Export Control Advisory - UN Imposes Additional Sanctions Against Iran for Proliferation Activities

March 7, 2008

On March 3, 2008, the United Nations Security Council adopted Security Council Resolution (“UNSCR”) 1803, which imposes additional sanctions against Iran for its refusal to suspend uranium enrichment and heavy-water-related products. The Security Council approved the resolution by a vote of 14-0, with only Indonesia abstaining. This resolution follows and builds upon previous sanctions against Iran adopted by UNSCR 1696 (2006), UNSCR 1737 (2006), and UNSCR 1747 (2007). The main components of the new sanctions are the following:

Freezing the financial assets of an additional 12 Iranian companies, listed in Annex III, for supporting Iran’s proliferation activities.
Prohibition on the supply, sale, or transfer to Iran of certain dual-use items related to the nuclear program or complete unmanned aerial vehicle systems (see Item 19.A.3), except for items meant exclusively for use in light-water reactors with advance notice to the UN
Expansion of the travel ban to five additional Iranian officials, expansion of the list of Iranian individuals subject to travel restrictions, and a requirement to notify the UN of any entry into or transit through its territory by restricted individuals.
Exercise of vigilance over the activities of financial institutions in member states with banks domiciled in Iran (particularly Bank Melli and Bank Saderat), and in entering into new commitments for public-provided financial support for trade with Iran – including export credits, guarantees, or insurance.
Inspection of cargoes to and from Iran, of aircraft and vessels owned or operated by Iran Air Cargo and Islamic Republic of Iran Shipping Line, provided there are reasonable grounds to believe that the aircraft or vessel is transporting prohibited goods. Members are also required to submit a written report to the Security Council within five working days of any such inspection, including information about the inspection and the grounds therefor.

The resolution also requests a report from International Atomic Energy Agency (“IAEA”) General Director Mohamed ElBaradei within 90 days on whether Iran has fully suspended uranium enrichment activities as required by past Security Council resolutions. Member states must report to the UN within 60 days regarding the measures they have taken to implement UNSCR 1803. The Security Council stated that it would suspend the sanctions if Iran suspended all enrichment-related and reprocessing activities, but would adopt further measures if Iran does not comply with this and past resolutions.

The sanctions approved in the resolution are not likely to have any significant impact in the United States, because these restrictions are already imposed by US economic sanctions and export control laws. However, other UN member states may need to adopt specific measures to implement these sanctions. In such countries, the new travel, trade, finance, and cargo inspection restrictions may have a larger impact. In the European Union, the implementation of the resolution will require additional EU measures which, depending on the nature of the restrictive measures, will take the legal form of a Common Position followed by a Council and/or Commission Regulation.

Any business entity operating within any UN member state should review its business activities with Iran, and ensure that any such business is in compliance with the new sanctions, as implemented by UN member states. The provisions most likely to affect private parties include those regarding transactions with Iranian banks, the asset freeze provision, and trade restrictions on certain dual-use items.

Should you have any questions about this development, please contact David Lorello at +44 20 7367 8007 in London; Guy Soussan at +32 2 626 0535 in Brussels; or Michael Gershberg at 202.429.6208 or Ed Krauland at 202.429.8083 in Washington, DC.