U.S. Secretary of State Michael Pompeo announced on October 3, 2018, that the United States would terminate the 1955 “Treaty of Amity” with Iran. The decision was triggered by a ruling issued earlier in the day by the International Court of Justice (ICJ), which ordered the United States to “remove, by means of its choosing, any impediments arising from the measures announced on 8 May 2018 to the free exportation to the territory of the Islamic Republic of Iran of (i) medicines and medical devices; (ii) foodstuffs and agricultural commodities; and (iii) spare parts, equipment and associated services (including warranty, maintenance, repair services and inspections) necessary for the safety of civil aviation … .” (See also Trump and Trade Update dated May 8, 2018.)

During a press conference, Pompeo said, “In July, Iran brought a meritless case in the International Court of Justice alleging violations of the Treaty of Amity. … In light of how Iran has hypocritically and groundlessly abused the ICJ as a forum for attacking the United States, I am therefore announcing today that the United States is terminating the Treaty of Amity with Iran. I hope that Iran’s leaders will come to recognize that the only way to secure a bright future for its country is by ceasing their campaign of terror and destruction around the world.” Despite the move to terminate the treaty, Pompeo acknowledged, “Existing exceptions, authorizations, and licensing policies for humanitarian-related transactions and safety of flight will remain in effect.” He concluded his remarks by answering a question from CBS News, “We’ll see what the practical fallout is.”

The “Treaty of Amity, Economic Relations, and Consular Rights Between the United States and Iran” was entered into force on June 16, 1957, when both nations ratified its terms after its original signing August 15, 1955. Specific treaty provisions included:

  • Favorable and fair judicial treatment of nationals while traveling or living within the territory of the other party (Art II, Sec 4).
  • Recognition of a corporation/business entity’s juridical status within the territory of either party (Art III, Sec 1).
  • No restrictions or prohibitions on the importation or exportation of any product of the other party unless that product is restricted/prohibited in a similar manner from other nations (Art VIII, Sec 2).
  • Several provisions governing the treatment of consular staff and related diplomatic operations in each nation (Art XII – XIX). These clauses remained in effect despite the severance of U.S.-Iranian diplomatic relations on April 7, 1980.

Article XX of the treaty included specific carve outs for the importation/exportation of gold and silver, activities relating to fissionable materials, production or traffic of arms, and measures “necessary to protect its essential security interests.” The final article of the treaty stipulated that either party could terminate the treaty “by giving one year’s written notice” to the other party. Because of the U.S. notification this week, the treaty as written will remain in effect until October 2019.

In connection with President Donald Trump’s May 8, 2018 decision to cease U.S. participation in the Joint Comprehensive Plan of Action (JCPOA) and to re-impose all sanctions lifted or waived in connection with the JCPOA, the president has issued a new Iran-related Executive Order, “Reimposing Certain Sanctions With Respect to Iran.” This completes the first of two wind-down periods for the re-imposition of certain Iranian sanctions. The terms in the Executive Order are effective at 12:01 a.m. Eastern Daylight Time (EDT) on August 7, 2018. In addition, certain wind-down general licenses that allowed limited continued actions involving Iran will expire at 11:59 p.m. EDT on August 6, 2018. Continue Reading U.S. Treasury Re-Imposes Certain JCPOA-Related Sanctions on Iran

In response to the United States’ withdrawal from the Joint Comprehensive Plan of Action (JCPOA, also informally known as the Iran nuclear deal) on May 8, 2018, the European Union (EU) has announced that it will take several actions in an effort to continue the full implementation of the JCPOA and to protect EU businesses. These actions are:

  • Initiate the formal process to activate the “blocking statute” by updating the list of U.S. sanctions on Iran falling within its scope. The blocking statute forbids EU persons from complying with U.S. extraterritorial sanctions, allows companies to recover damages arising from such sanctions from the person causing them, and nullifies the effect in the EU of any foreign court judgments based on them. The intent is to have these blocking regulations in force before August 6, 2018, when the first wind-down period ends and certain U.S. trade and economic sanctions are reinstated.
  • Begin the formal process to remove obstacles for the European Investment Bank (EIB) to decide under the EU budget guarantee to finance activities outside the EU in Iran. This will allow the EIB to support EU investment in Iran and could be useful for small and medium-sized companies.

Before full implementation of these actions, the European Parliament and the Council of the European Union will have up to a two-month period to object to these measures. The EU has also encouraged the following actions:

  • As confidence-building measures, the European Commission will continue and strengthen the ongoing sectoral cooperation with, and assistance to, Iran, including in the energy sector and as to small and medium-sized companies. Financial assistance through development cooperation or partnership instruments will also be mobilized.
  • The Commission is encouraging member states to explore the possibility of one-off bank transfers to the Central Bank of Iran. This could help the Iranian authorities to receive their oil-related revenues, particularly with U.S. sanctions that could target EU entities active in oil transactions with Iran.

Once implemented, these measures will likely leave foreign companies in the difficult position of determining any associated risks and potential penalties of continuing business transactions in Iran in support of the EU position to maintain the terms of the JCPOA, or risk running afoul of U.S. secondary sanctions pertaining to Iran that seek to limit and possibly penalize non-U.S. companies that conduct business in Iran as well as in the United States.

President Trump has announced that the United States will withdraw from the Joint Comprehensive Plan of Action (JCPOA, also informally known as the Iran nuclear deal) that was entered into in 2015 by Iran, the United States, China, France, Germany, Russia and the United Kingdom. The JCPOA was negotiated in an effort to ensure that Iran’s nuclear program would be used exclusively for non-military, peaceful means. On January 16, 2016, the JCPOA was formally implemented and certain trade and economic sanctions against Iran were relaxed by the other parties to the deal. From its inception, the Iran nuclear deal has had its share of proponents and critics, and was a hot-button issue during the 2016 presidential election. During the campaign, and since, President Trump repeatedly stated that the deal was “one of the worst and most one-sided transactions the United States has ever entered into.” In making today’s announcement, President Trump stated that the JCPOA was “defective at its core” since it would not prevent Iran from ultimately developing a nuclear bomb. He argued that the sunset provisions of the deal and the onsite inspection provisions were clearly inadequate, and at the time when the United States had “maximum leverage,” it entered into a deal that gave Iran, a “leading state sponsor of terrorism,” billions of dollars. The president called the agreement “a great embarrassment to me as a citizen and all citizens of the United States.” Continue Reading President Trump Announces U.S. Withdrawal from Iran Nuclear Deal