How to continue doing international business under the shadow of snapback sanctions
Following the reinstatement of the Joint Comprehensive Plan of Action (JCPOA) sanctions called “snapback”, several countries and business hubs have been hesitant in their relationships with Iranian counterparts. This is partly the result of predictions made by the headlines, and partly due to misinformation. But the truth is, Iran’s economy remains adaptable for those who seize the opportunities, even under snapback pressures.
Whether you are considering starting a business or need advice on its compliance with local and international regulations, our Compliance Advisors at Karimi & Associates Law Firm can assist you through all business burdens.
While snapback have created a wave of uncertainty for international partners because of the possibility of being engaged in prohibited transactions, it is safe to say that the effect of sanctions are not uniform across economy and all economy sectors. The energy and petrochemical sector has long been the primary target of sanctions and have forced the players to seek regional buyers or local refining. Similarly, banking and finance system requires innovative channels such as settling through alternative means including neighboring countries.
On the other hands, investors willing to benefit from the market, find their ways through humanitarian channels, mostly dealing with agriculture, food and medicine sectors. Since these three profitable and legitimate areas are exempted from US and UK sanctions framework, they continue to attract foreign engagements under humanitarian trade exceptions.
As a result of the snapback, Iranian companies and business partners have been pushed towards innovation on a domestic level. Joint ventures that transfer know-how and digital infrastructure are quite encouraged by the government and as it does not breach the sanction restrictions, it is welcomed by the competitors in this sector. Another area linked to local innovation is the renewable energy and green technologies, as they tend to address global concerns and they are driven by natural resources.
What has been primarily changed by the sanctions is not whether to do business with Iranian counterparts, but how to do business safely. In that regard, local legal insight is required to be able to identify non-restricted sectors and partners, and to manage risk allocation in contracts under snapback uncertainty and political matters. As a general rule, conducting sanctions due diligence should be the first step in every business.
Under the current circumstances, it is important to make sure of the chosen business area, the counterparts and level of liability one might be exposed to. Businesses should ensure their screening and due diligence, and be advised on compliance with the law. Practical guidance is essential for mapping contractual and operational risk when one aims to enter one of the most competitive markets in the MENA region.
Whether you already own a business in Iran or you are in business relation with Iranian counterparts, snapback necessitates comprehensive due diligence on both parties and business areas. Contractual safeguards, also, play an important role for Iranian and non-Iranian investors, doing business internationally. Our Compliance Advisors, at Karimi & Associates Law Firm with years of experience and expertise in international business relations, can assist you continue your international business safely.