IRAN – Changing sanctions pose challenges to GCC businesses
SENIOR local lawyers have warned businesses against trading with Iran – or face falling foul of tough new EU sanctions. Patrick Murphy, a senior associate at Clyde & Co in the UAE said: “Reputational and regulatory pressures will compel companies to minimise trade dealings with Iran as a result of the new sanctions.
“Individuals and firms should look to carry out their due diligence and evaluate their existing relations, to ensure that they are not engaging in illegal activity that exposes them to potential liability.”
His colleague, Clyde & Co partner Christopher Mills, took the caveat a step further, suggesting: “It is absolutely vital that individuals are not only aware of regulations in the UAE, which comply with UN sanctions; but that members of the expatriate community can be exposed to criminal prosecution in their home countries.”
Both lawyers delivered their stark warning at a recent Clyde & Co organised seminar, ‘Sanctions against Iran: hindering the flow of trade,’ held in Dubai and Abu Dhabi.
More than two hundred lawyers and senior executives from the business community attended the seminars, which discussed the applicability of economic and trade sanctions on individuals and organisations in the UAE – and the impact sanctions will have on the flow of trade.
The speakers highlighted that the number of sanctions imposed is increasing; and, due to their very nature, new sanctions tend to take immediate effect – causing difficulties to businesses with long term trading relationships.
According to Clyde & Co, the growing number and complexity of sanction regimes means organisations not only have to look at their domestic law for regulatory guidance, but also the laws of other jurisdictions, in particular the United States and European Union.
For example, a new EU regulation, which came into force on March 24, 2012, increases the breadth of the EU sanctions against Iran; including a phased embargo on Iranian petroleum imports to the EU, but also the carriage or insurance of Iranian petroleum. Recent US sanctions have also targeted non-US banks that carry out significant trade with Iranian financial institutions.
Iran is a major market for businesses in the UAE with 8,000 Iranian trading firms in Dubai alone, and trade reaching US$8.7 billion in the first nine months of 2011.
Although the position in the UAE is much more tolerant than the US and EU, the ease of doing business with Iran is deteriorating as a result of the difficulty of transferring money to and from the country.
And banks have been at the frontline of enforcement actions. Most Iranian banks have been blacklisted by the US and EU.
