International Law Advisory - EU Adopts Common Position Imposing Trade Restrictions on Iran

On February 27, 2006, the Council of the European Union issued a Common Position (2007/140/CFSP) setting forth special trade restrictions on Iran.1 The Common Position implements requirements imposed under United Nations Security Council Resolution (“UNSCR”) 1737, which the United Nations issued in late December 2006 in response to the Government of Iran’s continued development of a nuclear weapons program.  UNSCR 1737 requires (among other measures) that UN-member countries implement laws and regulations to restrict the supply of certain specified nuclear-related goods, services, and technology to Iran, until such time that the Government of Iran has come into compliance with international commitments concerning its nuclear program.

The Common Position, which follows a political agreement reached by the Council on February 12, introduces a number of new prohibitions and licensing requirements into European Union export controls laws, including the following key measures (each of which are subject to limited exceptions):

1. A ban on the export to any person in, or for the use in, Iran, or the import from Iran, of goods or technology which could contribute to enrichment-related, reprocessing or heavy water-related activities or to the development of nuclear weapon delivery systems.  These items are defined as those currently set forth in the Nuclear Supplier Group and Missile Technology Control Regime lists, as well as any other additional items designated by the United Nations.
2. The requirement that EU member states implement a case-by-case licensing system for the export of other items, not referenced above, that could contribute to Iran’s nuclear program.  The European Community is tasked under the Common Position to identify those items.
3. A ban on the provision of services to any person in Iran, or for use in Iran, relating to the above-referenced items, including various forms of “financial assistance” and “technical assistance or training, investment, brokering or other services[.]”
4. A prohibition against the issuance of visas to persons listed in UNSCR 1737, or those subsequently designated by the United Nations or European Council as having been directly associated with or providing support for Iran's nuclear weapons program;
5. A freeze on the assets “which belong to, are owned, held or controlled, directly or indirectly by” persons and entities listed in UNSCR 1737, or those subsequently designated by the United Nations or the European Council.
6. The implementation of steps to prevent the “specialised teaching or training of Iranian nationals,” including within the Member States’ own territories, of disciplines which would contribute to Iran's nuclear weapons program.

The Common Position thus imposes significant new restrictions on companies located in the European Union that are involved in the nuclear industry.  The restriction against providing certain technical information to Iranian nationals within the territory of the European Union will, in particular, create a unique export-controls requirement that has not been widely utilized to-date in the European Union.  (This type of restriction has existed for years in the United States, and has been implemented in limited circumstances in the United Kingdom as well.)  Depending on how this new restriction is implemented by member states, companies who are engaged in nuclear-related business and have Iranian national employees may need to obtain licenses from their national authorities to continue to share technical data with those employees.  In addition, the flexibility in the Common Position to designate additional products within the broader Iran trade restrictions could result in other companies, including those outside of the nuclear sector, finding themselves subject to restrictions (again, this depends on how the Common Position is implemented).

The Common Position is binding on all member states.  It is likely, although not certain, that the Council will adopt further measures (e.g., a Regulation) under the European Community Treaty, inasmuch as the sanctions that the Common Position imposes would have a disruptive effect on economic relations between the EU and Iran.  In addition, a number of other countries have implemented measures similar to the Common Position in recent weeks in order to bring their laws into compliance with UNSCR 1737.  Given that the Security Council resolution is binding on all UN member states, it is expected that most UN members will implement similar restrictions in due course.

We will keep you informed of developments concerning the UN and EU economic restrictions against Iran.  Should you have any questions in the meantime, please contact Guy Soussan at +32 2 626 0535 or Laura Atlee at +32 2 626 0516 in Brussels, or David Lorello at +44 20 7367 8007 in London.

 1. The complete version of the Common Position is available for download.