On December 21, 2012, the Council of the European Union adopted two regulations enhancing the EU Iran sanctions. Although the EU sanctions still stop short of a comprehensive embargo, they have become an extremely complicated and far-ranging regime that affects a very wide variety of Iran-related activities.
Council Regulation 1263/2012, the main regulation adopted, implements the new Iran sanctions that the Council adopted in October 2012 under Council Decision 2012/635/CFSP. That decision, which we have previously summarized in detail, significantly strengthened the EU Iran sanctions by prohibiting:
- Transactions between EU financial institutions and Iranian banks and other financial entities without approval by the competent authority of a Member State
- Importation, purchase, or transport of Iranian natural gas into or through a Member State
- Transfer to Iran from the EU of (i) graphite and raw or semi-finished metals, software for integrating industrial processes, and (ii) key naval equipment and technology for ship-building, maintenance, or retrofit
- Construction by a Member State of new oil tankers for Iran
- Provision of flagging and classification services to Iranian oil tankers and cargo vessels
- Supply of vessels for the purpose of transporting or storing Iranian crude oil and petrochemical products
Council Decision 2012/635/CFSP also froze the assets of certain designated persons and entities involved in nuclear or ballistic missile activities or providing support to certain sectors of the Government of Iran.
Council Regulation 1263/2012 makes these new sanctions directly binding, including with respect to activities entirely outside the EU by entities and individuals with EU connections of ownership or nationality (more on this in the general points below).
Council Regulation 1264/2012 is much more limited in scope, adding 18 entities and one individual to the list of those subject to an asset freeze and certain other restrictions under the EU Iran sanctions, due to their nuclear or ballistic missile activities and/or support for the Government of Iran. The regulation also amends the entries for three entities previously on the list, and deletes two entities from the list.
For those not familiar with the rapidly-evolving EU sanctions regulations, it should be noted that under the Treaty on the European Union, matters involving foreign relations and trade (including economic sanctions) are one of the areas in which the EU Council has direct authority to legislate for all 27 Member States, by issuing regulations. The October 2012 Council decision adopting the new sanctions was an executive, political decision that new sanctions were appropriate, and the regulations adopted last week are legislation that makes the sanctions binding. (In other areas of law, such as many areas of economic regulation, the EU Council and Parliament legislate primarily through directives that must be individually implemented by the Member States.)
It is also important to note that the jurisdictional scope of EU sanctions can be quite broad. For example, under Art. 49 of Council Regulation 267/2012, the primary Iran sanctions regulation (which Council Regulations 1263/2012 and 1264/2012 amend), sanctions apply (a) within the territory of the EU, (b) on board aircraft and ships under EU jurisdiction, (c) to nationals of any Member State (wherever located),
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.