Adoption Day in Iran Sanctions Deal: US and EU Give Clarification, But No Lifting of Sanctions Yet

by Dechert LLP

The United States and European Union took preparatory steps on 18 October 2015 to begin fulfilling their commitments to suspend certain sanctions against Iran pursuant to the Joint Comprehensive Plan of Action (“JCPOA”) agreed to earlier this year. Each offered clarification as to what its commitment to ease sanctions would look like in practice. However, no sanctions have yet been lifted: all current sanctions will remain in place until the IAEA verifies that Iran has fulfilled key nuclear-related commitments made under the deal – which is not expected to occur until spring 2016 at the earliest. For a description of the various types of sanctions relief expected to occur at that time, please see our prior OnPoint.

Adoption Day fell on October 18, 2015, exactly 90 days after the United Nations Security Council endorsed the JCPOA. Iran is now expected to begin (if it has not already started) fulfilling the various commitments to scale back its nuclear program and ultimately implement the IAEA’s “Additional Protocol,” which will permit international inspectors to verify whether Iran has taken the requisite steps. In exchange, the United States and European Union have taken certain steps in preparation for the eventual easing of certain sanctions against Iran. They have set out in greater detail the sanctions changes which will come into effect on Implementation Day (when the IAEA confirms that Iran has taken the steps it is required to take). We describe the EU and US actions below.

Actions by the European Union

The EU has adopted Council Regulation 2015/1861 ("the Amending Regulation") to give effect to the EU's sanctions-related commitments under the JCPOA from Implementation Day. In brief, some existing restrictions will remain, some will be amended, while others will be removed entirely. key changes include:

Financial, Banking and Insurance Measures

All EU restrictions on funds transfers and financial services will be removed. From Implementation Day, authorizations and notifications will no longer be required for transfers of funds to or from Iranian persons or entities. Banking and insurance services will also no longer be prohibited, and it will be permissible to sell or purchase public-guaranteed bonds issued by the Iranian government or Iranian financial institutions. A number of listed financial institutions and individuals will still be “blacklisted”. Additionally, financing and financial assistance in relation to certain activities (nuclear proliferation related measures, for example) will continue to be subject to authorization.

Oil, Gas and Petrochemicals

All EU restrictions related to oil, gas and petrochemicals will be removed. From Implementation Day, imports of crude oil, natural gas and petrochemicals from Iran into the EU will be allowed, as will the export of related equipment and technology into Iran.

Ship, Ship Building and Transport sectors

EU restrictions related to naval equipment or technology for shipbuilding, maintenance or refitting will be removed, as will the restrictions on providing oil tankers and services to Iranian-flagged oil tankers and cargo vessels. It will still be prohibited to provide services to Iranian-owned vessels and aircraft where the service provider has reasonable grounds to determine that the vessel or aircraft is transporting goods listed on the EU’s Common Military List or certain additional goods that are identified in the Amending Regulation.

Nuclear Proliferation Related Measures

The EU restrictions on Dual-Use and nuclear proliferation related goods and technology will be replaced with a licencing system. The Amending Regulation sets out the criteria for obtaining a licence, which in some cases will require UN Security Council or JCPOA Joint Commission approval. While the regime that will come into force from Implementation Day is less restrictive than the current EU prohibitions, there are still a number of hurdles that need to be cleared and care will certainly be required to navigate the licensing system whilst it is in its infancy.


EU restrictions related to gold, precious metals, diamonds, banknotes and coinage will be removed. The prohibitions related to graphite and raw or semi-finished metals will be replaced with an authorization scheme. Enterprise Resource Planning software will no longer be prohibited, and prior authorization will only be required if the software is being provided for use in the nuclear and military industries.

Arms and Military Equipment

The EU arms embargo will remain in place, including the restrictions on provision of technical and financial assistance.

Listing of Persons and Entities

The list of designated individuals and entities will change. A number of individuals and entities currently subject to sanctions will come off the list, and a new listing criterion will be added allowing persons to be listed for activities contrary to the JCPOA.

Actions by the US Government

President Obama issued a memorandum directing the Departments of State, Treasury, Commerce and Energy to begin taking all necessary steps to fulfill US sanctions relief commitments made in the JCPOA. In response, the State Department issued contingent waivers to implement US commitments under the JCPOA. These include: (i) the suspension of almost all “secondary sanctions” regarding Iran that authorize penalties to be imposed against non-US persons that engage in certain activities involving Iran; and (ii) the establishment of a licensing regime permitting US persons to apply for authorization to export commercial passenger aircraft and related items and services to Iran. However, as with the new EU regulation, these waivers will not take effect until Implementation Day.

The US Treasury Department’s Office of Foreign Assets Control also issued Frequently Asked Questions regarding the effect of Adoption Day. OFAC confirmed in the FAQs that US persons generally are and remain prohibited from entering into any contracts, contingent or otherwise, involving Iran or individuals or entities on the SDN List. Notably, the FAQs formally confirm that non-US persons also may be subject to sanctions for entering into certain contracts involving Iran prior to Implementation Day, which “could include contracts that are contingent on the implementation of sanctions relief under the JCPOA, such as contracts involving individuals or entities on the [List of Specially Designated Nationals].”

Otherwise, the releases from the US Government do not provide any new information regarding the manner in which US sanctions commitment will be implemented, though OFAC again stated its intention to issue more detailed guidance on the implementation of US sanctions commitments prior to Implementation Day. For example, OFAC is expected to issue a general license authorizing non-US entities that are owned or controlled by US persons to engage in almost all activities involving Iran, as long as the US parent or other US persons are not involved. However, the precise scope of such authorization will not be known until additional guidance is provided.

Proceeding with Caution

Until sanctions relief actually occurs on Implementation Day, global companies (both US and non-US) should continue to exercise caution with respect to any dealings involving Iran. That said, it may be permissible to begin exploring potential business opportunities involving Iran that would be authorized once sanctions relief occurs. This is especially the case for EU companies, where greater insight into the sanctions relief that will take effect from Implementation Day has been provided, and for other non-US companies. However, all companies should ensure that any pre-Implementation Day activities are conducted in a manner that is fully consistent with all international sanctions measures currently in place.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dechert LLP | Attorney Advertising

Written by:

Dechert LLP

Dechert LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.