There have been a number of fluctuating developments in the UN and EU’s approach to Iran over the past few weeks, with a further attempt to salvage negotiations in an agreement on 10 September. We set out further details herein, including consideration of the sanctions implications.
Political Developments
At the end of August, amid concerns regarding Tehran’s continued resistance to international nuclear oversight and Russia’s upcoming presidency of the United Nations Security Council, the E3 (France, Germany and the UK) triggered the so-called “snap-back” mechanism, as foreseen under section 37 of the 2015 Joint Comprehensive Plan of Action (JCPOA).
To this effect, on August 28, the three nations formally notified the Joint Commission, established under the JCPOA, of Iran’s “significant non-performance” under the agreement, notwithstanding their ongoing efforts to uphold the accord. This notification itself commences the process that may ultimately result in the reimposition of sanctions, as outlined below.
The E3’s referral follows a fraught sequence of events: recent Israeli and US military actions on Iranian nuclear infrastructure, Iran’s refusal to re-engage in negotiations under the threat of further attacks, and escalating disputes over access for IAEA inspectors. Notably, Iran has made clear that, should UN sanctions resume, it may withdraw from the Treaty on the Non-Proliferation of Nuclear Weapons (NPT)—a move that would severely curtail international oversight and further heighten ambiguity around its nuclear ambitions.
However, in a significant development on 10 September, Iran and the United Nations have reached an agreement described as an ‘important step’ towards restarting nuclear inspections and possibly halting the snap-back process.
The Snap-Back Mechanism: Legal Foundation and Process
As detailed in materials under our prior blog post here, the snap-back mechanism, endorsed by the UN Security Council under Resolution 2231, gives the E3 the right—set to expire on October 18—to refer Iran to the Security Council for non-compliance with its International Atomic Energy Agency (IAEA) obligations, according to a two-step dispute resolution mechanism.
In the current situation, the E3 allege that they have repeatedly engaged with Iran with viable proposals, and thereby undertaken good faith efforts to restore compliance with the JCPOA. Considering Iran’s rejection of their offers and refusal to adhere to its IAEA obligations, they concluded that Iran is in significant non-performance under the Plan of Action, and hence engaged the “snapback” mechanism as foreseen under section 37 of the agreement.
As a result, the UN Security Council has 30 days, i.e. until 27 September 2025 included, to vote on the extension of the sanctions relief granted to Iran under the JCPOA. If no agreement that satisfies all five veto-wielding UN Security Council members – including Russia and China – can be reached, then the sanctions relief measures will automatically lapse and the multilateral UN sanctions against Iran will be reinstated.
What Happens If Pre-2015 UN Sanctions Return?
If snap-back were to occur, i.e. if the agreement of 10 September does not prove to yield a solution and no other agreement to extend the JCPOA is reached, all UN member states would be required to effectively reinstate the UN sanctions regime against Iran via transposition in their domestic legislation.
Aside from the nuclear-related measures detailed below, UN sanctions would notably impose the monitoring of Iranian banks, as well as asset freezes and travel bans against listed organisations and individuals
In the EU, this would trigger the legislative process for the reactivation of the block’s broader sanctions as foreseen under Council Declaration 2015/C 345/01, based on a joint recommendation to the Council by the High Representative of the European Union for Foreign Affairs and Security Policy, France, and Germany and following the standard Common Foreign and Security Policy decision process. All 27 EU Member States would be required to vote unanimously on a Decision, followed by an Implementing Regulation.
Following this process, pre-JCPOA EU sanctions could be reinstated, including Council Decision 2010/413/CFSP and the implementing Council Regulation (EU) 267/2012 which primarily targets the oil industry and financial sector of Iran, and related product controls. This could entail:
- a ban on the export of key equipment and technology for the oil, gas and petrochemical sectors
- a ban on imports of Iranian crude oil, petroleum and petrochemical products
- a ban on joint ventures or other forms of cooperation in natural gas transmission
- a ban on the landing of Iranian cargo flights within the European Union, as well as restrictions on the maintenance and servicing of Iranian aircraft and vessels
- a ban on the trade in gold, precious metals and diamonds with the Government of Iran.
In the event of snap-back of UN sanctions, there would also likely be a corresponding reimposition of restrictive measures under the UK’s autonomous Iran nuclear sanctions regulations. These regulations transposed the remaining EU nuclear-related sanctions against Iran into UK law following the UK’s exit from the EU to ensure the UK would continue to meet its obligations under the JCPOA.
In addition, UN sanctions would require Iran, as a UN member state, to suspend uranium enrichment activities.
Under the snap-back process, all other United Nations member states would be mandated to inspect Iranian ships and aircraft, enforce stringent restrictions on the provision of nuclear and ballistic missile-related materials to Iran, prohibit the export of dual-use goods associated with nuclear and missile technology, ban Iran from engaging in ballistic missile-related activities, and implement a comprehensive arms embargo against the country.
For European businesses that retained exposure to Iranian markets, this means a return to a highly complex restrictive environment, demanding renewed diligence, robust compliance controls, and a review of existing contracts, subject to the implementation of contractual protection measures as foreseen under section 37 of the JCPOA, and announced under Council Decision (CFSP) 2015/1863 of 18 October 2015.
What Should Businesses and Institutions Do Now?
In this rapidly shifting context, businesses would do well to:
- Review all Iran-facing transactions and partnerships for renewed exposure to UN, EU, and national sanctions and export control laws
- Reassess sanctions diversion procedures to ensure proper identification of red flags in well-known Iran-related diversion hubs, particularly in the Middle East and Asia-Pacific
- Monitor official lists and updates from the UN, EU, and relevant enforcement authorities, and confirm their screening services providers are updating their lists accordingly
- Evaluate the contractual language for sanctions “snap-back” clauses and force majeure provisions
- Prepare contingency plans for suspended operations, blocked assets, and potential legal disputes
Looking Ahead
The coming weeks will be pivotal as legal deadlines approach and diplomatic positions solidify.
The outcome of the renewed UN-Iran cooperation on nuclear inspections will be closely watched, as it may influence the trajectory of sanctions and international engagement. We will continue to monitor developments and remain available for further advice or bespoke guidance.
