US Implements The P5+1 Joint Plan Of Action With Iran

On Monday, January 20, the US Department of the Treasury ("Treasury") released much-anticipated guidance on its implementation of the Joint Plan of Action ("JPA") agreed to by the US, UK, France, China, Russia, and Germany (collectively the "P5 + 1") and Iran on November 24, 2013.

This guidance follows the White House release of a summary of the technical components of the JPA on January 16, 2014, as well as the release of some details of the steps that the European Union has taken to implement the JPA. The Treasury release includes several components: (i) a Guidance document on "Certain Temporary Sanctions Relief"; (ii) a Statement of Licensing Policy with respect to civil aviation; and (iii) a set of answers to "Frequently Asked Questions" about the sanctions relief.

Together, the Treasury Guidance and related materials offer meaningful detail about the terms of the JPA - but also raise the potential for challenging compliance issues. As described below, the JPA is limited to its terms and contingent upon Iran's compliance with international obligations: as such, the JPA can be suspended or reversed without advance notice. Moreover, because the P5+1 countries (as well as the EU) each have to implement the JPA through their own legal systems, there is a significant potential for inconsistent regulations across key jurisdictions. Within this framework, implementation of the Guidance is likely to have significant commercial consequences for global firms in the agriculture, energy, financial services, life sciences and pharmaceutical sectors, including those with interests in the Middle East.

Key Aspects of the JPA

Relief Is For Non-US Persons

The JPA provides relief to foreign persons—not US persons. The JPA does not authorize general commercial trade between the US and Iran. Nor does it authorize US Persons , or any foreign entity owned or controlled by a US Person, to trade with Iran - with the exception of certain commercial passenger airline transactions, and the limited types of transactions that were already permitted under US law.

Blacklisted Parties Remain Blacklisted - Mostly

The JPA does not authorize any transactions with individuals or entities on the Treasury Department's list of Specially Designated Nationals and Blocked Persons ("SDNs"), other than certain exceptions in the context of crude oil sales and civil aviation.

Major Sanctions Architecture Remains

The JPA does not eliminate the banking/energy sanctions under the Comprehensive Iran Sanctions, Accountability and Divestment Act (CISADA), as amended, or reconnect Iranian financial institutions to the SWIFT system.

JPA is Temporary and Conditional

The JPA is limited in duration to six months, from January 20, 2014 until July 20, 2014, with provisions for renewal by mutual agreement of the parties. However, the JPA is also reversible without advance notice; and does not provide a safe harbor for pre-January 20, 2014 conduct that would violate restrictions but-for the JPA. Moreover, the JPA may not be used to "grandfather" conduct beyond the 6-month period: transactions in reliance on the JPA must...