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Sanctions - Iran


US sanctions against Iran

On 8 May 2018 President Trump announced the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA), also known as the ‘Iran nuclear deal’ and the re-imposition of secondary sanctions against Iran.

In 2015 Iran and the five permanent members of the UN Security Council (China, France, Russia, the UK and the US) plus Germany and the EU entered into the JCPOA. It was aimed at restricting Iran’s ability to develop nuclear weapons in exchange for lifting economic sanctions against Iran. On 16 January 2016 the JCPOA came into effect i.e. the International Atomic Energy Agency verified that Iran had implemented its key nuclear-related commitments and as a result the UN, EU and US lifted their nuclear-related sanctions against Iran.

The sanctions which were lifted related to the financial, banking, energy, metal, petrochemical, shipping, shipbuilding, and automotive sectors in Iran and the provision of insurance, re-insurance and underwriting services. The US only lifted sanctions that apply to non-US persons (known as secondary sanctions).  US primary sanctions which apply to US persons were not lifted and remained in effect.

The re-imposition of secondary sanctions means that it is illegal for non-US persons to engage in a wide range of commercial activities with Iran including the following:

  • the purchase of petroleum, petroleum products or petrochemical products from Iran;
  • the sale or supply to or from Iran of graphite, aluminium, steel, coal and software for integrating industrial processes;
  • Iran’s port operators and its energy, shipping and ship-building sectors; and
  • the provision of underwriting services or insurance and reinsurance in respect of the above activities.

General Licence H which authorised certain transactions relating to foreign entities owned or controlled by US persons was also revoked and the US Administration re-listed hundreds of individuals, entities and vessels as Specially Designated Nationals (SDN) that were previously included on its sanctions list.  Further details are provided in a client alert produced by Freehill, Hogan & Mahar LLP here.

US banks which are subject to US primary sanctions are prohibited from processing any US dollar transactions in respect of Iran. Members should be aware that many non-US banks are cautious about processing payments relating to Iran in any currency which means that it is difficult for the club to assist members in terms of paying claims or providing security.

Members that disregard US secondary sanctions risk facing major fines in the US and/or exclusion from the US financial market. Further details are provided in FAQs issued by the US Office of Foreign Assets Control (OFAC) which can be found on the US Treasury Department website here.

EU Blocking Regulation

The European Commission responded to the US withdrawal from the JCPOA by announcing on 18 May 2018 that it would amend its Blocking Regulation (EU Council Regulation no. 2271/96) to protect EU companies from the extraterritorial effect of US secondary sanctions against Iran. 

The Blocking Regulation was first adopted in 1996 to protect EU businesses against the effects of US extra-territorial sanctions against Cuba, Libya and Iran, which the EU argued benefited US foreign policy interests at the expense of the sovereignty of EU Member States. The updated Blocking Regulation (Commission Delegated Regulation EU no. 2018/1100) came into force on 7 August 2018.

The Blocking Regulation forbids EU persons or entities from complying with US secondary sanctions and requires EU Member States to impose penalties which are ‘effective, proportional and dissuasive’ where a breach arises.  It provides protection to EU persons or entities by allowing them to recover damages in EU courts as a result of complying with such sanctions and makes US court judgments based on these sanctions ineffective in the EU. There is also a mechanism which allows EU companies to ask for an exemption if they can demonstrate that compliance with the Blocking Regulation would 'seriously damage their interests' or the interests of the EU.  

The Blocking Regulation creates uncertainty for members who are subject to EU sanctions as they may find themselves caught between breaching US secondary sanctions on the one hand or breaching the Blocking Regulation on the other. There has been caselaw which suggests that a party who relies upon a contractual right to refuse to perform an obligation under a contract (e.g. a right to refuse to trade to Iran) would not be considered to be in breach of the Blocking Regulation i.e. it may be construed as relying upon the terms of the contract as opposed to complying with US sanctions in breach of the EU Blocking Regulation (Mamancochet Mining Limited v Aegis Managing Agency Limited [2018] EWHC 2643 Comm).  However, there remains uncertainty regarding this issue.

Recent developments

Since the US withdrawal from the JCPOA, relations between Iran and the other parties to the JCPOA has deteriorated. In May 2019 Iran announced that it would no longer abide by its commitments. On 14 January 2020 France, Germany and the UK triggered the JCPOA dispute resolution mechanism by referring the issue of Iran’s non-compliance to the Joint Commission of the JCPOA.  If this issue is not resolved it may lead to the collapse of the JCPOA and the re-imposition of EU and UN sanctions against Iran.

We remind members who are considering trading to Iran that they will need to undertake extensive due diligence to ensure that the trade or activity is not subject to sanctions and that they do not trade with individuals or entities that are named on the US or EU sanctions lists. We refer members to the detailed guidance regarding the need to carry out enhanced due diligence on the main sanctions page on the club website.


The US Treasury and the US Office of Foreign Assets Control (OFAC) has issued detailed Guidance and FAQs relating to the lifting of US secondary sanctions under the JCPOA:

Guidance Relating to the Lifting of Certain Sanctions Pursuant to the Joint Comprehensive Plan of Action on Implementation Day

Frequently Asked Questions Relating to the Lifting of Certain U.S. Sanctions under the Joint Comprehensive Plan of Action (JCPOA) on Implementation Day

The US Consolidated sanctions list

The EU Consolidated sanctions list

Circulars issued by the club

31 May 2018, Standard Europe circular - Iran sanctions - US withdrawal from the joint comprehensive plan of action

9 August 2018, Club Circular – Iran sanctions – EU Blocking Regulation

14 April 2016, Standard Club circular - Iran Trading, P&I cover

22 March 2016, Standard Club circular - Iran trading P&I cover update

23 February 2016, Standard Club circular - Iran trading, P&I cover

20 January 2016, Standard Club Circular - Iran Sanctions lifting of certain sanctions under the JCPOA