On September 19, 2020, the US State Department issued a press release announcing the re-imposition of sanctions against Iran pursuant to the snapback process under UN Security Council Resolution 2231, the resolution that essentially terminated all UN sanctions on Iran pursuant to the Joint Comprehensive Plan of Action (“JCPOA”). At the same time, the international community has rejected this unilateral US attempt to snapback UN sanctions.
To implement the snapback of UN sanctions, on September 21, 2020, the US State Department, US Treasury Department, and the US Commerce Department issued a series of new US sanctions against Iran pursuant to a new Executive Order (“Iran Conventional Arms EO”) and the pre-existing Executive Order 13382 imposing WMD non-proliferation sanctions (“EO 13882”), among other authorities.
Attempt to Snapback UN Sanctions
The US Government’s announcement of the snapback of Iran sanctions followed its August 20, 2020, notification to the President of the UN Security Council of Iran’s “significant non-performance” of its JCPOA commitments, which the US determined sufficient basis to trigger the 30-day process leading to the snapback of previously terminated UN sanctions. The snapback of UN sanctions would consist of a return of UN sanctions previously terminated under the JCPOA. These include extending the UN conventional arms embargo and would obligate the Iranian Government to refrain from testing ballistic missiles and suspend enrichment-related activities that could support development of a nuclear weapon.
The UN, EU and E3 (the UK, France and Germany) have rejected this unilateral US action. The foreign ministers of the UK, France and Germany released a joint statement explaining that the US’ attempt to “snapback” UN sanctions did not have legal effect. Their statement cited paragraph 11 of UNSCR 2231, which permits a JCPOA participant to claim “significant non-performance of commitments under the JCPOA” and trigger the snapback procedure. The E3 contends that the US was no longer a JCPOA participant following its withdrawal from the deal in May 2018 and therefore its notification under UNSCR 2231 was invalid.
This was also the view taken by Josep Borrell, the High Representative of the EU for Foreign Affairs and Security Policy and coordinator of the JCPOA Joint Commission, who stated that the US “”cannot initiate the process of reinstating UN sanctions under the UN Security Council resolution 2231” and “sanctions lifting commitments under the Joint Comprehensive Plan of Action continue to apply.” The UN’s stance was similar, with the UN Secretary-General, Antonio Guterres, stating that the UN would not support the re-imposition of sanctions on Iran until it received clarity from the UN Security Council; Guterres noted that the majority of UN Security Council members were of the view that snapback had not been triggered.
US Government Imposes New Sanctions Against Iran
To strengthen implementation of the snapback of UN sanctions, on September 21, 2020, the US State Department, the US Treasury Department, and the US Commerce Department all announced a series of new sanctions against Iran, including:
- Issuing the Iran Conventional Arms EO extending the UN arms embargo with regard to Iran indefinitely (it was set to expire in October 2020), and providing specific authority to designate parties involved in Iran’s conventional arms acquisitions, Iran’s indigenous manufacturing programs, and Iran’s ability to support paramilitary organizations with arms and materials.
- Designating the following parties on the US Treasury Department’s Office of Foreign Assets Control’s (“OFAC”) Specially Designated Nationals and Blocked Persons List (“SDN List”), as outlined on OFAC’s website:
- Iran’s Ministry of Defense and Armed Forces Logistics, Iran’s Defense Industries Organization, and its Director, Mehrdad Akhlaghi-Ketabchi, added pursuant the Iran Conventional Arms EO;
- Venezuela’s President Nicolas Maduro for conventional arms-related activities and assisting Iran in circumventing the UN arms embargo added pursuant to the Iran Conventional Arms EO (Maduro was previously designated under Venezuela Executive Order 13692 in 2017);
- Six individuals and three entities associated with the Atomic Energy Organization of Iran (“AEOI”) added pursuant to EO 13382, which targets WMD proliferators; and
- Three individuals and four entities associated with Iran’s liquid propellant ballistic missile organization, the Shahid Hemmat Industrial Group pursuant to EO 13382.
As a result of being added to the SDN List, all property and interests in property of the identified persons and entities that are in the United States or in the possession or control of US Persons must be blocked and reported to OFAC. For purposes of the Iran Conventional Arms EO and EO 13382, “US Person” is defined as (i) US citizens and permanent residents, (ii) entities organized under the laws of the United States and their foreign branches, and (iii) any individual or entity located in the United States. In addition, non-US persons that engage in certain transactions with the Iranian individuals and entities designated may themselves be exposed to sanctions or subject to an enforcement action. Furthermore, OFAC has made clear via its press release that, unless an exception applies, any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated could be subject to US sanctions.
- Adding to the Entity List maintained by the US Commerce Department’s Bureau of Industry and Security (“BIS”) five individuals affiliated with the AEOI for alleged involvement in Iran’s nuclear weapons development program.
As a result of such additions, BIS has now imposed an export license requirement for exports/reexports and transfers to these parties by anyone of all items subject to US jurisdiction under the Export Administration Regulations (i.e., items manufactured in the United States, items exported from the United States, items manufactured outside of the United States with more than de minimis levels of controlled US content, and certain direct products of technology controlled for national security reasons), with a license review policy of presumption of denial. No license exceptions are available.