Snapback of Iran Sanctions: Now in Full Effect

International Trade & Compliance Client Alert
November.12.2018

As described in our prior alert, November 5, 2018 marked the full return ("snapback") of U.S. Iran-related sanctions measures lifted or waived pursuant to the Iran nuclear deal (the Joint Comprehensive Plan of Action or "JCPOA"). This snapback followed termination of U.S. participation in the JCPOA on May 8, 2018.

Revisiting the five crucial points about snapback from our May 11 alert:

Sanctions Measures Lifted or Waived Pursuant to JCPOA Are Back in Effect: As described in more detail below, the following Iran nuclear-related sanctions measures are now fully back in effect, as of August 6 and November 5, depending on the sanctions measure:

Application of suspended primary sanctions prohibitions to U.S.-controlled companies engaging in Iran-related activity and to certain previously exempt activities of U.S. persons themselves.
Secondary sanctions measures that authorize or mandate imposition of sanctions against non-U.S. companies for engaging in specified dealings related to Iran, including those involving Iran's financial, energy and shipping sectors.

Revocation of General License Authorizations for U.S.-Controlled Entities: United States-controlled entities acting outside of the United States and their U.S. parent companies no longer have authorization under "General License H" to engage in business related to Iran. As of November 4, 2018, General License H beneficiaries were generally required to have terminated any activity lawfully undertaken under General License H.
Revocation of Other Exceptions to Primary Sanctions: United States persons and U.S.-controlled entities are again generally prohibited from engaging in supply of civil aircraft and parts and components to Iran and related activities absent a flight safety-related specific license, as well as from importing Iranian-origin carpets and foodstuffs.
Secondary Sanctions: Previously lifted or waived secondary sanctions measures addressing Iran-related activities in the following sectors of Iran's economy are fully back in force: (i) finance and banking, including activities such as provision of loans, investments, securities, foreign exchange services (including Iranian rial-related transactions), specialized financial messaging services and purchase, subscription to and facilitation of the issuance of Iranian sovereign debt, (ii) energy and petrochemicals, including activities such as investments, exports, acquisitions, sales, transportation and marketing, (iii) insurance, including provision of underwriting services, insurance and re-insurance, (iv) shipping, shipbuilding and ports, (v) gold and other precious metals, (vi) software and metals and (vii) the automotive sector. As has been widely reported, the Trump Administration has indicated that, for certain countries and to a limited extent, it will waive a general requirement to impose secondary sanctions in response to dealings regarding Iranian crude oil.
SDN Designations: On November 5, 2018, in the largest Iran-related single-day sanctions action, the U.S. government added more than 700 individuals, entities, aircraft and vessels to the Specially Designated Nationals and Blocked Persons List ("SDN List") in connection with Iran. This includes nearly 250 persons and associated blocked property returned to the SDN List from other OFAC-administered sanctions lists.

Given that U.S. persons remained generally forbidden to deal with Iranian and Iran-related blocked persons even following the relaxation of sanctions under the JCPOA, the designations are expected to primarily affect non-U.S. persons' risk under secondary sanctions measures. As described in our prior alert, non-U.S. persons may once again be exposed to U.S. secondary sanctions if they engage in certain dealings with Iranian or Iran-related persons added to the SDN List.

Authors

Harry Clark Partner, International Trade and Investment, Mergers & Acquisitions

Washington, D.C.

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D:+1 202 339 8499
E: [email protected]

Practice:

Technology & Innovation Sector
International Trade and Investment
Mergers & Acquisitions
Responsible Business
Strategic Advisory & Government Enforcement (SAGE)

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Harry Clark Partner

Washington, D.C.

Harry is experienced in areas such as CFIUS/Exon-Florio examinations of foreign investment, military and “dual use” export control regulations (ITAR/EAR), economic sanctions administered by the U.S. Treasury Department (OFAC), customs regulations, the Foreign Corrupt Practices Act, anti-money laundering rules, anti-boycott requirements and defense industrial security requirements. He executes internal corporate investigations regarding trade and investment rules and advises on such rules in the context of corporate transactions.

Additionally, Harry has extensive experience with government contracting matters. His government contracting work has included, for example, design and implementation of U.S. Defense Department renewable energy projects. He also represents broad industry coalitions on major trade litigations and international negotiations. His experience in these areas includes a leading role in what is often considered the largest-ever international trade dispute: the controversy regarding unfair softwood lumber imports from Canada. It has involved myriad administrative proceedings before federal agencies, NAFTA panel appeals, WTO dispute proceedings, judicial proceedings and international settlement agreements.

Harry has represented a coalition of major U.S. oil companies in antidumping and countervailing duty litigation. As a related matter, he pursues policy issues with congressional and executive branch officials and advises on international trade rules (e.g., GATT, WTO agreements and NAFTA).

Chambers 2022 recognizes Harry as a leader in the field of export controls and economic sanctions (Chambers Global and Chambers USA), as well as CFIUS (Chambers USA). Previous editions have also recognized Harry’s achievements regarding his work related to the Foreign Corrupt Practices Act. Clients note that Harry provides “accurate, straightforward guidance incredibly efficiently” and “he has an ability to translate complex legal requirements and rules into business-friendly jargon.”

Elizabeth Zane Partner, International Trade and Investment, Mergers & Acquisitions

Washington, D.C.

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D:+1 202 339 8532
E: [email protected]

Practice:

International Trade and Investment
Mergers & Acquisitions
Strategic Advisory & Government Enforcement (SAGE)

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Elizabeth Zane Partner

Washington, D.C.

Elizabeth's experience includes work on internal investigations, voluntary disclosures, commodity jurisdiction requests and developing and implementing compliance programs. She also advises clients on government contracting matters.

Evgeniya Shakina Senior Associate, International Trade and Investment, Strategic Advisory & Government Enforcement (SAGE)

Washington, D.C.

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D:+1 202 339 8520
E: [email protected]

Practice:

International Trade and Investment
Strategic Advisory & Government Enforcement (SAGE)

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Evgeniya Shakina Senior Associate

Washington, D.C.

As part of her practice, Evgeniya advises clients on economic sanctions administered by the U.S. Department of the Treasury (OFAC), export control regulations (EAR/ITAR), the Foreign Corrupt Practices Act and federal procurement regulations.

She also has experience assisting clients in unfair trade practice disputes, including antidumping and countervailing duty proceedings, CFIUS/Exon-Florio examinations of foreign investment, and trade compliance due diligence in corporate transactions.

Gregory I. Hume Economist and Compliance Specialist, Mergers & Acquisitions, International Trade and Investment

Washington, D.C.

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Practice:

Mergers & Acquisitions
International Trade and Investment
Strategic Advisory & Government Enforcement (SAGE)

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Gregory I. Hume Economist and Compliance Specialist

Washington, D.C.

Greg assists in a variety of regulatory and investigatory activities relating to the Committee for Foreign Investment in the United States (CFIUS), export controls, economic sanctions and anti-boycott regulations, including the preparation of CFIUS Notices, voluntary disclosures, internal audit documentation and compliance policies and procedures. He also actively participates in corporate transaction due diligence related to Trade Controls and the Foreign Corrupt Practices Act, as well as internal investigatory activities.

With over 20 years' experience in antidumping and countervailing duty investigations (and consequent administrative reviews) of unfairly-traded goods, Greg has been centrally involved in the statistical, economic and financial analysis of the confidential pricing, logistical, marketing and accounting information submitted by parties in such cases, as well as supporting the drafting and review of briefs and other pleadings filed by parties in the cases. Among the unfair trade cases in which he has participated are those involving crystalline solar voltaic panels, softwood lumber, warmwater shrimp, wooden bedroom furniture, outboard motors and various flat-rolled steel products.

Greg has frequently presented litigation-related testimony before the International Trade Administration and actively participates in representing firm clients before the U.S. Department of Commerce, the International Trade Commission, the Court of International Trade, the Court of Appeals for the Federal Circuit and the World Trade Organization.

Greg actively participated in the negotiation of a major international trade agreement involving billions of dollars of trade, and the subsequent monitoring of that agreement. In binding arbitration emerging from that agreement, he developed a damages estimate adopted by the U.S. Government and accepted by the arbitral panel.

Greg also supports a variety of litigation efforts requiring data analysis, and has developed and analyzed damages estimates for various arbitration and litigation matters.