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EU Sanctions Updates 2013

COUNCIL REGULATIONS 1263/2012 AND 1264/2012 PUBLISHED 22 DECEMBER  2012

On 21st December 2012 the EU Council approved the implementing legislation for the most recent EU restrictive measures in response to the Iranian nuclear programme. With effect from 23rd December 2012, Regulation 1263 /2012 gives full legal effect to the measures set out in Council Decision 2012/635 of 15th October 2012, by amending and incorporating new provisions into EU Regulation 267/2012 dated 23 March 2012. References to Article numbers below are to Articles of Regulation 267 as amended.  The Regulation:

  • further defines the prohibitions regarding participation in transactions with Iranian financial institutions, unless authorised in advance (Article 30);
  • defines the scope of the several export bans, including on graphite and raw or semi-finished metals (Article 15a as listed in Annex VIIB), key naval equipment and technology for ship-building (Article 10a as listed in Annex VIB), additional key equipment or technology for the Iranian oil, natural gas and petrochemical sector (Article 8 as listed in Annexes VI and VIA) and software for industrial production (Article 10d as listed in Annex VIIA);
  • specifies which natural gas products may no longer be imported into the EU (Article 14a as listed in Annex IVA) and clarifies that swapping Iranian natural gas is also prohibited;
  • includes in the export prohibition for dual-use items and technologies certain  items and technologies relevant to industries controlled by the Islamic Revolutionary Guards Corps or for Iran’s nuclear programme (Article 15 a and Annex I);
  • offers further clarification regarding the ban on supplying certain services in respect of Iranian oil tankers and cargo vessels (Article 37a) as well as  regarding the ban on supplying  vessels designed for the transport or storage of oil to Iran (Article 37b).

In addition, also with effect from 23rd December 2012, Regulation 1264/2012 added one individual and 18 entities involved in nuclear activities or providing support to the Iranian Government to the list of those targeted with an asset freeze and a travel ban. The entities include companies connected with the Iranian oil industry; the First Islamic Investment Bank; Moallem Insurance Company of Iran; and some overseas companies, such as Hong Kong Intertrade Company and Petro Suisse.

Regulations 1263 and 1264/2012, and associated HMT Financial Sanctions Notices, can be viewed and downloaded via the links below.

IG FAQ ON EU REGULATION 1263/2012 - PUBLISHED ON 29 JANUARY 2013

The International Group has published a new FAQ summarising the key provisions of amending Regulation 1263/2012 that could affect Group Clubs and their Members.

In summary the amendments to Regulation 267/2012 introduced by the new Regulation 1263/2012 prohibit the import, purchase or transport of Iranian natural gas and insurance and reinsurance related to such activities, as well as prohibiting the sale, supply or transfer of certain metals to Iran and certain naval equipment and technology for shipbuilding, maintenance or refit of ships and in particular the construction of oil tankers. It also prohibits the supply of vessels designed for the transport or storage of oil and petrochemical products to Iranians or for Iranian products, and the supply of services, including those of  Classification Societies, to Iranian flag oil tankers and cargo vessels, or to any oil tankers and cargo vessels owned, chartered or operated directly or indirectly by Iranian interests,  as well as introducing tighter financial restrictions. The Regulation clarifies that the ban on the purchase, transport or import of Iranian crude oil and petroleum products in Regulation 267 does not apply to the purchase of bunker oil intended for the propulsion of the engines of vessels, provided such bunker oil is produced and supplied by a third country other than Iran.

A copy of the FAQ can be downloaded from the link set out below.

EU REGULATION 971/2013 - EFFECTIVE FROM 12 OCTOBER 2013

The EU has implemented new sanctions measures pursuant to which entities (including non-EU entities) may be designated and subject to EU asset freezing measures.  The 3 new grounds include:

1. The person or entity has evaded or violated EU or UN sanctions.   There is no guidance as yet on the scope of this measure, hence it is unclear whether it would apply to non-EU persons engaging in trade with Iran which is not sanctionable under the laws to which they are subject, but which would be sanctionable if they were subject to the jurisdiction of the EU.  If that were to be the case, then it could be used to apply EU restrictions extra-territorially.

2. Provision of "insurance or other essential services to IRGC, or to entities owned or controlled by them or acting on their behalf".

3. Provision of "insurance or other essential services to IRISL, or to entities owned or controlled by them or acting on their behalf".

There is no definition of "essential services" so the scope of this measure is unclear.  EU insurers are already prohibited from providing insurance to IRGC and IRISL, so it seems the new measures are targeted towards non-EU entities engaging in such activities.

A copy of the Regulation can be downloaded from the link set out below.

 

P5+1 INITIAL AGREEMENT WITH IRAN FOR LIMITED EASING OF SANCTIONS - 23 NOVEMBER 2013

 

On 23 November 2013, the countries known as P5+1, (United States, United Kingdom, Germany, France, Russia and China), facilitated by the European Union, concluded a “First Step Understanding” with Iran intended to halt Iran’s uranium enrichment program for a period of six months, in return for a limited and reversible easing of sanctions. Further details of the scope of the agreement are set out in a Joint Plan of Action published by the EU on 24 November 2013 and a US State Department Fact Sheet, copies of which can be downloaded from the links set out below. It is intended that negotiations between the parties will continue with a view to reaching a broader and longer-term agreement to limit Iran’s nuclear programme. During this 6 month period, if Iran abides by its commitments, no new nuclear-related sanctions will be imposed.  

It is important to understand that the agreement does not amount to a removal of all trade sanctions against Iran.  

In a Fact Sheet published on 23 November 2013, the U.S. State Department has confirmed that the following sanctions will remain in place:

1. The broad US restrictions on trade with Iran;

2. All UN security council sanctions;

3. Sanctions affecting Iran’s crude oil exports - Iran will be allowed access to USD 4.2 billion of its oil sales but in the next 6 months Iran’s crude oil sales at their currently reduced levels cannot increase;

4. Sanctions on import by Iran of petroleum products including those imposed by “CISADA” and other laws;

5. Sanctions against the Central Bank of Iran and other designated Iranian banks and financial institutions;

6. Sanctions on those who provide a broad range of financial services to Iran including insurance;

7. The majority of Iran’s foreign exchange reserves will remain frozen and asset freezing measures will be maintained against individuals and companies;

8. Sanctions on dealings with the Iranian energy, shipping and shipbuilding industries, as well as on long term investment and  the provision of technical services to Iran’s  energy sector;

9. Sanctions targeting Iran’s military programme, its sponsorship of terrorism and abuse of human rights.

 

The main concessions on the part of the P5+1 are as follows: 

1. Not to impose new nuclear-related sanctions for six months;

2. To suspend certain sanctions on gold and precious metals, and on Iran’s auto and petrochemical sectors;

3. To license safety related repairs and inspections for Iran’s civil aviation sector;

4.   To allow purchase of Iranian oil to remain at current reduced levels (but not to increase) and to permit the transfer to Iran of US$4.2 billion from those sales;

5. Existing exemptions  for humanitarian transactions related to Iran’s purchase of food, agricultural commodities, medicine and medical devices will continue.

 

No specific details have so far been provided as to how or when these concessions are to be implemented.  U.S. sanctions imposed by a Presidential Executive Order can be lifted by the President without the approval of Congress. However, statutes passed by Congress which have already been signed into law cannot be lifted by the President alone.  The relevant EU sanctions measures are largely set out in EU Regulation 267/2012, as amended by EU Regulation 1263/2012.  The EU would need to pass amending legislation to give effect to any concessions.

Until the US and EU pass legislation to amend the existing sanctions, they remain in full force.  The IG is presently endeavouring to make contact with HMT and the UK Foreign Office for information as to how the trade restrictions against Iran are likely to be changed over the next months.

Copies of the EU Joint Plan of Action, the US State Department Fact Sheet and a commentary written by Eren Lawyers Washington can be downloaded from the links set out below. 

 

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EU REGULATION 1263/2012 PUBLISHED 22 DECEMBER 2012 (1.09 MB)
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HMT NOTICE ON EU REG 1263 24 DEC 2012 (0.12 MB)
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EU REGULATION 1264/2012 PUBLISHED 22 DECEMBER 2012 (0.97 MB)
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HMT NOTICE ON EU REG 1264 24 DEC 2012 (0.11 MB)
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IG SANCTIONS FAQ 29 JANUARY 2013.pdf (0.02 MB)
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EU Regulation 971 10 October 2013 (0.94 MB)
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White House Fact Sheet 23 November 2013 (0.12 MB)
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JOINT PLAN OF ACTION 24 NOVEMBER 2013 (0.04 MB)
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Eren Iran Sanctions Update 29 November 2013 (0.38 MB)