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Interaction | August 2018

Sanctions on Iran will not impact India at all

In an exclusive conversation, <span style="font-weight: bold;">Pavani Reddy, Managing Partner, Zaiwalla &amp; Co LLP speaks to POWER TODAY's Rahul Kamat</span> from the UK and explains how sanctions by the USA on Iran are illegal and politically motivated. <br /> <br /> <span style="font-weight: bold;">What are the implications of the Iran nuclear deal withdrawn by the Trump administration? </span><br /> As you know, Trump had announced that the USA will withdraw from the nuclear deal citing the National Security Memorandum where he said that he was going to put back the economic sanctions against Iran. It is a very historic move in the sense that it was one of Trump's most important foreign policy to date because this decision affects and determines all of the sanctions that were released and offered by the USA as a part of the Joint Comprehensive Plan of Action (JCPOA). Although America has taken a stand, the European Union, particularly countries like the United Kingdom, do not support this move and have given commitment to support Iran.&nbsp;&nbsp; <br /> In case of impact, for instance, before JCPOA, there were two levels of sanctions û one, the American sanctions and the other, the EU sanctions. The EU adopted the United Nations Security Council Regulations and created a similar one, which they have implemented. But, since European countries are not going to withdraw from JCPOA effectively, business will be as usual with Iran at large and with China and India. It is a welcome step. With the establishment of JCPOA three years back, trade started taking place between the European countries and Iran.&nbsp; <br /> <br /> <span style="font-weight: bold;">By saying political decisions, do you mean overwriting all the decisions made by the Obama administration and correcting them by the Trump regime?</span><br /> When I say political, I mean that they have not really given the policy documents yet as to how they are going to impose the sanctions. It could create legal complications because, for instance, it is still unclear as to how the US administration will practically reimpose these sanctions. I think it will take another 90 to 180 days. However, there is no clarity on how this window provision of 90 to 180 days is going to take place in reality. Stakeholders who have been expecting this decision may have to adjust, but the US companies or the foreign subsidiaries of the US individuals are dealing with a lot of challenges. So that, I think it will impact USA.<br /> <br /> <span style="font-weight: bold;">How has your experience been in working with Bank Mellat?</span><br /> Bank Mellat is one of the largest private banks in Iran. For your information, the bank was boycotted effectively by Europe in early 2009. The first country to do this was the UK, followed by the Middle Eastern countries. But when Bank Mellat raised the issue of discrepancies, the Supreme Court of the UK ruled out the decision in favour of the bank and termed the UK sanction on us as illegal. Since the bank is a private entity, no country can place sanctions. We have filed for the damages and it will cost the government $4 billion.&nbsp; <br /> <br /> <span style="font-weight: bold;">How would unlawful sanctions by the USA impact the business of the bank? What are the legal complications that you are pointing at?</span><br /> The legal complication is that if any company (American) is dealing with Iran, as a part of the 180-day-period process - which ends on November 4, 2018 û sanctions will be imposed. At the moment, there are no sanctions and the US government has only shown its intention to reimpose the sanctions. By doing this, the USA is doing nothing short of threatening Iran. In the meantime, Iran has committed to comply with all the obligations under the JCPOA as it is likely to replace. The damage or implications are yet to be seen as to how it will impact Iran port operators, the ship building sector, for example, IRIFCI, Republican shipping lines, and others. In addition, it is likely to see at what level transactions will take place between the USA and National Iranian Oil Corporation (NIOC) and how financial institutions like the Central Bank of Iran will be impacted. <br /> <br /> As a matter of fact, Iran also needs to see whether OPEC will restore the Single Buoy Mooring (SBM) list and favour Iranian companies. These companies have put on the SBM list of OPAC of America, solely because of the fact that they are affiliated with the government of Iran. <br /> <br /> <span style="font-weight: bold;">Since we are talking of all these sanctions and opting out of the Iran Uranium deal, do you think there will be an impact on India too?</span><br /> No, it will not affect India at all. In fact, when sanctions were imposed on Iran last time, India was a major gainer because the country was importing oil from Iran. America, then pressurised India not to help Iran. However, India had a long relation with Iran and it took a strong objection and continued supporting Iran. Due to the support from India, Iran was able to get rid of a substantial amount of oil. So effectively, India and Iran both benefitted from the sanctions imposed by the USA.&nbsp;&nbsp;&nbsp; <br /> At the moment, I do not see any impact on India. But these are all political decisions and not court orders. If the relations are strong between India and the USA, then it is up to India on whose side to stand. <br /> <br /> <br /> Zaiwalla &amp; Co LLP has represented a number of high profile clients including the Governments of India, China and Russia, the National Iranian Oil Company, the Dalai Lama, Indian Oil Corporation, the Gandhi Family, a Russian oil major, the China National Petroleum Company and Iran's Bank Mellat on unlawful sanctions. Over the years, the firm has been involved in over 1,200 international energy, maritime and construction arbitrations in London and worldwide as a solicitor, counsel, party-appointed arbitrator, or sole arbitrator. The firm's prominence in the international legal sector is underlined by the fact that there have been over 110 judgements reported in English reports where it has acted for one of the parties; a judgement is only reported if it involves a substantial development in the English law.<br /> The firm also successfully represented the highly publicised case for Bank Mellat (the largest private bank in Iran) in two, high value cases against both the UK government (claim value USD 4 billion) and the Council of the EU to successfully challenge the imposition of financial sanctions. This is the largest ever damage claim brought against the UK government for wrongful imposition of sanctions.<br /> <br /> &quot;Since the bank is a private entity, no country can place sanctions. We have filed for the damages and it will cost the government $4 billion.&quot;<br />
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