In advising clients interested in doing business with Iran, I have been keen to point out that risk operates on two different levels: (1) legal risk and (2) business risk. As a sanctions lawyer, I am able to provide an assessment as to the legal risk associated with a proposed dealing involving Iran. That is indeed central to our work. However, what is most important to a client and will be ultimately determinative as to whether they pursue or engage in a particular transaction is the associated level of business risk. Business risk will be determined not only by the legal climate, but by a host of other critical factors, including, but not limited to, political events, reputational concerns, and the business environment.  In other words, legal risk is merely one of the many factors that can be inputted into the decision-making process for companies interested in commercially engaging Iran post-JCPOA.

The election of Donald Trump does not change the legal risk inherent in dealings with Iran. Companies interested in engaging in permissible transactions with Iran can do so at the present time without incurring civil or criminal penalties. Nothing has changed the legal analysis involved in looking at a given transaction and determining whether it is legally permissible or not. In this respect, the Iran nuclear deal is as it was – the law remains the law (for now).

However, President-elect Donald Trump will likely have significant influence on the business risk associated with a particular dealing. That is true for a number of different reasons, most of all the fact that candidate Trump promised to upend the nuclear deal thru its “rewriting” or “renegotiation” with Iran. Whether President-elect Trump will faithfully and strictly observe the U.S.’s JCPOA obligations – which will include, within the first 100 days, the issuance of renewed waivers to continue the suspension of sanctions lifted under the nuclear accord – is unclear at the present time, and this lack of clarity will have a significant impact on the business risk now inherent in dealings with Iran. The recent uptick in Iran-related business – as foreign firms regained confidence in their ability to navigate surviving U.S. sanctions and surety in the fact that President Obama would be succeeded by an administration that would be similarly committed to the JCPOA – will now move in reverse, as even firms interested in re-engaging their Iranian counterparts will put plans on hold for the foreseeable future. That future will likely last at least six months – if not much longer – as parties take stock of the incoming Trump administration.

Never before has the legal risk inherent in dealings with Iran been more out of line with the business risk. Companies will be able to legally pursue business with Iran over the immediate future, but their ability to do so over the long-term is now under serious threat. We will now have a better sense as to the factors that go into a decision by a company as whether to re-engage the Iranian market following the nuclear accord or to sit on the sidelines in a wait-and-see attitude. Legal risk is not the primary determinative factor as to whether firms re-engage Iran; and nowhere will this be more true than over the immediate future as companies hang back from engaging the Iranian market until the intentions of a President Trump become more clear.  If it were true before, it is never more true now: the political volatility over the nuclear deal has reached peak proportions and will hinder engagement in legally permissible transactions with Iran.