In the case of Ministry of Defence and Support for Armed Forces of the Islamic Republic of Iran v International Military Services Ltd [2019] EWHC 1994 (Comm), the High Court examined in detail the effect of the EU sanctions regime against Iran in the context of the enforcement of arbitral awards.

The High Court found

On May 8, 2019, President Trump issued a new Executive Order expanding secondary sanctions against the iron, steel, aluminum, and copper sectors of Iran.  The Executive Order provides authority to impose sanctions on foreign persons who operate in the covered metals sectors or who facilitate significant transactions in connection with those sectors.  Unlike direct sanctions (which have long prohibited unlicensed dealings with Iran with a connection to U.S. jurisdiction), secondary sanctions threaten the imposition of sanctions against non-U.S. persons acting entirely outside U.S. jurisdiction.  Although the order is immediately effective, firms are permitted 90 days to wind down existing transactions pursuant to an accompanying OFAC FAQ.
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On January 31, 2019, France, Germany and the UK (the “E3”) announced the creation of the Instrument in Support of Trade Exchanges (“INSTEX”), a special purpose vehicle intended to facilitate legitimate trade between European companies and Iran, registered in France.  This initiative is supported by the European Union. The vehicle was created in the wake of the U.S.’ withdrawal in 2018 from the Iran nuclear deal (the  Joint Comprehensive Plan of Action (“JCPOA”)), in addition to the EU Blocking Regulation, and as part of the EU’s response to the re-imposition of U.S. secondary sanctions on Iran through the U.S. Executive Order 13846 (the “Executive Order”).  The Executive Order re-imposed the secondary sanctions regime against Iran that it have been suspended while it was a party to the JCPOA. 
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The Office of Foreign Assets Control of the U.S. Treasury Department recently issued a series of instructive press releases regarding enforcement actions taken against several companies.  The decision to publicize these enforcement actions could signal a more activist and expansionist approach to sanctions enforcement matters and may evidence a broadening of OFAC’s enforcement priorities as the long run of enforcement against financial institutions begins to wind down.  The actions demonstrate a focus on acquisition due diligence and conduct by overseas entities, and in particular on aggressive action against U.S. companies who fail to terminate sanctioned business by their newly acquired overseas subsidiaries; indeed, in a number of these cases OFAC took enforcement action despite the fact that the U.S. acquiror explicitly directed the termination of the sanctioned business, was deceived by officials of the acquired entity, and voluntarily self-reported the violation after discovering it.  OFAC has also begun to spell out, in enforcement actions, the elements of sanctions compliance programs it imposes on violators (and, presumably, would consider a benchmark for other companies).
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On November 28, 2018, the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) identified for the first time digital currency addresses associated with sanctioned persons.  The newly sanctioned individuals, Iran-based Ali Khorashadizadeh and Mohammad Ghorbaniyan, were accused of converting digital currency payments into Iranian rial as part of a widespread ransomware scheme.  Since 2015, the ransomware scheme (known as “SamSam”) has infected the data networks of corporations, hospitals, universities, and government agencies.  According to OFAC’s announcement, the identified bitcoin addresses were used with over 40 digital currency exchangers to process more than 7,000 illicit transactions in bitcoins worth millions of U.S. dollars.
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On 18 May 2018, the European Commission announced its intention to expand Council Regulation (EC) 2271/96 of 22 November 1996 (the “Blocking Regulation”) in order to discourage European companies from complying with newly re-imposed U.S. Iran-related sanctions. On 6 June 2018, the European Commission adopted a delegated regulation to enact these changes, which will come into force by 6 August 2018 (the date when the first wind-down period for the U.S. secondary sanctions on Iran expires), provided the EU Parliament and Council do not have objections.

This blogpost considers how the Blocking Regulation will work in practice for UK and European companies, in particular in light of the UK’s departure from the European Union (“EU”) in 2019.
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On May 8, 2018, President Trump announced that the United States will cease its participation in the Joint Comprehensive Plan of Action (the “JCPOA”) and reintroduce nuclear-related sanctions on Iran that were lifted following the implementation of the JCPOA, effectively restoring the 2013 Iranian sanctions program from a U.S. perspective.

The U.S. Department of the

On December 14, 2017, Cleary Gottlieb partner Paul Marquardt led a presentation titled, “Developments in U.S. Sanctions Against Iran, Russia, and Venezuela” as part of PLI’s Coping With U.S. Export Controls and Sanctions 2017 conference.

To view the full presentation, click here.

For additional information regarding the conference, please visit the event’s website.