This news piece relates to the state of U.S. sanctions on Iran in the aftermath of the P5+1 Agreement and the permissible scope of activities by U.S. Persons.
Permissible Scope of Commercial Activities by U.S. Persons1
Babak Hoghooghi
Benjamin H. Flowe, Jr.
Dan Fisher-Owens
August 10, 2015
On July 14th, the United States, Russia, China, France, the United Kingdom, Germany (collectively known as the “P5+1”) and Iran reached a historic agreement (the “Joint Comprehensive Plan of Action” or the “JCPOA”) whereby the P5+1 agreed to remove certain US, EU, and UN economic sanctions on Iran in exchange for Iran agreeing to significantly scale back its nuclear program. Notwithstanding the welcome anticipation of the “removal” of U.S. sanctions on Iran by some in the United States and the great trepidation about such “removal” by others, the JCPOA in fact only provides for rather limited easing of U.S. sanctions on Iran, principally those directed at non-U.S. Persons, and no sooner than probably sometime in mid to late 2016.
For purposes of this paper and as provided under applicable U.S. regulations, “U.S. Persons” are defined to include U.S. citizens, permanent residents, persons physically in the U.S., entities organized under U.S. law, non-U.S. branches of U.S. entities (i.e., not separate legal entities), non-U.S. entities that are owned or controlled by U.S. Persons2 (i.e., subsidiaries organized under other countries’ laws), and non-U.S. Person officers, directors, employees, or other agents of U.S. Persons, including any such persons who are of Iranian heritage or nationality (i.e., an Iranian employed by a U.S. company).
This paper is intended to serve as a practical guide on the state of U.S. sanctions on Iran in the aftermath of the JCPOA, specifically outlining (1) the provisions of the JCPOA providing for the easing of U.S. sanctions on Iran, as well as the steps and timelines for implementing the same, (2) the activities that U.S. Persons continue to be prohibited from undertaking under U.S. law in connection with commercial transactions in or related to Iran, and (3) the limited scope of currently permissible activities by U.S. Persons in or relating to Iran, including activities to explore and assess potential future business opportunities there if and to the extent U.S. sanctions are scaled back, pursuant to the JCPOA or otherwise.
I. Summary
Relief from U.S. sanctions on Iran pursuant to the JCPOA will not go into effect until the following
1 This paper contains general legal guidance on the matters discussed herein, but should not be construed as legal opinions on the application of this guidance to any specific facts or circumstances. Opinions provided herein are solely those of the authors.
2 An entity is deemed owned or controlled by U.S. Persons if such U.S. Persons (i) hold a 50% or greater equity interest by vote or value in such entity, (ii) hold a majority of seats on its board of directors, or (iii) otherwise control its actions, policies or personnel decisions.
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