On 16th January 2016 the International Atomic Energy Agency verified that Iran had implemented its agreed nuclear-related commitments contained in the Joint Comprehensive Plan of Action. This landmark event not only represented the end of six years of EU and US financial and economic sanctions against the country, but has been accompanied by a host of Iran-related deals and activity within the past month. Guy Martin, Partner and Head of International Law at Carter-Ruck, tells us about what needs to be done to aid UK PLC in doing business with Iran in light of the news.
Since the news that Iran has successfully implemented its agreed nuclear-related commitments, Iranian President Hassan Rouhani has been busy. He has visited Italy, Vatican City and France – where a $25 billion deal for 118 Airbus planes was signed. There has also been an agreement that PSA Peugeot Citroën is to contribute more than €400 million-worth of compensation to Iran’s biggest carmaker for losses incurred when it left the country, as the two companies embark on a new joint venture to build vehicles.
It seems that President Rouhani’s European tour has proved productive for those countries which have had the foresight to embrace commercial opportunities with Iran. With Germany, Italy and France leading the European pack and signing such large-scale deals, we might be left wondering why the Government has not done more to ensure that UK PLC is able to take advantage of the business opportunities.
My view is that there are three distinct steps to be taken to help UK PLC be better positioned to trade with Iran:
First and foremost the Government needs to put in place a crucial legal mechanism to create the necessary conditions for investor protection whilst trading with Iran: a Bilateral Investment Treaty (BIT). Broadly, BITs establish the terms and conditions for private investment by nationals and companies of one state in another state. France, Italy and Germany have all concluded BITs with Iran and without one British businesses and investors do not have same level of protection afforded to investors from these countries. The establishment of a BIT would inspire investor confidence and provide important and valuable protection to British investors should they encounter difficulties in Iran. This must be a priority for the FCO.
Secondly: rectify visa issues. The British embassy in Tehran reopened in August 2015 following the closure in 2011 after it was stormed by protesters during a demonstration against sanctions.
Despite having been open now for nearly six months, the embassy still has no visa office meaning that Iranian businesspeople have to travel (for example, to Istanbul) to obtain a visa to enter the UK. The FCO notes on its website that “re-establishing a full consular service is a priority and we hope to be in a position to offer this within the next few months” however, at present this is a further obstacle to easing trade ties – especially if applicants must wait a period of days before getting their visa. Similarly, the Iranian embassy in London has now reopened but does not currently offer a visa service. British businesspeople wishing to visit Tehran must apply via Iranian embassies in Paris or Dublin – again, not the smoothest start to potential business opportunities.
Finally, there is a real need for coordinated and positive messaging from both the FCO and Her Majesty’s Treasury on doing business with Iran. While the FCO in theory gives the green light to improved relations, The Treasury published on its website the statement: “Iran is currently subject to financial sanctions. This document contains the current list of designated persons relating to proliferation sensitive nuclear activities” with what it terms a “consolidated list of designated persons”. This list and Treasury notices, while useful resources, are a maze of technicality which readers might struggle to comprehend in the absence of specialist legal advice.
To accelerate the UK’s economic relations with Iran and provide the conditions for UK PLC to take advantage of the opportunities offered, the Government must provide more joined up, practical and positive guidance about investment coupled with the creation of the conditions for investor confidence and swifter entry. Without these, UK PLC will continue to lose out to competitors when it comes to opportunities with Iran.
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