Skip to main content

US Withdrawal from the Joint Comprehensive Plan of Action

US Withdrawal from the Joint Comprehensive Plan of Action

On 8 May 2018, President Trump announced that the US is to begin the process of withdrawing from the JCPOA agreement . At the present time, it is not clear how this withdrawal will be achieved, although OFAC has issued a set of FAQs which provide some guidance.  The precise implications for non-US persons will depend in large part upon the response from the other parties to the JCPOA (China, Russia, Germany, France, United Kingdom), who so far have indicated support for the continuation of the agreement. It is unclear how Iran will respond to this very significant development.

Winding Down Periods

At the present time, it appears that activities undertaken pursuant to US waivers under the JCPOA continue to remain lawful to perform, subject to falling within the scope of the winding-down provisions as described in the FAQs.

According to those FAQs the US intends to reinstate the US secondary sanctions that were lifted pursuant to the JCPOA, subject to a transition period of up to 90 or 180 days, in order to enable companies to wind-down activities with Iran currently authorised under the JCPOA.

Up to 6 August 2018 activities in connection with the following (including associated services) are authorised:

  1. purchase or acquisition of U.S. dollar banknotes by the Government of Iran;
  2. activities in connection with Iran’s trade in gold or precious metals;

iii. activities in connection with the direct or indirect sale, supply, or transfer to or from Iran of graphite, raw, or semi-finished metals such as aluminium and steel, coal, and software for integrating industrial processes;

  1. significant transactions related to the purchase or sale of Iranian rials, or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial;
  2. purchase, subscription to, or facilitation of the issuance of Iranian sovereign debt; and
  3. activities in connection with Iran’s automotive sector.

Up to 4 November 2018 activities in connection with the following (including associated services) are authorised:

  1. Iran’s port operators, and shipping and shipbuilding sectors, including the Islamic Republic of Iran Shipping Lines (IRISL), South Shipping Line Iran, or their affiliates;
  2. petroleum-related transactions with, among others, the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO), and National Iranian Tanker Company (NITC), including the purchase of petroleum, petroleum products, or petrochemical products from Iran;

iii. transactions by foreign financial institutions with the Central Bank of Iran and designated Iranian financial institutions under Section 1245 of the National Defense Authorization Act for Fiscal Year 2012 (NDAA);

  1. provision of specialized financial messaging services to the Central Bank of Iran and Iranian financial institutions described in Section 104(c)(2)(E)(ii) of the Comprehensive Iran Sanctions and Divestment Act of 2010 (CISADA);
  2. provision of underwriting services, insurance, or reinsurance; and
  3. activities in connection with Sanctions on Iran’s energy sector.

OFAC FAQ 2.2 reads:

2.2. Can I engage in new activity involving Iran if the activity will not extend beyond the end of the relevant wind-down period?

At the end of the wind-down periods, the State Department does not expect to issue further broad waivers of relevant statutory authorities, and OFAC plans to revoke the general and specific licenses issued in connection with the sanctions relief provided under the JCPOA that may remain in effect as of that time. (See FAQs 4.1.-4.5. for more details on the wind-down approach for general and specific licenses.) Prior to August 6, 2018, or November 4, 2018, as applicable, persons engaging in activity consistent with the U.S. sanctions relief specified in the JCPOA should take the steps necessary to wind down operations by that date to avoid exposure to sanctions or an enforcement action when the applicable wind-down period ends. When considering a potential enforcement or sanctions action with respect to activities engaged in after August 6, 2018, or November 4, 2018, as applicable, OFAC will evaluate efforts and steps taken to wind down activities and will assess whether any new business was entered into involving Iran during the applicable wind-down period. [05-08-2018]

Based on comments made by the US Government there is a serious risk that performance of new commitments entered into after 8 May 2018 which involve activities for which sanctions are to be re-imposed, are not authorised by OFAC, and are therefore sanctionable.

General License H

This license, which allows non-US subsidiaries of US persons to engage in activities with Iran consistent with the JCPOA, is to be revoked as soon as administratively feasible, to be replaced with a new license with more narrow authorisations to allow such persons to engage in winding-down transactions, up to either 6 August 2018 or 4 November 2018 as applicable.

It is expected that OFAC will clarify the precise meaning/implications once the new narrower license is issued. In the context of the Club’s reinsurances there may be a risk that (i) existing claims, and (ii) claims that might arise as a result of winding-down activities, which have an Iranian nexus, may not benefit from participation of reinsurers thus far relying upon General License H, beyond the wind-down periods.


For the time being, there does not appear to be any restriction against the provision of insurance to activities conducted within the scope of the winding-down operations as set out in the OFAC FAQs.

The Managers will continue to monitor and report on developments to the Members.