• April 19, 2024

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Does ISA Extension Violate the JCPOA?

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This weekend, Iran’s Foreign Minister Mohammad Javad Zarif sent a letter to the European Union’s Foreign Policy Chief Federica Mogherini requesting a meeting of the JCPOA’s Joint Commission to discuss the Iran Sanctions Extension Act, which was recently-enacted into law by the United States. It is unclear whether this letter is intended to trigger the dispute resolution mechanism provided for at ¶ 36 of the JCPOA’s Main Text – under which Iran can refer potential JCPOA violations to the Joint Commission for resolution – but it does provide clear evidence that Iran views the Iran Sanctions Extension Act as a U.S. violation of the JCPOA and intends to seek redress.

I have long avoided the central question of whether the Iran Sanctions Extension Act is a violation of the JCPOA and for good reason: the Iran Sanctions Extension Act has negligible practical effect for U.S. implementation of its JCPOA sanctions-lifting obligations, as the United States remains obligated to waive the application of ISA’s sanctions for the indefinite future. However, Iran remains intent on pressing the matter, meriting some reflection on Iran’s legal argument and whether it stands up to the express terms of the JCPOA.

Few here in the United States believe that the Iran Sanctions Extension Act constitutes a U.S. JCPOA violation. The Obama administration – while regretting the fact that Congress sought fit to legislate the renewal of a law for which the President had pre-existing authorities to enforce should the need arise – viewed the ISA renewal as nonetheless consistent with the U.S.’s JCPOA obligations, as it did nothing to limit the President’s power to continue to waive and the “cease the application” of ISA’s sanctions.

Meanwhile, Iran holds that the extension of those U.S. sanctions lifted under the JCPOA constitutes a JCPOA violation on the part of the United States. Less well-known, Iran has held this position consistently since the advent of the JCPOA. Evidencing this, Iran submitted a letter to the United Nations Security Council (UNSC) upon passage of UNSCR 2231 in which it stated:

It is clearly spelled out in the JCPOA that both the European Union and the United States will refrain from re-introducing or re-imposing the sanctions and restrictive measures lifted under the JCPOA. It is understood that re-introduction or re-imposition, including through extension, of the sanctions and restrictive measures will constitute significant non-performance which would relieve Iran from its commitments [under the JCPOA] in part or in whole. [italics added]

The peculiar language used in Iran’s letter is worthwhile to note. Specifically, Iran states that extension of the sanctions lifted under the JCPOA “is understood…to constitute significant non-performance,” suggesting that an ISA extension may have been discussed between the JCPOA parties and generally understood to be an effective re-introduction or re-imposition of the sanctions lifted under the JCPOA.

What is the precise language at issue in the JCPOA? ¶ 26 of the JCPOA’s Main Text states:

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 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 Congress, will refrain from imposing new nuclear-related sanctions. Iran has stated that it will treat such a re-introduction or re-imposition of the sanctions specified in Annex II, or such an imposition of new nuclear-related sanctions, as grounds to cease performing its commitments under this JCPOA in whole or in part.

Most U.S. observers contest the core idea that the ISA renewal is a re-introduction or re-imposition of a sanction lifted under the JCPOA. Specifically, it is argued that the ISA renewal is not a re-introduction or re-imposition of a sanction lifted under the JCPOA for reason being that the Iran Sanctions Act was good law at the time of the JCPOA’s enactment. By legislating ISA’s renewal, then, Congress is merely maintaining the status quo: retaining the legislative framework of the Iran Sanctions Act while permitting its continued waiver in line with U.S. commitments under the JCPOA. No sanction lifted under the JCPOA has been re-introduced or re-imposed via ISA’s renewal.

Iran contends otherwise, arguing that as a literal matter the Iran Sanctions Act was due to sunset and had to be effectively re-introduced in order to be renewed. Even if the President continues to waive its application and thus refrains from re-imposing ISA’s sanctions, ISA’s sanctions have been quite literally re-introduced in a manner that is anathema to the plain language of the JCPOA’s Main Text. It does not matter if ISA’s renewal is designed to maintain the status quo alone: the JCPOA expressly prohibits the United States from re-introducing the sanctions lifted under the JCPOA, including the Iran Sanctions Act.

Where do I come out on the issue? I find both parties to be wrong in their own respective ways. First, I think that Iran is correct that the ISA renewal is an effective re-introduction of a sanction lifted under the JCPOA, as Congress did need to legislate the Iran Sanctions Extension Act into law. As a technical matter, Iran’s position seems to me unassailable, even if I can appreciate the logic (and exasperation) of the alternative view.

But Iran’s position has a fatal flaw that no one so far has identified: the obligation to refrain from the re-introduction of sanctions lifted under the JCPOA lies with the U.S. administration – and not with the U.S. government as a whole. That is evident from the express language located at ¶ 26 of the JCPOA’s Main Text (cited above). Technically speaking, the Obama administration did not re-introduce the Iran Sanctions Extension Act and has expressed no intention of re-imposing ISA’s sanctions so long as Iran upholds its own nuclear-related commitments. So long as the Obama administration continues to cease the application of ISA’s sanctions, the U.S. administration will meet its express commitment to refrain from re-imposing the sanctions lifted under the JCPOA.  In other words, Iran correctly identifies the obligation, but fails to appreciate on whom that obligation is imposed.  In my view, that renders its legal argument ultimately defective, even if Iran may hold – in the alternative – that the Iran Sanctions Extension Act remains anathema to the “spirit of the JCPOA,” an argument that would be more in accord with the text of the JCPOA.

Tyler Cullis

Mr. Cullis is an Associate Attorney at Ferrari & Associates, P.C. where he is engaged in the practice of U.S. economic sanctions, including trade compliance, regulatory licensing matters, and federal investigations and prosecutions. Mr. Cullis has extensive experience counseling clients on matters falling under the purview of the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). He has provided counsel to U.S. and foreign parties on complex cross-border transactions and compliance with U.S. economic sanctions; conducted corporate internal investigations and developed sanctions compliance policies; and submitted license applications and voluntary self-disclosures to OFAC. Mr. Cullis has advised global financial institutions, multi-national corporations, U.S. and foreign exporters and insurers, as well as private individuals regarding U.S. sanctions matters, including matters involving Russia, Iran, and Cuba.

1 Comments

  • Good analysis. By the way, why don t you argue that ISA has not been reintroduced, but only amended before its extension. That what happened. Before it expired on December 31 it has been amended changing its expiration day.

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