
2. Make an “investment” of more than US$20 million that directly and significantly contributes to the enhancement of Iran’s ability to develop petroleum resources.
It is not yet clear how quickly the necessary pre-authorisations will be
processed by the competent national authorities of Member States
Significantly, the sanctions available under the amended ISA are not restricted to US persons. They have extra-territorial reach. The list of 9 is frightening. A major cause of concern for certain multinationals has been the sanction which specifically prevents foreign persons engaged in sanctionable activities from US government procurement, and the sanction preventing any credits/payments with any US financial institution – effectively ending the ability to trade in US dollars.
European Union In its Decision of July 26th
2010, the EU Council
announced tough new sanctions measures against Iran that exceeded those mandated by the UN. In keeping with the US, the new measures focused on Iran’s oil and gas, transport, insurance and finance sectors. However, as the Council’s Decision only bound the governments of Member States, EC Regulation No. 961/2010 (the Regulation) was subsequently published on October 27th
2010 so as
to bind companies and individuals. The publication of the Regulation has further
complicated trade with Iran. In particular, there are four provisions which those involved in international trade should be aware of:
1. Regulation (EC) No. 423/2007 has been repealed. The “blacklist” created by previous Regulation
(EC) No.423/2007 has been retained in the new Regulation along with the requirement that all funds and economic resources belonging to such blacklisted parties be “frozen” (which prohibits any movement of funds or economic resources to or from them).
2. Money transfers to or from any Iranian individuals, entities or bodies exceeding €40,000 will require pre-authorisation with certain limited exceptions. It is not yet clear how quickly the necessary pre-
authorisations will be processed by the competent national authorities of Member States. What is
clear, however, is that there is no guarantee that authorisation will be granted in any case so one cannot rely on being able to make or receive any payments that exceed €40,000 to or from Iranian counterparties or customers. Those specifically involved with Iran’s energy
sector should note that such authorities have the power to refuse to authorise any transfer if it reasonably believes that such funds would contribute to prohibited activities relating to exploration of crude oil and natural gas, production of crude oil and natural gas, refining, or liquefaction of natural gas by an Iranian person, entity or body.
3. Requires the production of pre-arrival and pre-departure information in respect of all goods transported between Iran and the customs territory of the Union, whether by sea or by air. The rules governing these pre-information
requirements are set out in Regulation (EEC) No. 2913/92 and Regulation (EEC) No. 2454/93.
4. Prohibits the loading and unloading of cargo on or from vessels which are owned or chartered by IRISL or such designated entities in ports of Member States. The prohibition relates to the obligation to
freeze funds and economic resources of IRISL and of designated entities owned or controlled by IRISL. However, the obligation to freeze such funds and economic resources, does not require the impounding or detention of cargoes belonging to third parties carried by these vessels. It is worth noting that the Regulation contains
no explicit right to refuse a vessel nomination of an IRISL vessel even though the Regulation would make loading that vessel impossible. Accordingly, there is a real risk that without specific contract wording upon which sellers can rely to excuse their non-performance, FOB sellers may be in breach of contract if they reject a nomination on these grounds. Significantly, we understand from HM Treasury
that FOB sellers loading goods onto a “blacklisted” vessel (other than an IRISL vessel) will not be considered in breach of EU sanctions provided the seller does not pay freight or other fees to or on behalf of the vessel (which would cause the seller to be in breach of the obligation to “freeze” blacklisted parties’ funds).
The Article 32 Defence Article 32(b) of the Regulation provides a defence
to a breach of the Regulation in circumstances where a party did not know nor had it reasonable cause to suspect that their actions would infringe the prohibitions.
December 2010 79
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