China, France, Germany, Russia, the United Kingdom and the United States have agreed a deal with Iran that provides for sanctions against the country to be lifted in return for a pledge that it will never 'seek, develop or acquire any
nuclear weapons'.
According to US President Barack Obama, the deal - the Joint Comprehensive Plan of Action (JCPOA) - represents 'real and meaningful change' that 'makes our country, and the world, safer and more secure'. Iran's President, Hassan Rouhani, welcomed 'a new chapter' in his country's relations with the wider world.
Simply reaching an agreement after such long and complex negotiations is quite an achievement. However, the JCPOA already has many vocal opponents in the US, Iran and elsewhere. They may be able to delay its implementation or prevent it ever taking effect.
Sanctions against Iran remain in place for the time being. Guidance like that issued by HM Treasury in the UK making clear that 'the UK government does not encourage trade with, or investment in Iran, and has withdrawn all commercial support for trade' is still in force.
This is unlikely to change until 'Implementation Day', when the International Atomic Energy Agency (IAEA) is due to certify that Iran has complied with the key
nuclear-related measures described in the JCPOA.
On Implementation Day, if Iran has done what it has agreed to do, then the US and EU will relax sanctions in many areas. But no one can be sure when that day will come. According to Christopher Lock, who works with Lourdes Catrain, Hogan Lovells' European Group Director responsible for trade in the Brussels office and
Vice-Chair of the IBA International Trade and Customs Law Committee, it could be in six to nine months' time. Others suggest it could be at least a year away.
'We're waiting for the technical moves on Iran's part, and they may or may not happen,' says Lock. 'There's still a great deal of uncertainty at the political level.'
The international trade and investment team at Hogan Lovells is still trying to work through what companies interested in doing business in Iran can undertake. 'A lot of clients are asking about this, but as it stands, the sanctions remain in place and they still cover brokering services,' says Lock. 'Strictly speaking, negotiating for a contract and making arrangements for a transaction that would be sanctioned under the existing regime remains a breach of the rules.'
Barbara Linney, a member of the IBA International Trade and Customs Law Committee, says the long-term impact of the JCPOA on US businesses will be minimal. Even after Implementation Day, there will only be limited relief for US businesses in the form of sanctions relief for the commercial passenger aircraft sector, she says.
After Implementation Day, the US has pledged to allow imports of Iranian-origin carpets and foodstuffs, including pistachios and caviar, and to allow non-US entities that are owned or controlled by a US person to engage in activities with Iran that are 'consistent with' the JCPOA. The JCPOA doesn't provide much detail about this, but it might include 'activities of
US-owned or controlled foreign entities in industries for which secondary sanctions will be lifted', says Kuang Chiang, a member of the IBA International Trade and Customs Law Committee whose practice at Miller & Chevalier focuses on export and import controls, particularly on economic sanctions as regulated by the US Treasury.
These industries include energy, petrochemicals, shipping, shipbuilding, port services and the automotive, financial, banking and insurance sectors. The US government's Office of Foreign Asset Control is expected to issue guidance in the run-up to Implementation Day.
Any US secondary sanctions that are suspended or waived on Implementation Day will remain 'on the books' until 'Transition Day'. This is supposed to be in approximately eight years' time, or whenever the IAEA issues a report confirming that Iran is only engaging in peaceful nuclear activities. At that point, they should come to an end. 'The longstanding embargo on trade with Iran by US persons will remain in place,' says Linney, 'as will the US arms embargo and export controls on
dual-use items.'
Could investigations into past violations of sanctions be suspended? The JCPOA says that once they are lifted, 'ongoing investigations on possible infringements of such sanctions may be reviewed in accordance with applicable national laws'. But it doesn't say anything about pending US enforcement actions over breaches of embargoes or of
dual-use export controls. 'Such violations are subject to civil and criminal penalties,' says Linney, 'and we do not expect the JCPOA to have any impact on enforcement proceedings related to such violations.'
Outside the US, the line has been that the sanctions regime is still in place and still being adhered to. 'Regulators won't just be letting people off the hook for breaching what was the law for the last few years,' says Lock.
The lifting of sanctions, if implemented, represents a significant opportunity for European companies. 'Under the terms of the JCPOA, the US primary sanctions will remain in place, so there will be more extensive restrictions on US companies than on European companies,' says Lock. All European sanctions under the nuclear regime are due to be lifted on Implementation Day.
Jonathan Watson is a freelance journalist and can be contacted on jonathan.watson@yahoo.co.uk
IBA Legal Practice Division committee articles online
The IBA has improved the way it delivers content to members and now provides a more regular flow of information to committees that is more
user-friendly for both committee members and newsletter editors. Articles and conference reports are available to view online, alongside pre-2015 editions of newsletters in PDF format on committee of forum webpages.
Each month a selection of recent online articles will be published in IBA E-news. View the online archive at www.ibanet.org/Online_Articles.aspx.
Newcomers' Welcome Workshop: make the most of the Annual Conference
If you're new to the IBA or this will be the first year you attend the Annual Conference, then make sure to go along to the orientation workshop in Vienna run by Pippa Blakemore. This lively and participative two-hour introduction to the IBA and its Annual Conference is a great way to find out more and will help you to get the most out of Conference week. The workshop takes place at 1630 on the first day of the Annual Conference,
Sunday 4 October.
For more details about the workshop, see tinyurl.com/NewcomerWorkshop
Launch of Myanmar film on constitution, business and human rightsMyanmar: the long road to reform, a new film from the IBAHRI, was launched at the Charlotte Street Hotel in London on 14 July.
After decades of brutal military dictatorship, many hope that Myanmar is now on the path to reform. However, while there are opportunities for change, significant challenges remain regarding the rule of law, foreign investment and development.
The 25-minute film draws on exclusive interviews with leading lawyers, diplomats, politicians and activists - including Nobel laureate and opposition leader Aung San Suu Kyi - and calls for caution from international investors in the absence of comprehensive legal and constitutional reform
The film is now available to view online at tinyurl.com/IBAMyanmarFilm
LPD Committees call on sporting organisations for reformThe LPD's Anti-Corruption Committee and Sports Law Subcommittee have called on governments and financial supporters of sporting bodies to push for fundamental reform to improve governance, transparency and oversight of international sports organisations, such as FIFA.
The Chair of the IBA Anti-Corruption Committee, Rob Wyld, says: 'Sport is a global industry worth many billions in any currency and that, unfortunately, provides ample opportunity for corruption at all levels and in many settings. Bid manipulation can be problematic in respect of governments and companies alike. The former, manipulating bids to host major sporting events, and the latter, manipulating bids to secure lucrative contracts, for example in the construction of stadia and relevant infrastructure.'
Many of the world's major sporting bodies were established with noble intentions, including FIFA, in 1904, to formulate a set of standard rules and regulations governing the play of football.
The Chair of the IBA Sports Subcommittee, Javier Medin, comments: 'Since their establishment, a number of sporting organisations have grown and changed without independent oversight. This has led to poor governance structures that lack transparency and accountability. Consequently, in many cases the noble and ethical rules once governing the practices of the organisations have been neglected, distorted or blatantly ignored. Integrity in sport needs to be restored. In order for this to happen the IBA Sports Sub-Committee believes that systemic, deep-rooted change must occur throughout a number of international sporting organisations.
'The financial supporters of these organisations must recognise that fundamental reform is required and press for it. As a first step, sporting organisations should write anti-corruption procedures into their constitutions and codes of conduct,' he says. 'It is critical that sport be free of nepotism, double standards, racketeering, venality and grubby self-interest. It may involve the dismantling of organisations and starting again, but that may just have to be the price to pay.'
Alternative finance: regulating Europe's funding crowds Scott Appleton
Crowdfunding is fast becoming a force to be reckoned with. Londoner Thom Feeney even attempted to solve the Greek debt crisis by launching a crowdfunding campaign to raise the e1.6bn required by the IMF back in June. In eight days he raised e1.93m, not enough to solve the crisis, but enough to demonstrate the power
of crowdfunding.
Globally the sector is estimated to be worth $12.21bn. The phenomenon may have started in the US, but in less than a decade Europe's leading platforms have grown to become billion-euro businesses.
'There is a strong demand among businesses for access to growth capital and many companies are now exploring new and more flexible ways to raise finance,' says Karen Kerrigan, Legal & Finance Director at UK-based equity crowdfunding platform Seedrs. 'Startups and small and medium-sized businesses [SMEs] increasingly look beyond the banks, and even beyond their home markets for investment, and this is the gap that crowdfunding is filling.'
Rapid expansion and attraction for investors and businesses alike are presenting challenges for lawyers.
'From a legal perspective the US has led the way in crowdfunding legislation, intended to both encourage and regulate the growth of the market. But there is as yet no pan-EU framework,' says José Ramón Morales, Head of Technology at Garrigues in Barcelona. 'The crowdfunding platforms, companies and investors may be taking their influences from many different markets, but we currently have to apply the law on a nation-by-nation basis.
Indeed, the disparate nature of crowdfunding means that it is impossible to take a one-size-fits-all approach to regulation. 'Donor and reward' platforms such as Kickstarter may be better known, but such a model accounts for a fraction of the total market.
The largest and most rapidly expanding sector is peer-to-peer consumer and business lending, where investors lend to businesses or consumers via an intermediary platform, or through investing in the platform itself, which then lends to clients.
One such platform is German-based Zencap Global Services, which has expanded to the Netherlands and is now exploring options in Spain, says Co-Founder Matthias Knecht.
'Since 2014 we have received e180m loan requests and issued over e20m. What has become very apparent, besides the massive demand for finance from SMEs, is the strong interest among institutional investors to access the types of businesses in the countries in which we operate - we offer a class of asset, such as the German Mittelstand, that has previously been out of reach to most.'
But such opportunities are not without problems. Germany's Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin) has proved slow to adapt the country's debt and equity fundraising regulation to the crowdfunding model.
'As we look across Europe we see certain financial authorities taking a much more facilitative approach, encouraging the growth of the sector through the creation of exceptions within the existing regulatory framework, for example,' says Knecht. 'BaFin has, however, not been one of them… For that, in Germany at least, we still have to partner with a registered bank.'
'The regulators are always playing catch-up,' says Stefan Weidert, partner at Gleiss Lutz in Frankfurt and Chair of the IBA Technology Committee.
'A key focus of the European Commission, especially since the financial crisis, has been to strengthen consumer protection, in terms of finance, loans and data. For operators like Zencap, the result is that Germany may be a large and attractive market, but from a regulatory perspective it remains a challenging place in which to grow their business.'
The UK appears to be taking the lead in Europe's crowdfunding market. It is home to many of Europe's largest players and the 'crowd' and regulatory authorities are both open to new ideas.
'Companies like Seedrs pioneered the regulatory approach to what they do,' says Kerrigan. 'The UK Crowdfunding Association, launched in 2012 by ten platforms and now representing around 50, created a common code of practice and has since worked with the Financial Conduct Authority [FCA] to create a proportionate framework that brings credibility to the sector. The result is a clear set of rules that sits within existing legislation, in order to bring the requisite comfort required by retail and institutional investors alike to grow the sector.'
Equity crowdfunding - where businesses seek to sell off small stakes in themselves - is now the fastest growing segment of the UK market, having expanded 400 per cent between 2012 and 2014, according to research by Nesta and the University of Cambridge.
'The UK authorities have recognised the importance of crowdfunding as a means for SMEs to raise finance but also as a financial market in its own right,' says Angus McLean, partner at Simmons & Simmons in London. 'The FCA… has sought to impose a clear framework to regulate what they do. The result, many hope, is that the
UK-based platforms become a preferred choice for investors and businesses; that the UK becomes a European crowdfunding capital.'
As Thom Feeney discovered, crowdfunding may not be a panacea for all financial challenges, but for Europe's regulators it may be no bad thing to follow the crowd.
Jordan to host the next IBA Women Business Lawyers Initiative eventAfter a successful pilot event in Dubai, UAE, in March 2014, the IBA Women Business Lawyers Initiative is returning to the Middle East with an event that will focus on the challenges and opportunities for Jordanian women in the legal profession. On 7 September 2015, around 120 participants will gather in the Kempinski Hotel, Amman, for a series of sessions covering career management, including deciding on a path and a specialisation, leadership, networking, marketing and business development, anti-corruption awareness and law firm management. High-profile speakers and panellists, including former Minister of Justice HE Sharif Zubi, will share their expertise with participants.
The IBA has teamed up with two important Middle Eastern organisations for the Initiative. The Association's international partner, the Arab International Women's Forum (AIWF), headquartered in London, has been the global voice of Arab women since 2001. AIWF strives to be an agent of change for women in the Arab region and its partnership with the IBA signifies an important new focus on women in the law. The IBA'slocal partner, the Arab Women's Legal Network (AWLN) was established in 2005 and works at promoting Arab women in legal professions by facilitating meetings of Arab women legal practitioners and encouraging the exchange of experience and expertise.
Registration for this event is now open and delegates can register free of charge at tinyurl.com/IBA-Amman
IBA Judicial Integrity InitiativeThe IBA Judicial Integrity Initiative is a project aimed at combating judicial corruption, and is a key priority for IBA President David W Rivkin's two-year term. The aim of the Initiative is to raise awareness of the legal consequences of judicial corruption where it exists, combat it through promoting the highest standards of integrity among judges, prosecutors, court personnel and lawyers, and further best practices of countries that have worked effectively to eliminate it.
Work has begun on the first stage of the Initiative: the production of a report on the types of corruption occurring between lawyers and judges, and other judicial system officials. This will include preparing a questionnaire, to be disseminated to judges, lawyers and others, and conducting in-country consultations in key jurisdictions around the world. Preliminary findings are expected by the end of 2015. As the Initiative progresses, the Typologies Report will guide the design and implementation of further activities to combat judicial corruption.
The latest news on this project can be found at tinyurl.com/JudicialIntegrityInitiative
Ten nominees shortlisted for the IBA Pro Bono Award 2015Following receipt of a record number of nominations for this year's IBA Pro Bono Award, the judging panel has selected a shortlist of ten from whom this year's winner will be selected. The second stage of deliberation and adjudication is now underway and the winner will be announced at the Annual Conference in Vienna on Monday 5 October, at the Pro Bono Committee session International pro bono: charity doesn't have to begin at home.
The shortlisted candidates are: Daniel Urbas, partner at Borden Ladner Gervais; David Gutiérrez, co-founding partner at BLP, the largest law firm in Costa Rica; Enrique Felices, partner and Head of Pro Bono at Miranda & Amando Abogados in Lima; Gavin Davies, partner at Herbert Smith Freehills in London; Kirsty Brimelow QC, Chair of the Human Rights Committee at Doughty Street Chambers in London; Marcos Fuchs, founder and Executive Director of Instituto Pro Bono in Brazil; Mercedes Pando, of Estudio Beccar Varela in Buenos Aires; Pooja Dela, of Webber Wentzel in Johannesburg; Richard Dyton, partner (Head of the Projects Group and voluntary Pro Bono Partner) at Simmons & Simmons; and Scott Anderson, managing partner at Sidley Austin in Geneva.
Full details of all ten nominees can be found at tinyurl.com/ProBono2015
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