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After reluctantly implementing the Iran nuclear agreement—also known as the Joint Comprehensive Plan of Action (JCPOA)—for over a year, President Trump announced today that he is pulling the United States out. He described the agreement as “a horrible, one-sided deal that should have never, ever been made” and signed a presidential memorandum directing federal agencies to “re-impose all United States sanctions lifted or waived in connection with the JCPOA” within 180 days. Trump stated that the United States “will be instituting the highest level of economic sanction” against Iran.
The announcement came just days before the first of several statutory deadlines that would have required the president to extend waivers in order to continue suspending nuclear sanctions lifted as part of the implementation of the JCPOA. This post offers some preliminary thoughts on what to watch for next from a legal perspective.
How We Got Here
Under the JCPOA, the United States committed to lifting a range of economic sanctions imposed over Iran’s nuclear program. The Obama administration implemented that commitment on Jan. 16, 2016 (“implementation day”). President Obama exercised statutory waiver authorities granted to the president by a number of statutes that imposed sanctions on Iran: sections 212-213 of the Iran Threat Reduction and Syria Human Rights Act; sections 1244-1247 of the Iran Freedom and Counter Proliferation Act; section 1245(d) of the National Defense Authorization Act for fiscal year 2012, also known as the Kirk-Menendez Amendment; and section 4(c)(1)(A) of the Iran Sanctions Act (as amended). Those waivers have to be renewed every 120-180 days, depending on the statute.
In addition to exercising statutory waivers, Obama rescinded a number of executive orders that imposed nuclear sanctions against Iran—specifically, Executive Orders 13574, 13590, 13622, and 13645, as well as sections 5–7 and 15 of Executive Order 13628. The administration also de-listed a large number of persons and entities designated as Specially Designated Nationals (SDN) and Foreign Sanctions Evaders, as well as other persons and entities that appeared on the Non-SDN Iran Sanctions Act List. The Treasury Department’s Office of Foreign Asset Control (OFAC) maintains all of these lists. SDN designations also trigger secondary sanctions, such as those provided for in the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA) and the Iran Freedom and Counterproliferation Act (IFCA). The Congressional Research Service has succinctly described these secondary sanctions as “largely clos[ing] the U.S. economy to third-country entities that conduct transactions with Iran-related SDNs.”
The Obama administration maintained that the JCPOA was a non-legally binding political commitment, notwithstanding the agreement’s endorsement by U.N. Security Council Resolution 2231. Therefore, Obama could conclude the agreement on his own without Senate approval. Criticizing the legislative branch’s exclusion from the process of concluding the JCPOA, Congress enacted the Iran Nuclear Agreement Review Act (INARA), which required the president to submit any nuclear agreement with Iran for congressional review and created a mechanism for congressional oversight over the implementation of the agreement.
Additionally, INARA requires the president to certify every 90 days that Iran is in compliance with the JCPOA and that it remains in the U.S. interest to suspend sanctions as part of the implementation of any agreement. If the president does not provide the required certification, Congress can (but is not required to) re-impose sanctions under expedited procedures provided for in INARA within 60 calendar days of the certification deadline. Such expedited procedures are also available if the president reports that Iran has materially breached the agreement.
On Oct. 13, 2017, while rolling out a new Iran strategy, Trump announced that he would not provide the required certification under INARA. That announcement, however, did not immediately impact the implementation of the JCPOA, as the president renewed the statutory sanctions waivers shortly thereafter. Nor did the administration re-issue the rescinded executive orders or re-designate de-listed persons and entities. And Congress did not move to re-impose nuclear sanctions either.
In Jan. 2018, when the time came to renew the statutory waivers once again, President Trump indicated that this would be the last time. He posed an ultimatum to the other parties to the JCPOA, demanding that the agreement be “fixed” as a condition of continued U.S. participation. Specifically, he wanted a revamped JCPOA that would apply greater pressure on Iran for its ballistic missile activity and its various other activities in the Middle East and elsewhere. Trump also demanded the removal of the agreement’s sunset clause, which provides that limitations on Iran’s nuclear program would be lifted after 15 years of successful implementation (i.e., in 2030). It is noteworthy that the agreement as written clearly states that, even after those limitations are lifted, Iran must never purse nuclear weapons.
Despite their strong support for the JCPOA in its current form, the European parties to the agreement have made an effort over the past several months to address Trump’s demands. They have also attempted to dissuade Trump from following through on his pledge. French President Emmanuel Macron and German Chancellor Angela Merkel voiced support for the JCPOA in their recent visits to Washington, D.C. and the United Kingdom has also stressed the importance of maintaining the agreement. Today’s announcement clearly indicates that these efforts to reach a compromise failed.
By contrast, Israel led the charge against the agreement, complete with Prime Minister Benjamin Netanyahu’s theatrical presentation of material that Israeli agents obtained pertaining to Iran’s nuclear weapons program, which President Trump referenced the presentation and the materials in his statement. Many commentators dismissed this material as a rehashing of widely known facts, though it is difficult to tell without actually reviewing it in detail.
The multiple deadline-induced crises created by the Trump administration have produced volumes of commentary about the motivation behind Trump’s insistence on pulling out of the JCPOA and the political and strategic wisdom of doing so. I will not address these questions here. Instead, I will focus on the immediate legal implications of Trump’s announcement and what we should be looking out for over the coming days and weeks. There are three potential legal components of the implementation of the U.S. withdrawal: the bilateral component, the process for terminating the JCPOA under its own terms, and the U.N. Security Council component.
1. The Bilateral Component
Trump’s decision not to extend the statutory sanctions waivers will result in those sanctions being gradually re-imposed beginning on May 12. If Congress is interested in protecting the JCPOA, legislators may theoretically be able to push through legislation that would lift those statutory sanctions, but there is scant evidence that this is a politically viable option.
As previously mentioned, in order to restore Iran sanctions to their pre-JCPOA state (and potentially add more sanctions), the Trump administration will need to take additional measures, including re-issuing executive orders and re-designating de-listed persons in entities. Section 3 of the presidential memorandum signed today by Trump instructs the Secretary of State and the Secretary of the Treasury to do just that as soon as possible and “in no case later than 180 days from the date of this memorandum.” Separately, the Treasury Department issued a guidance describing the pace at which it will be reinstating various sanctions over the 180 days.
The direct effect of such re-designations will probably be limited, because Iranian persons and entities have likely already removed their assets from the jurisdiction of the United States. But the indirect effect of the re-designations could be significant, as they may trigger secondary sanctions that penalize third parties for doing business with Iranian nationals by restricting their access to the U.S. market (more on this below).
2. Termination Under the JCPOA
The JCPOA itself contains provisions on dispute resolution (paragraphs 36-37 of the main text of the agreement, annexed to the text of resolution 2231). Any party can—but is not required to—raise a compliance issue through that dispute resolution mechanism, which includes a Joint Commission, ministerial-level consideration, and consideration by an Advisory Board created by the JCPOA (something akin to an arbitration). However, paragraph 36 of the JCPOA states that:
If the issue still has not been resolved to the satisfaction of the complaining participant, and if the complaining participant deems the issue to constitute significant non-performance, then that participant could treat the unresolved issue as grounds to cease performing its commitments under this JCPOA in whole or in part and/or notify the UN Security Council that it believes the issue constitutes significant non-performance.
Whether it chooses to first raise the issue of U.S. non-compliance through this mechanism or not, Iran would be well within its rights to stop implementing its own JCPOA obligations once the United States re-imposes nuclear sanctions. But Iran might also choose to continue implementing the agreement together with the other parties without the United States. Immediately after Trump’s announcement, the United Kingdom, France, and Germany issued a joint statement making clear their intention to continue implementing the agreement. Russia and China have indicated that they intend to stay in the JCPOA as well. And Iranian President Hassan Rouhani has indicated that Iran will enter into negotiations with these other parties on remaining in the JCPOA. This leaves the United States in a precarious position: isolated from the other parties to the agreement, whose nationals will continue doing business with Iran while U.S. nationals will be barred from doing so.
A key source of friction will likely be the re-activation of U.S. secondary sanctions, which would target European and other companies and intuitions that do business with Iran. European officials are reportedly already examining options to protect European companies and individuals from U.S. sanctions. One such option is a so-called EU “blocking regulation,” which would prohibit compliance with U.S. secondary Iran sanctions. The EU has introduced a blocking measure in the past to counter U.S. extraterritorial sanctions against Cuba and Iran.
3. The U.N. Security Council Component
U.N. Security Council Resolution 2231, which endorsed the JCPOA, also terminated all the previous resolutions concerning Iran’s nuclear program: resolutions 1696 (2006), 1737 (2006), 1747 (2007), 1803 (2008), 1835 (2008), 1929 (2010), and 2224 (2015). At the same time, however, operative paragraphs 11-12 of Resolution 2231 created what became known as a “snap-back” mechanism. The mechanism allows a single party to the JCPOA to trigger a process to re-impose Security Council sanctions related to Iran’s nuclear program. Operative paragraph 11 further provides (emphasis added):
[The U.N. Security Council] [d]ecides, acting under Article 41 of the Charter of the United Nations, that, within 30 days of receiving a notification by a JCPOA participant State of an issue that the JCPOA participant State believes constitutes significant non-performance of commitments under the JCPOA, it shall vote on a draft resolution to continue in effect the terminations in paragraph 7 (a) of this resolution [which lists the resolutions to be terminated under the JCPOA] . . . .
In other words, if a party to the JCPOA notifies the U.N. Security Council that “significant non-performance of commitments under the JCPOA” have occurred, the council is required to vote on a resolution to continue the suspension of Security Council sanctions. Operative paragraph 12 then provides:
[The Security Council] [d]ecides, acting under Article 41 of the Charter of the United Nations, that, if the Security Council does not adopt a resolution under paragraph 11 to continue in effect the terminations in paragraph 7 (a), then effective midnight Greenwich Mean Time after the thirtieth day after the notification to the Security Council . . . all of the provisions of resolutions 1696 (2006), 1737 (2006), 1747 (2007), 1803 (2008), 1835 (2008), and 1929 (2010) that have been terminated pursuant to paragraph 7 (a) shall apply in the same manner as they applied before the adoption of this resolution . . . .
Thus, if the Security Council does not vote to continue suspending sanctions concerning Iran’s nuclear program, those sanctions will automatically resume within 30 days of the notification.
It is not clear that the U.S. has a basis for notifying the Security Council that Iran is in “significant non-performance” of the JCPOA. While the presidential memorandum mentions two instances of Iranian non-compliance, the IAEA and the other parties to the agreement have repeatedly emphasized that Iran is generally in compliance with its obligations. The U.K., France and Germany reiterated that Iran is in compliance with the JCPOA in their statement today.
If the U.S. does attempt to trigger this “snap-back” mechanism, however, it appears that there is little the other members of the Council can do to prevent Security Council sanctions being re-imposed. Even if the notification of non-performance were completely baseless, the U.S. veto power would likely block any attempt by the other members of the Council to pass a resolution that would continue the suspension of relevant U.N. sanctions. In their statement, the U.K., France and Germany seemed to plead with the U.S. not to activate the snap-back mechanism at the Security Council. “We call on the US”, they said, “to do everything possible to preserve the gains for nuclear non-proliferation brought about by the JCPoA, by allowing for a continued enforcement of its main elements.” If the U.S. only re-imposes bilateral sanctions, the JCPOA might survive without it. But if U.N. sanctions are re-imposed, it is doubtful that the agreement would survive. Trump’s memorandum does not explicitly mention triggering the “snap-back” mechanism.
Finally, there is the question of whether United States itself violated its international legal obligations by pulling out of the JCPOA (as opposed to its political commitments to Iran and the other parties). Other parties to the JCPOA have argued that the agreement is legally binding by virtue of its endorsement by the U.N. Security Council. As previously mentioned, however, that was not the position of the Obama administration and commentators have doubted whether resolution 2231 in fact transformed the commitments included in the JCPOA into binding international law. The fact that the part of the JCPOA that outlines those commitments is entitled “Iran and E3/EU+3 will take the following voluntary measures within the timeframe as detailed in this JCPOA and its Annexes” (emphasis added) supports this latter position.
Trump’s move today was a long time coming. Its immediate consequences will be the gradual re-application of statutory sanctions over the coming months. Additional measures to impose sanctions by executive order may take up to six months, according to today’s presidential memorandum.
One of the main questions now is whether the JCPOA can survive the U.S. withdrawal. Whether the United States decides to move to re-impose U.N. Security Council sanctions will no doubt be critical in this regard. If Security Council sanctions remain suspended, the other parties may be able to continue implementing the agreement if they so choose. But it will be incredibly difficult to keep the agreement alive if the full scope of the comprehensive sanctions regime that existed prior to the JCPOA is reinstated.
Another major question is how the other parties to the agreement might respond to U.S. secondary sanctions.
What is clear is that all the other parties to the JCPOA intend to stay in the agreement notwithstanding the U.S. withdrawal. And it is doubtful that Trump’s move will encourage any international cooperation on increasing pressure on Iran and addressing all the negative aspects of its behavior. If anything, it may undermine such cooperation.