Private Equity

On January 16, 2016, the International Atomic Energy Association verified that Iran had taken necessary steps to align its nuclear program with the requirements of the Joint Comprehensive Plan of Action (“JCPOA”), an agreement among the United States, the European Union, Iran, the United Kingdom, France, Germany, Russia, and China. The IAEA’s verification triggered so-called “Implementation Day” requirements, including requirements that the United States and the European Union relax certain sanctions measures restricting economic activity involving Iran.

The United States did three things on Implementation Day.

• First, it lifted nuclear-related “secondary sanctions” (sanctions involving “non-U.S. persons”). As a result, non-U.S. persons now may engage in transactions relating to sectors of Iran’s economy including finance and banking, insurance, energy and petrochemicals, shipping and shipbuilding, port operators, gold and other precious metals, and automobiles.
• Second, the United States removed over 400 individuals and entities from U.S. sanctions list. This means that non-U.S. persons now may transact business with the removed individuals and entities, provided those transactions do not involve conduct that is otherwise sanctionable.
• Third, the United States relaxed certain trade-related restrictions on U.S. persons and foreign entities owned and controlled by U.S. persons. Now, the Office of Foreign Assets Control will issue specific licenses allowing commercial passenger aircraft exports to Iran on a case-by case basis; non-U.S. companies that are owned or controlled by U.S. persons may engage in some limited transactions with Iran; and Iranian carpets and certain food items may be imported into the United States.The European Union lifted nuclear-related sanctions that previously (1) prohibited dealing with designated persons; (2) imposed an embargo on purchasing Iranian oil and gas products; and (3) imposed funds transfer controls and reporting requirements. However, E.U. companies considering business in Iran should be aware that certain restrictions remain in place and proceed with caution.

Notwithstanding these measures, U.S. persons (defined as U.S. citizens, permanent resident aliens, and companies organized under the laws of the United States, including foreign branches) still are prohibited from engaging in most economic activity involving Iran.

The European Union lifted nuclear-related sanctions that previously (1) prohibited dealing with designated persons; (2) imposed an embargo on purchasing Iranian oil and gas products; and (3) imposed funds transfer controls and reporting requirements. However, E.U. companies considering business in Iran should be aware that certain restrictions remain in place and proceed with caution.

For a more in depth summary, please refer to our recent International Trade Currents.

The above is a high-level summary of changes to U.S. and E.U. law. Particular questions, including with respect to proposed or actual transactions, should be reviewed carefully by counsel to ensure compliance with applicable laws.