Could special payment vehicle save EU-Iran trade?uld special payment vehicle save EU-Iran trade?

Mohsen Masjedi. Lawyer


Following the withdrawal announcement from Joint Comprehensive Plan of Action (“JCPOA”) by Trump administration, the secondary sanctions retargeted the international businesses intending to deal with Iran. Already today, almost all of the major European companies have left their projects in Iran and the regular trade between Iranian and EU members faces serious banking and payment challenges. On late January, France, Germany and the United Kingdom announced the establishment of INSTEX SAS (“Instrument for Supporting Trade Exchanges”) as their promised contribution in keeping the JCPOA in place. The INSTEX has supported by the EU, which affirmed it’s willing to work on the instrument with Iranian counterparts to make it operational. It could be argued that the success of the Instrument is the only existing factor that could survive part of the expected economic benefits that Iran gambled for during the nuclear negotiations. The effort has been made yet could be described as symbolic. Apart from various technical and legal barriers against operationalising the mechanism, it is not clear that to what extent it could protect European companies from being targeted by US secondary sanctions. It remains to be seen how INSTEX payment mechanism will work in practice.



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