Sanctions Against Iran – A Short Update

By | August 28, 2015

The July 2015 agreement between Iran and the so-called P5+1 group (the 5 permanent members of the UN Security Council plus Germany) is a complex deal that provides that once Iran ends its nuclear-weapons program, western sanctions against that country- though not all – will be lifted.

Clients have asked about the effect of this on Canada-Iran business. The bottom line is that nothing in the deal will mean an immediate end to Canada’s sanctions against that country.

  • First, under the deal, sanctions mandated by the UN won’t be terminated until International Atomic Energy Agency (IAEA) verifies that Iran has complied with all its obligations. Once the IAEA confirms this, the sanctions are lifted, Iran will recover approximately $100 billion of its assets frozen in overseas banks and will be allowed to resume international oil exports.
  • Second, the agreement is between Iran, on the on hand, and the US and other Security Council members and Germany, on the other. Canada is not party to the deal and not legally bound by it. Canada could continue to apply its Iran sanctions – although it’s likely for the reasons explained below that Canada will eventually follow its allies in this regard.
  • Third, the agreement doesn’t end all sanctions against Iran but only UN-mandated sanctions – and only when the IAEA verifies that Iran has complied with all its obligations. The IAEA report is expected sometime in 2016. Once that is issues, the P-5 will approve a UN Security Council resolution to repeal or amend those sanctions.

There is a proviso that if future IAEA verifications reveal Iran has broken its commitments, these UN-ordered sanctions will snap-back into place.

Canada applies part of its Iranian sanctions under the United Nations Act, to implement binding Security Council decisions. So when the Security Council repeals its Iran sanctions resolution, Canada will follow through and revoke sanctions under that act by repealing or amending the United Nations (Iran) Regulations.

However, the July agreement with Iran only covers the ending of nuclear-related UN sanctions imposed by the US and the others. Sanctions on Iran for its conventional arms and ballistic missile programs will remain in place for several more years.

And significantly, other non-nuclear-related sanctions against Iran for its human rights abuses and support for international terrorism are not affected at all by the agreement.

This means that, even if Canada’s UN-mandated Iran sanctions are terminated, Canadian sanctions countering Iran’s human rights violations and its support for international terrorism under the Special Economic Measures Act (SEMA) will not be affected. These are not tied to UN Security Council resolutions or the requirements of Canada’s United Nations Act.

The Canadian government has provided little information so far on its position on these sanctions following the July agreement. What is pretty certain, however, is that even if Canada ends its UN-imposed sanctions and un-freezes Iranian assets in Canadian banks, it will continue to apply a wide range of sanctions against commercial and financial dealings with Iran to counter that countries terrorism activities and human rights violations.

Developments respecting Canada’s sanctions against Iran should be monitored carefully by Canadian business, keeping an eye on news releases and the web-site of the Department of Foreign Affairs, Trade and Development at: