Approximately two hundred lawyers and senior executives from the business community attended a seminar entitled ‘Sanctions against Iran: hindering the flow of trade' hosted by leading international law firm Clyde & Co LLP, held in Dubai and Abu Dhabi on the 14th and 16th May respectively.
The seminar discussed the applicability of economic and trade sanctions on individuals and organizations in the UAE and the impact sanctions will have on the flow of trade. In recent years there has been an increase in sanctions legislation around the world, much of it overlapping, and with that increase comes a certain degree of uncertainty. In addition, due to the swift response needed to rapidly changing political environments, sanctions legislation tends to be implemented with immediate effect, causing difficulties to businesses with long term trading relationships.
According to Clyde & Co, the growing number and complexity of sanction regimes means that organisations not only have to look at their domestic law for regulatory guidance but also the laws of other jurisdictions, in particular the USA and European Union.
For example, a new EU regulation, which came into force on 24th March 2012, increases the breadth of the EU sanctions against Iran including not only 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 $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.
"Reputational and regulatory pressures will compel companies to minimise trade dealings with Iran as a result of the new sanctions," commented Patrick Murphy, Senior Associate at Clyde & Co. "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."
Thus far banks have been at the frontline of enforcement actions. Most Iranian banks have been blacklisted by the US and EU and international banks are choosing to err on the side of caution by minimising their interaction with them.
"It is absolutely vital that individuals are not only aware of regulations in the UAE, which comply with UN sanctions, but members of the expatriate community can be exposed to criminal prosecution in their home countries," commented Christopher Mills, Partner Clyde & Co.
Sanctions regimes have been evolving very quickly in a rapidly changing environment. The scope and complexity of regulation in this area is increasingly meaning that multinational businesses are faced with the challenge of assessing a number of sanction regimes.
Clyde & Co have recently advised clients on the imposition of trade sanctions against Iran, Syria and Libya by the US and the EU, and the actions of the Arab League and Turkey.
You can access related articles on the Clyde & Co website at www.clydeco.com.