Written By: CENSA Editorial Board
On January 16, 2016 and as outlined within the Joint Comprehensive Plan of Action (JCPOA), sanctions against the Islamic Republic of Iran were lifted, releasing and returning to the Iranian economy as much as $100 billion in frozen financial assets and resources, including nearly $1.7 billion in funds originally earmarked for U.S. pre-1979 military equipment (principal and interest). The JCPOA was developed, agreed to, and advanced in July 2015 by leading nations from the European Union, the United States and Iran, endorsed from the United Nations Security Council (resolution 2231), with requirements for the International Atomic Energy Agency (IAEA). More specifically, January 16th – also known as Implementation Day – marks the date when the IAEA confirmed Iran had completed various actions regarding the down-sizing and transparency requirements pertaining to their nuclear program, as required by the JCPOA; this confirmation was presented to the UN Security Council, EU members, the United States and the greater international community. Details of the various sanctions and related program adjustments are outlined in the US Announcement here, the European Union announcement here, the United Nations Security Council here, and the IAEA here. In sum, Iran is back in the international game and, as an example, is already hosting state visits to facilitate greater international cooperation and business ties (note President Xi Jinping’s recent visit).
Also, perhaps coincidentally but more than likely not, on December 18, 2015, the United States Congress agreed to and passed notable language as part of H.R. 2029, the “Consolidated Appropriations Act” for Fiscal Year 2016. This legislation contains language from Section 404 of the Compensation for United States Victims of State Sponsored Terrorism Act and creates a fairly creative and certainly interesting legal precedent, making possible the payment of compensatory judgment claims for those individuals or families of individuals harmed by acts of state-sponsored terrorism. For example, this legislation will allow funds seized from organizations, states, or individuals known to be conducting international commerce afoul of in-place sanctions, to be awarded to individuals, classes or families of outstanding final judgments against Iran, Syria, or Sudan. Such seizures will be placed into a newly formed account, one utilized to pay families for compensatory claims and a myriad of other fees, such as expenses and requirements resulting from extremely lengthy legal proceedings. Preliminary discussions about this new law have already suggested a new approach for compensating the families of fallen U.S. Marines killed at the Beirut barracks in 1983.
Shortly after passage of this legislative provision and perhaps because it was included in the Consolidated Appropriations Act, several articles decried the new method of compensatory payment, most arguing in one form or another – “that US taxpayers were footing the bill for outstanding payments that [Iran] owed”. While this assertion is understandable, especially when juxtaposed with the details of Implementation Day and Washington’s $1.7 billion direct payment to Tehran, the legal precedent created by H.R. 2029 may usher in a new era of innovation for addressing and resolving compensatory judgments, and perhaps will create a new form of deterrence against future acts of violence by the named offenders. Further, the facts are that the “fund” outlined in this legislation will not be capitalized by U.S. taxpayers, but will first be seeded with funds from BNP Paribas, one of the largest banks in France and Europe. In 2014, BNP Paribus paid a record $9 billion in fines for violating U.S. foreign sanction laws.”
The details of the lifting of these sanctions are outlined in a US Treasury Department release entitled, “Guidance relating to the lifting of certain US Sanctions pursuant to the Joint Comprehensive Plan of Action on Implementation Day” – a release that includes a description of various restrictions being lifted to allow the flow of currency in and out of the Iranian economy. With the recent diplomatic focus on and momentum from the “nuclear deal,” it was somewhat of a surprise to see that “the U.S. Treasury department impose new sanctions – over Iran’s ballistic, not nuclear, weapons” literally within hours of the Implementation Day announcements. These actions by Treasury were consistent with the talking points that the White House emphasized during the larger nuclear deal announcements; specifically, that all sanctions weren’t being lifted and other violations of international norms would induce penalties.
Our relationship with Iran is indeed interesting, and there are U.S. companies doing business with and within Iran (summarized here); but we should not expect prominent businesses to flock to Iran just yet, as many layers of complexity remain to consider and assess about the opportunity and risk calculus of what could be an extremely influential market. But the business climate remains both opportunistic and volatile: sanctions remain in place for companies and individuals violating international norms on ballistic missile proliferation, human rights, and terrorism-related activities; several large currency movements have recently been executed to and from Iranian financial institutions; and billions of dollars’ worth of potential compensatory judgments to U.S. persons and families hang in the balance. With sanctions’ enforcement being more likely than ever before, present conditions just might be optimum (or perfect!) not only for the formalization of potentially-lucrative business arrangements but for erecting arrangements that could be nullified in short order and replaced with yet a new sanction to address a specific transgression or to allow for the pursuit of justice in more innovative ways (see the following link to consider a possible analogy: “North Korean ship pursued for seizure in case.”) Further, the fine print of H.R. 2029 allows for a 10 percent award fee to those persons or entities providing information to the U.S. Government leading to forfeiture (as the BNP Paribas case).
Could a more open Iranian economy operating within and around existing sanctions – and those likely to be put in place (given historical precedence) – lead to both a windfall for American businesses and to compensatory payments for long-patient families and individuals harmed over the years? The potential for such a scenario has been set. And while it may be too soon to predict with great certainty, present conditions offer a meaningful promise. 
Information Note on EU sanctions to be lifted under the Joint Comprehensive Plan of Action (JCPOA), 23 January 2016, Brussels. http://eeas.europa.eu/top_stories/pdf/iran_implementation/information_note_eu_sanctions_jcpoa_en.pdf
 Iran, China discuss $600B economic deals as Xi Jinping visits, 23 January 2016 http://www.timesofisrael.com/iran-china-vow-tighter-ties-as-president-xi-jinping-visits/
 Omnibus for FY 2016 - https://www.congress.gov/resources/display/content/Appropriations+for+Fiscal+Year+2016
 U.S. Freezes $2 Billion in Iran Case - http://www.wsj.com/articles/SB126057864707988237
 Iran Bank Gets Tough Hearing on Terror Award at High Court
 Americans Held Hostage in Iran Win Compensation 36 Years Later http://www.nytimes.com/2015/12/25/us/politics/americans-held-hostage-in-iran-win-compensation-36-years-later.html?
 Taxpayers pony up what Iran won’t under Terror Victim Law - http://www.washingtontimes.com/news/2015/dec/31/golden-hammer-taxpayers-pony-up-what-iran-wont-und/?page=all
 Justice for US Terrorism Victims – Paid for by a Major French Bank, January 5, 2016, Huffington Post, Frank Vogl - http://www.huffingtonpost.com/frank-vogl/justice-for-us-terrorism_b_8896402.html
 U.S. Imposes New Ballistic Sanctions on Iran, Day After Many Penalties Lifted, January 17, 2016, NPR, Camila Domonoske - http://www.npr.org/sections/thetwo-way/2016/01/17/463377946/u-s-imposes-new-ballistic-sanctions-on-iran-day-after-many-penalties-lifted
 Why U.S. businesses could lose big in Iran - http://money.cnn.com/2016/01/11/investing/iran-sanctions/