Those “Snap-Back” Sanctions in the Iran Deal Have a Pretty Big Loophole

by Julian Ku

I don’t have a profound take on the Iran Deal (full text here) announced today between Iran and the P-5+1 leading world powers. From my understanding of this agreement, I am doubtful it will work out to benefit the U.S. and the E.U., but I don’t feel particularly strongly on this point. There are more than enough commentators out there who have strong opinions on the merits, a few of whom are even worth reading!

Here at Opinio Juris, we have concentrated on the key legal aspects of the Iran Deal in previous posts.  As Duncan has explained, the Iran Deal is not a binding international agreement.  As I have noted, the Iran Review Act does not actually require Congress to vote in order to approve the deal, and it allows the President to veto any congressional vote of disapproval.  Additionally, I think a future president could withdraw from the Iran Deal without violating either international law or the Constitution. (It’s nonbinding under international law and it’s not a treaty nor an congressional-executive agreement for U.S. constitutional purposes).

In this post, I would like to focus on another interesting legal quirk. In order to sell the bill to Congress and the U.S. public, the Obama Administration has insisted on some provisions to re-impose sanctions if Iran is caught cheating.  In earlier discussions, the President has called for “snapback” provisions in the Iran Deal.  In other words, if Iran is caught cheating, the prior UN Security Council Resolutions would be “automatically” re-imposed without going back for a new vote of the Security Council.

I have been skeptical about how this would work, as a legal matter. But the Iran Deal does indeed contain language calling for something like a “snapback” sanction.

37. Upon receipt of the notification from the complaining participant, as described above, including a description of the good-faith efforts the participant made to exhaust the dispute resolution process specified in this JCPOA, the UN Security Council, in accordance with its procedures, shall vote on a resolution to continue the sanctions lifting. If the resolution described above has not been adopted within 30 days of the notification, then the provisions of the old UN Security Council resolutions would be re-imposed, unless the UN Security Council decides otherwise….

I suppose it is theoretically possible for this mechanism to work, as long as the UN Security Council resolution lifting sanctions on Iran contains language incorporating this “snapback” process.  The Iran Deal, we should recall, is not a binding agreement and cannot bind the Security Council. I am not aware of similar instances where terminated UN Security Councils could be automatically revived upon a finding of non-compliance, but I am hardly an expert on this subject so I would welcome any readers who can offer some examples.

In any event, there is one more rather large loophole. Paragraph 37 goes on to insulate contracts with Iran that have already been made from whatever “snapback” sanctions that are imposed:

…In such event, these provisions would not apply with retroactive effect to contracts signed between any party and Iran or Iranian individuals and entities prior to the date of application, provided that the activities contemplated under and execution of such contracts are consistent with this JCPOA and the previous and current UN Security Council resolutions.

Since there is likely to be a “gold rush” of business rushing to sign deals with Iran upon lifting of sanctions, this exception might prove a pretty big hole in the “snapped-back” sanctions.   The expected Chinese and Russian deals with Iran for arms sales and oil purchases could survive any snapback, even if Iran was caught cheating.

So even if “snapback” works legally, it would have pretty limited impact practically.Or am I missing something?

http://opiniojuris.org/2015/07/14/those-snap-back-sanctions-in-the-iran-deal-have-a-pretty-big-loophole/

8 Responses

  1. This is a very interesting question. I believe the sanctions encompass much more than commercial contracts. For example, they effectively blocked Iran’s access to the international financial system. However, those contracts still are valuable.

  2. Thanks for the post , and old saying goes like that :

    Piss upon the US , you would get wet , US pissing on you , well, you are surly flooded and drowned as hell .

    Not long time ago, a huge bank, called ” BNP Paribas “, pissed of uncle SAM, dealing with the Iranians ( among others ) while bypassing restrictions and sanctions imposed by US , and the result, a fine of not less than:

    9 billion dollars…. ( see link )

    So, you are right, maybe it wouldn’t be the same, but only maybe, since, even here, with Iran , the Americans , didn’t exhibit yet , their full range of capacity in this regard .

    Link :

    http://www.bloomberg.com/news/articles/2014-06-30/bnp-paribas-charged-in-sanctions-violation-probe-in-new-york

    Thanks

  3. In the long game, I would suspect that states could impose new sanctions outside of the UN Security Council regime to block those deals done in between the two dates. Kerry said as much on Morning Joe this morning. Feature of state sovereignty.

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