Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



New United Nations Security Council Resolution Against Iran: What Canadian Businesses Should Expect

On June 9, 2010, the United Nations Security Council passed new strict economic sanctions against Iran. The resolution builds on existing UN sanctions imposed since 2006 and expand the breadth and reach of such measures by creating new categories of sanctions. Please go to the following link to read the draft resolution - http://s3.amazonaws.com/nytdocs/docs/377/377.pdf.

Assuming that there were no last minute changes to the draft resolution, Canadian companies should expect almost immediate domestic regulatory changes to implement the new U.N. Security Council Resolution. Based on the draft regulation (June 4, 2010 version), some of the new restrictions under Canadian law on trade with Iran should include:

  • Canada should restrict Iranian investment: Iran shall not acquire an interest in any commercial activity in another State involving uranium mining, production or use of nuclear materials and technology as listed in INFCIRC/254/Rev.9/Part 1, in particular uranium enrichment and reprocessing activities, all heavy-water activities or technology related to ballistic missiles capable of delivering nuclear weapons, and

    all States shall prohibit such investment in territories under their jurisdiction by Iran, its nationals, and entities incorporated in Iran or subject to its jurisdiction, or by persons or entities acting on their behalf or at their direction, or by entities owned or controlled by them;
  • Canada should prohibit certain arms exports: All States shall prevent the direct or indirect supply, sale or transfer to Iran, from or through their territories or by their nationals or individuals subject to their jurisdiction, or using their flag vessels or aircraft, and whether or not originating in their territories, of any battle tanks, armoured combat vehicles, large calibre artillery systems, combat aircraft, attack helicopters, warships, missiles or missile systems as defined for the purpose of the United Nations Register on Conventional Arms, or related materiel, including spare parts, or items as determined by the Security Council or the Committee established pursuant to resolution 1737 (2006) (“the Committee");

  • Canada should prohibit the provision of certain arms related services: All States shall prevent the provision to Iran by their nationals or from or through their territories of technical training, financial resources or services, advice, other services or assistance related to the supply, sale, transfer, provision, manufacture, maintenance or use of any battle tanks, armoured combat vehicles, large calibre artillery systems, combat aircraft, attack helicopters, warships, missiles or missile systems as defined for the purpose of the United Nations Register on Conventional Arms and related materiel, and, in this context and a

    ll States shall exercise vigilance and restraint over the supply, sale, transfer, provision, manufacture and use of all other arms and related materiel;
  • Canada should prohibit certain technology transfers: All States shall take all necessary measures to prevent the transfer of technology or technical assistance to Iran related to activities related to ballistic missiles capable of delivering nuclear weapons, including launches using ballistic missile technology;

  • Canada should prohibit travel by certain persons: All States shall take the necessary measures to prevent the entry into or transit through their territories of individuals designated in Annex C, D and E of resolution 1737 (2006), Annex I of resolution 1747 (2007), Annexes I and II of resolution 1803 (2008) and Annexes I and II of this resolution, or by the Security Council or the Committee pursuant to paragraph 10 of resolution 1737 (2006), except where such entry or transit is for activities directly related to the provision to Iran of items in subparagraphs 3(b)(i) and (ii) of resolution 1737 (2006) in accordance with paragraph 3 of resolution 1737 (2006);

  • Canada should impose vigilance requirements on Canadian businesses (e.g. freight forwarders, exporters, etc.): All States shall exercise vigilance over those transactions involving the IRGC that could contribute to Iran’s proliferation-sensitive nuclear activities or the development of nuclear weapon delivery systems;

  • Canada shall expand list of export prohibitions: The list of items in S/2006/814 shall be superseded by the list of items in INFCIRC/254/Rev.9/Part 1 and INFCIRC/254/Rev.7/Part 2, and any further items if the State determines that they could contribute to enrichment-related, reprocessing or heavy water-related activities or to the development of nuclear weapon delivery systems, and that for the purposes of the measures specified in paragraphs 3, 4, 5, 6 and 7 of resolution 1737 (2006), the list of items contained in S/2006/815 shall be superseded by the list of items contained in S/2010/263;

  • Canada shall undertake cargo inspections: All States to inspect, in accordance with their national authorities and legislation and consistent with international law, in particular the law of the sea and relevant international civil aviation agreements, all cargo to and from Iran, in their territory, including seaports and airports, if the State concerned has information that provides reasonable grounds to believe the cargo contains items the supply, sale, transfer, or export of which is prohibited goods;

  • All States to cooperate in such inspections if there is information that provides reasonable grounds to believe the vessel is carrying items the supply, sale, transfer, or export of which is prohibited goods;

  • Canada should pass laws permitting destruction of prohibited goods: All States shall, seize and dispose of (such as through destruction, rendering inoperable, storage or transferring to a State other than the originating or destination States for disposal) items the supply, sale, transfer, or export of which is prohibited;

  • Canada shall prohibit certain fuel-related services: All States shall prohibit the provision by their nationals or from their territory of bunkering services, such as provision of fuel or supplies, or other servicing of vessels, to Iranian-owned or -contracted vessels, including chartered vessels, if they have information that provides reasonable grounds to believe they are carrying items the supply, sale, transfer, or export of which is prohibited by paragraphs 3, 4 or 7 of resolution 1737 (2006), paragraph 5 of resolution 1747 (2007), paragraph 8 of resolution 1803 (2008) or paragraphs 8 or 9 of this resolution, unless provision of such services is necessary for humanitarian purposes or until such time as the cargo has been inspected, and seized and disposed of if necessary, and underlines that this paragraph is not intended to affect legal economic activities;

  • Canada shall prohibit certain financial activities: All States, in addition to implementing their obligations pursuant to resolutions 1737 (2006), 1747 (2007), 1803 (2008) and this resolution, to prevent the provision of financial services, including insurance or re-insurance, or the transfer to, through, or from their territory, or to or by their nationals or entities organized under their laws (including branches abroad), or persons or financial institutions in their territory, of any financial or other assets or resources if they have information that provides reasonable grounds to believe that such services, assets or resources could contribute to Iran’s proliferation-sensitive nuclear activities, or the development of nuclear weapon delivery systems, including by freezing any financial or other assets or resources on their territories or that hereafter come within their territories, or that are subject to their jurisdiction or that hereafter become subject to their jurisdiction, that are related to such programmes or activities and applying enhanced monitoring to prevent all such transactions in accordance with their national authorities and legislation;

  • All States shall take appropriate measures that prohibit in their territories the opening of new branches, subsidiaries, or representative offices of Iranian banks, and also that prohibit Iranian banks from establishing new joint ventures, taking an ownership interest in or establishing or maintaining correspondent relationships with banks in their jurisdiction to prevent the provision of financial services if they have information that provides reasonable grounds to believe that these activities could contribute to Iran’s proliferation-sensitive nuclear activities or the development of nuclear weapon delivery systems;

  • All States shall take appropriate measures that prohibit financial institutions within their territories or under their jurisdiction from opening representative offices or subsidiaries or banking accounts in Iran if they have information that provides reasonable grounds to believe that such financial services could contribute to Iran’s proliferation-sensitive nuclear activities or the development of nuclear weapon delivery systems; and

  • Entity Due Diligence Requirement: All States shall require their nationals, persons subject to their jurisdiction and firms incorporated in their territory or subject to their jurisdiction to exercise vigilance when doing business with entities incorporated in Iran or subject to Iran’s jurisdiction, including those of the IRGC and IRISL, and any individuals or entities acting on their behalf or at their direction, and entities owned or controlled by them, including through illicit means, if they have information that provides reasonable grounds to believe that such business could contribute to Iran's proliferation-sensitive nuclear activities or the development of nuclear weapon delivery systems or to violations of resolutions 1737 (2006), 1747 (2007), 1803 (2008) or this resolution.

It goes without saying that the effects of the new Iranian sanctions may significantly affect Canadian businesses who do business with Iran or Iranians or who do business with persons who do business with Iran or Iranians. Canadian companies should watch for the new regulations that will be promulgated by the Canadian Cabinet as early as this afternoon (but the regulations may not be published in the Canadian Gazette for 10 days). Canadian companies should review their policies on Iran or develop compliance policies. Canadian companies should look at whether they have orders on the books that are now prohibited. Canadian companies should ask questions when in doubt.

It should be noted that beyond the restrictions imposed by the U.N. sanctions themselves, the vote today sets stage for harsher measures by the United States, the European Union and Canada. In other words, there may be more sanctions coming and business activities may be even more limited soon. Any business with Iran at this time is risky business.

By the way, did I mention that the Canada Border Services Agency has worked closely with the Royal Canadian Mounted Police relating to export controls violations and will be watching very closely? Did you know that there is a criminal trial underway at the present time related to an export control violation under Canadian law and the goods were destined for Iran?

Leave a Reply

remember my information