THE ENFORCEMENT OF THE IRAN NUCLEAR DEAL:
FROM ITS ADOPTION TO THE PRESENT DAY
PART 1: FROM THE ADOPTION OF THE JCPOA TO THE UNILATERAL WITHDRAWAL OF THE UNITED STATES AND ITS CONSEQUENCES
A/ THE ESSENCE OF THE JCPOA AND ITS UNAVOIDABLE WEAKNESSES
On 14 July 2015, the Islamic Republic of Iran, the E3 (i.e., the United States, China and Russia), and the EU+3 (i.e., the High Representative of the European Union + France, Germany and the United Kingdom) signed a Joint Comprehensive Plan Of Action (the “JCPOA” or the “Agreement”), the so called Iran Nuclear Deal, that entered into force on 16 January 2016.
The Agreement is the result of a decade-long of unofficial and official negotiations and heralded a new era of diplomatic relations between Iran and the rest of the world.
The weaknesses of any long-negotiated agreement
When an agreement, like the JCPOA, is negotiated for such an extended period of time, it often entails that the initial positions of each party were so far apart that numerous compromises had to be found.
The outcome of such a situation cannot be satisfactory on all points for all parties. More contentious issues are often either:
- dropped, and not provided for in the agreement, given that no agreement can finally be reached on those, or
- vaguely defined so that each party can find their way around them in any event.
This is very likely what happened with certain issues in the JCPOA.
Indeed, subject matters such as the ballistic missiles’ matter or the consequences in the event a party, other than Iran, stops complying with its commitments, are of high importance.
However, these are not covered by the JCPOA whereas it is hard to believe that, during years of negotiations, none of those were mentioned.
Therefore, it is more likely that those concerns were discussed, but that no agreement could be found.
Nevertheless, even without reaching an agreement on the above-mentioned subject matters and maybe several more, an agreement, and not the least, was reached in the form of the JCPOA.
The clear aims and reciprocal commitments provided for under the JCPOA
The JCPOA defines quite clearly and precisely its aims and the commitments of the parties to the JCPOA.
The Agreement self-defines itself as marking “a fundamental shift in its consideration of [the nuclear-related] issue and expressing its desire to build a new relationship with Iran”.
Such shift feeds through reciprocal commitments.
On the one part, Iran undertakes multiple commitments to ensure “that [its] nuclear programme will be exclusively peaceful”(the “Nuclear-Related Commitments”).
On the other part, the UN Security Council, who endorsed the Agreement, the European Union and the United States commit to a “comprehensive lifting of all UN Security Council sanctions as well as multilateral and national sanctions related to Iran’s nuclear programme, including steps on access in areas of trade, technology, finance, and energy”. Said lifting has for final aim to normalize trade and economic relations with Iran and the detail of all sanctions that shall be lifted are listed in an annex of the Agreement (i.e, the Annex II of the Agreement).
The commitments of the United States under the Agreement
The JCPOA also contains certain specific commitments, in relation to the lifting of sanctions, which for the United States are that they will:
- cease the application, and will continue to do so, of all nuclear related sanctions listed under Annex II of the Agreement;
- take all appropriate steps to achieve the implementation of the JCPOA;
- actively encourage officials at the state or local level to take into account the changes in the US policy reflected in the lifting of sanctions under the JCPOA and to refrain from actions inconsistent with this change in policy;
- make its best efforts, in good faith, to sustain the JCPOA and prevent interference with the realization of the full benefit by Iran of the sanctions lifting specified in Annex II;
- refrain from re-imposing sanctions specified in the JCPOA and from imposing new nuclear-related sanctions; and
- remove the designation of certain entities and individuals from the lists maintained by the Office of Foreign Assets Control (OFAC), authority within the US Department of the Treasury, in charge of the administration and enforcement of economic and trade sanctions.
It is in consideration of such a broad lifting of sanctions, enabling the normalization of its commercial relations with the rest of the world, that the Islamic Republic of Iran agreed to commit to the nuclear-related restrictions defined under the Agreement and the increased scrutiny of the International Atomic Energy Agency (IAEA) (Learn more about the Nuclear-Related Commitments and the role of the IAEA in Part 3 “The role of the IAEA and the enforcement of Iran nuclear-related commitments”).
B/ RE-IMPOSITION OF US SECONDARY SANCTIONS IN 2018
Re-imposition of all US sanctions lifted under the JCPOA
On 8 May 2018, President Trump, announced that the United States would withdraw from the Agreement.
Following said announcement, the former president issued Executive Order 13846 dated 6 August 2018 (EO 13846) reinstating all US sanctions lifted under the JCPOA, which are in the form of “secondary sanctions”.
It is interesting to note that those sanctions which target various sectors of the Iranian economy are called “secondary sanctions”, as they target not only US persons but also non-US persons, raising the question of the extraterritoriality of US sanctions.
On the other hand, the “primary sanctions”, which target US persons and assets subject to the US jurisdiction, were never lifted under the JCPOA and thus always effective.
The two wind-down periods
The reimposition of sanctions, as provided for by EO 13846, was organized in two stages, as EO 13846 granted companies, who were doing business with Iran, two wind-down periods to stop their activities when entering within the scope of the targeted sectors.
Those wind-down periods were set as follows:
- The termination by 7 August 2018 of certain activities and/or transactions related to:
- trade in gold or precious metals,
- trade in certain graphite, raw, or semi-finished metals,
- the purchase or sale of Iranian Rials,
- the issuance of Iranian sovereign debt,
- Iran’s automotive sector,
- the purchase and/or acquisition of $U.S. banknotes by the Government of Iran.
- The termination by 5 November 2018 of certain activities and/or transactions related to:
- Iran’s port, shipping, shipbuilding sectors,
- petroleum-related transactions,
- Iran’s energy sector,
- transactions with the Central Bank of Iran and designated Iranian financial institutions,
- specialized financial messaging services to the CBI and Iranian financial institutions,
- underwriting services, insurance, reinsurance.
These wind-down periods were to offer businesses, targeted by the said sanctions, a window to cease the above-mentioned activities and comply with the newly reimposed sanctions.
Designation of Iranian entities and individuals on the OFAC lists
In addition, in October and November 2018, the OFAC forbade both US and non-US persons from engaging in any transactions with 20 new Iranian companies and banks, as well as 700 new Iranian entities and individuals, by placing them on the Specially Designated Nationals (SDN) list.
C/ THE LEGITIMACY OF THE RE-IMPOSED US SANCTIONS AND ITS IMPACT
The absence of provisions under the JCPOA with regards to the legitimacy of the reimposition of sanctions
The first consequence of the re-imposition of the US sanctions was the winding down of businesses between Iran and mostly European companies, fearing the imposition of US sanctions. But also, the termination of several important projects and negotiations.
The legitimacy of the re-imposition of sanctions was thus swiftly questioned by the parties and stakeholders of the JCPOA, that is to say the Iranians, the Islamic Republic of Iran, the European companies and the states in which the companies were located.
However, the JCPOA itself does not provide a clear answer to such question. Indeed, the case where the re-imposition of sanctions could be considered as legitimate is not clearly defined under the Agreement.
The binding force of the JCPOA
Moreover, the question of the binding force of the Agreement is a complex matter as the answer may be different according to the domestic law and legal system of each party to the Agreement.
The answer could be found in international public law as it governs the legal relations between and among states and nations; but even under international law the question of the legitimacy of a unilateral withdrawal from the JCPOA is complex.
Political or diplomatic commitments, such as those embodied in the JCPOA, are not necessarily legally binding between and among nations. Thus, a party could legally withdraw at any time without being considered as violating international law.
However, the JCPOA was endorsed by the United Nations (“UN”) and incorporated into a UN Resolution. Indeed, the JCPOA is an annex to Security Council Resolution 2231 (2015), which endorses the JCPOA.
Under the UN Charter, Member States of the UN (thus including the United States) agree to accept and carry out the “decisions” of the Security Council, meaning that such decisions are binding under international law.
Nevertheless, all UN resolutions are not considered binding. For instance, the Security Council’s “recommendations” lack binding effect according to the International Court of Justice (“ICJ”), which is the UN’s principal judicial organ. Whether a provision is understood as a nonbinding recommendation or a binding decision mostly depends on the language used in the resolution, according to legal doctrine and the jurisprudence of the ICJ.
In Resolution 2231, it seems clear that the Security Council intended the provisions that lifted UN based sanctions to be legally binding, as it “decides” to terminate former resolutions imposing sanctions. It is nevertheless less clear if Resolution 2231 creates an obligation, under international law, for the United States to withhold its domestic secondary sanctions or to comply with the JCPOA more broadly.
In its Paragraph 2, Resolution 2231, the Security Council does not “decide” nor “request” but “[c]alls upon all Members States […] to take such actions as may be appropriate to support the implementation of the JCPOA, including by […] refraining from actions that undermine implementation of commitments under the JCPOA.” The phrase “calls upon” may be subject to interpretation as if whether it creates obligations to the Member States under international law.
It is interesting to note that in a 1971 advisory opinion, the ICJ concluded that a provision in a Security Council resolution that “[c]all[ed] upon all States […] to refrain from any dealings with the Government of South Africa” was binding under the UN Charter.
But as said opinion was rendered for a different resolution taken in a different context, there is no clear answer to whether Resolution 2231 creates an obligation to comply with the JCPOA or not, as a matter of international law.
The pending proceeding before the ICJ initiated by the Islamic Republic of Iran should at some point provide an answer to that particular question.
Taking the above into consideration, it would have seemed reasonable for the United States to take the necessary actions to mirror the formalities lifting the sanctions (i.e., a UN resolution) in order to legitimately reimpose any sanction that was lifted under the “UN-endorsed JCPOA”. To do so, the United States could have simply used the tool set for this purpose and defined in the Agreement (see below the dedicated section “The Dispute Resolution Mechanism”).
The IAEA’s report concluding to the fulfillment by Iran of its commitments under the JCPOA
However, when thinking of what could trigger or justify such re-imposition, the answer that comes to mind is the non-fulfilment by Iran of its commitments.
Under the JCPOA, the organization designated to verify and monitor the fulfillment of the Nuclear-Related Commitments taken by Iran is the International Atomic Energy Agency (IAEA).
Before the withdrawal of the United States, all IAEA’s reports concluded to the respect by Iran of its commitments under the JCPOA.
Thus, the unilateral withdrawal of the United States, while the Islamic Republic of Iran was declared by the IAEA fulfilling its commitments, could be construed as an infringement of the Agreement.
The Dispute Resolution Mechanism
Nevertheless, as previously mentioned, the JCPOA does not provide for the consequence of an infringement of the Agreement by a party that is not Iran.
The Agreement sets a “Dispute Resolution Mechanism” but does not provide for any practical solution in the event one of the E3/EU+3 stops fulfilling its commitments.
According to the provisions dedicated to such mechanism under the JCPOA, the mechanism may be triggered by either Iran or any of all of the E3/EU+3 on the grounds of a possible violation of the JCPOA by Iran or any or all of the E3/EU+3.
Nevertheless, the mechanism, in its first phase, only forces discussions between the parties at the Joint Commission level for a 15-day period (extendable by consensus) and then at the Ministerial and/or the Advisory Board level for another 15-day period (extendable by consensus).
If the issue remains unresolved, the UN Security Council can be notified in the event the claimant believes the issue constitutes significant non-performance. In such case, within a 30-day period as from the notification, the UN Security Council shall vote a resolution “to continue the sanctions lifting”. If such resolution has not been voted during the 30-day period, sanctions lifted under the JCPOA could be re-imposed. This being the so called “Snap-back”.
Thus, a possible “Snap-back” is the sole concrete consequence provided for under the JCPOA in the event an issue related to the enforcement of the JCPOA remains unresolve.
As such “Snap-back” would consist in re-imposing the lifted sanctions, it goes without saying that such sanction would only make sense in the event of the violation by Iran of the Agreement and not in the event another party to the Agreement infringes it.
The grounds for Iran to stop fulfilling its commitments
In the event it is not Iran that stops to fulfil its commitments under the JCPOA but another party, nothing is provided for under the Agreement except for the following statements made by Iran, as expressly mentioned in the Agreement:
“Iran has stated that it will treat [the] re-introduction or re-imposition of the sanctions specified in Annex II, or [the] imposition of new nuclear-related sanctions, as grounds to cease performing its commitments under this JCPOA in whole or in part.”
“Iran has stated that if sanctions are reinstated in whole or in part, Iran will treat that as grounds to cease performing its commitments under this JCPOA in whole or in part.”
Thus, the re-imposition of sanctions by the United States unilaterally could be considered, under the Agreement, as giving grounds for Iran to stop performing its commitments.
However, according to the IAEA, Iran did not immediately stop performing its Nuclear-Related Commitments.
Indeed, as the unilateral withdrawal of the United States did not automatically entail the termination of the JCPOA, and as the UN and EU sanctions remained lifted, Iran first hoped that the other parties to the Agreement, and more particularly the European Union, would be able to continue to implement the Agreement, despite the re-imposition of US secondary sanctions, enabling non-US companies to continue doing business with Iran.
Unfortunately, the attempt of the EU to protect their companies from the US secondary sanctions (Read more in Part 2 “The European efforts for the survival of the Joint Comprehensive Plan of Action and the humanitarian trade with Iran”) was not sufficient to stop companies from fearing the imposition of the said sanctions when targeting their sectors of activity (cf. the question of extraterritoriality of US sanctions).
For the same reason, banks did not want to take any risk and thus refused to deal with any Iran-related transactions, without having any solid safeguards from the other parties to the Agreement.
As a consequence, the JCPOA stopped to be fully implemented in practice.
Indeed, soon after the announcement of the withdrawal in May 2018, most of the business between Iran and European countries stopped, as well as any serious negotiations for contemplated projects. Moreover, most expatriates that had moved to Iran, moved back to their homeland or someplace else in the world. Even foreign embassies started reducing their staff in Tehran.
The situation led to an economic crisis in Iran, the rise of tension between the United States and Iran, and Iran gradually stopping to perform its Nuclear-Related Commitments, as it could be foreseen under the provisions of the Agreement (Read more in Part 3 “The role of the IAEA and the enforcement of Iran nuclear-related commitments” and Part 5 “The entry into negotiations between Iran and the United States subject to the same pre-requisite for each party: “the return to strict compliance with the JCPOA”).
More to come in the next editions
Sophie Gabillot, Avocat Associée, LTO
 §xiv. of the Preamble and General Provisions of the JCPOA
 First paragraph of the Preface of the JCPOA
 Last paragraph of the Preface of the JCPOA
 §29 of the JCPOA “The EU and its Member States and the United States, consistent with their respective laws, will refrain from any policy specifically intended to directly and adversely affect the normalisation of trade and economic relations with Iran inconsistent with their commitments not to undermine the successful implementation of this JCPOA”
 Indeed due to the particular waiver mechanism existing in the United States, in order for US sanctions to remain lifted the President or the Secretary of State has to periodically renew sanctions waivers according to the relevant domestic Sanctions Acts
 §21 of the JCPOA “The United States will cease the application, and will continue to do so, in accordance with this JCPOA of the sanctions specified in Annex II to take effect simultaneously with the IAEA-verified implementation of the agreed nuclear-related measures by Iran as specified in Annex V.”
 §25 of the JCPOA “If a law at the state or local level in the United States is preventing the implementation of the sanctions lifting as specified in this JCPOA, the United States will take appropriate steps, taking into account all available authorities, with a view to achieving such implementation. The United States will actively encourage officials at the state or local level to take into account the changes in the U.S. policy reflected in the lifting of sanctions under this JCPOA and to refrain from actions inconsistent with this change in policy.”
 §26 of the JCPOA ““The United States will make best efforts in good faith to sustain this JCPOA and to prevent interference with the realization of the full benefit by Iran of the sanctions lifting specified in Annex II. The U.S. Administration, acting consistent with the respective roles of the President and the Congress, will refrain from re-introducing or re-imposing the sanctions specified in Annex II that it has ceased applying under this JCPOA, without prejudice to the dispute resolution process provided for under this JCPOA. The U.S. Administration, acting consistent with the respective roles of the President and the Congress, will refrain from imposing new nuclear-related sanctions”
 §31 of the JCPOA “remove designation of certain entities and individuals on the Specially Designated Nationals and Blocked Persons List, and entities and individuals listed on the Foreign Sanctions Evaders List, as detailed in Annex II and the attachments thereto”
 Section X of the PREAMBULE of the JCPOA: “The International Atomic Energy Agency (IAEA) will be requested to monitor and verify the voluntary nuclear-related measures as detailed in this JCPOA. The IAEA will be requested to provide regular updates to the Board of Governors, and as provided for in this JCPOA, to the UN Security Council. All relevant rules and regulations of the IAEA with regards to the protection of information will be fully observed by all parties involved”. See also the Part call “Nuclear” in the Agreement as well as Annex I which is dedicated to the nuclear-related commitments of Iran
 From his election onwards the former U.S. President, Donald Trump, sowed the seed of doubt each time the renewal of a US waiver was required to maintain the lifting of sanctions, and refused to certify, on 13 October 2017, few items to the Congress yet necessary to continue the lifting. Indeed, under section 2 (e) of the Iran Nuclear Agreement Review Act (“INARA”) which is a domestic American law, the President of the United States shall, not less than every 90 days, certify to the Congress that: 1. Iran is fully implementing the JCPOA, 2. Iran has not committed a material breach of the JCPOA, 3. Iran has not taken any action that could significantly advance a nuclear weapons program, and 4. suspension of sanctions pursuant to the JCPOA is appropriate and proportionate to the measures taken by Iran and vital to U.S. national security interests.
 Article 25 of the UN Charter “The Members of the United Nations agree to accept and carry out the decisions of the Security Council in accordance with the present Charter” and Article 48 of the UN Charter “1. The action required to carry out the decisions of the Security Council for the maintenance of international peace and security shall be taken by all the Members of the United Nations or by some of them, as the Security Council may determine. 2. Such decisions shall be carried out by the Members of the United Nations directly and through their action in the appropriate international agencies of which they are members.”
 Paragraph 7 of UN Resolution 2231 “Decides, acting under Article 41 of the Charter of the United Nations, that, upon receipt by the Security Council of the report from the IAEA described in paragraph 5:
(a) The provisions of resolutions 1696 (2006), 1737 (2006), 1747 (2007), 1803 (2008), 1835 (2008), 1929 (2010) and 2224 (2015) shall be terminated;
(b) All States shall comply with paragraphs 1, 2, 4, and 5 and the provisions in subparagraphs (a)-(f) of paragraph 6 of Annex B for the duration specified in each paragraph or subparagraph, and are called upon to comply with paragraphs 3 and 7 of Annex B”
 To be followed up https://www.icj-cij.org/fr/affaire/175, According to the last decision rendered by the ICJ on 3 February 2021, the ICJ “[f]inds, consequently, that it has jurisdiction, on the basis of Article XXI, paragraph 2, of the Treaty of Amity, Economic Relations, and Consular Rights of 1955, to entertain the Application filed by the Islamic Republic of Iran on 16 July 2018, and that the said Application is admissible.”
 §36 of the JCPOA
 Composed of the high representatives of all parties to the JCPOA
 Consisting of three members (one each appointed by the participants in the dispute and a third independent member)
 §37 of the JCPOA “Upon receipt of the notification from the complaining participant, as described above, including a description of the good-faith efforts the participant made to exhaust the dispute resolution process specified in this JCPOA, the UN Security Council, in accordance with its procedures, shall vote on a resolution to continue the sanctions lifting. If the resolution described above has not been adopted within 30 days of the notification, then the provisions of the old UN Security Council resolutions would be re-imposed, unless the UN Security Council decides otherwise”.
 Annex II of the JCPOA contains the list of sanctions lifted pursuant to the said agreement
 §26 of the JCPOA
 §37 of the JCPOA