Technical question on Snap-Back provision: “do not apply with retroactive
effect to contracts signed”
Dr. Aaron Lerner – IMRA 25 July 2015

The “snap-back” provision of UNSC 2231 [relevant excerpt follows] provides
that the snap back “do not apply with retroactive effect to contracts signed
between any party and Iran or Iranian individuals and entities prior to the
date of application “

How broad is this exception?

The tightest application of Paragraph 14 is to a contract involving a
transaction of a single container of product “X”.

How about a contract covering transactions in product “X” that applies to
transactions for the next 20 years? Does Paragraph 14 waive the
application of the snap-back to a 20 year contract?

Let’s go to an extreme:

An international consortium signs a master contract with an Iranian
consortium to develop “Industry X” or “Region X” for the next 20 years. The
contract is extremely broad and describes the mechanism for concluding
details for specific projects within the framework of the master contract.
The contract even includes a mechanism for changing the composition of the
international consortium as well the composition of the Iranian consortium.
Does Paragraph 14 waive the application of the snap-back to such a business
platform?

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Resolution 2231 (2015) Adopted by the Security Council at its 7488th
meeting, on 20 July 2015

11. Decides, acting under Article 41 of the Charter of the United Nations,
that, within 30 days of receiving a notification by a JCPOA participant
State of an issue that the JCPOA participant State believes constitutes
significant non-performance of commitments under the JCPOA, it shall vote
on a draft resolution to continue in effect the terminations in paragraph 7
(a) of this resolution, decides further that if, within 10 days of the
notification referred to above, no Member of the Security Council has
submitted such a draft resolution for a vote, then the President of the
Security Council shall submit such a draft resolution and put it to a vote
within 30 days of the notification referred to above, and expresses its
intention to take into account the views of the States involved in the issue
and any opinion on the issue by the Advisory Board established in the JCPOA;

12. Decides, acting under Article 41 of the Charter of the United Nations,
that, if the Security Council does not adopt a resolution under paragraph
11 to continue in effect the terminations in paragraph 7 (a), then
effective midnight Greenwich Mean Time after the thirtieth day after the
notification to the Security Council described in paragraph 11, all of the
provisions of resolutions 1696 (2006), 1737 (2006), 1747 (2007), 1803
(2008), 1835 (2008), and 1929 (2010) that have been terminated pursuant to
paragraph 7 (a) shall apply in the same manner as they applied before the
adoption of this resolution, and the measures contained in paragraphs 7, 8
and 16 to 20 of this resolution shall be terminated, unless the Security
Council decides otherwise;

13. Underscores that, in the event of a notification to the Security Council
described in paragraph 11, Iran and the other JCPOA participants should
strive to resolve the issue giving rise to the notification, expresses its
intention to prevent the reapplication of the provisions if the issue giving
rise to the notification is resolved, decides, acting under Article 41 of
the Charter of the United Nations, that if the notifying JCPOA participant
State informs the Security Council that such an issue has been resolved
before the end of the 30-day period specified in paragraph 12 above, then
the provisions of this resolution, including the terminations in paragraph
7 (a), shall remain in effect notwithstanding paragraph 12 above, and notes
Iran’s statement that if the provisions of previous resolutions are applied
pursuant to paragraph 12 in whole or in part, Iran will treat this as
grounds to cease performing its commitments under the JCPOA;

14. Affirms that the application of the provisions of previous resolutions
pursuant to paragraph 12 do not apply with retroactive effect to contracts
signed between any party and Iran or Iranian individuals and entities prior
to the date of application, provided that the activities contemplated under
and execution of such contracts are consistent with the JCPOA, this
resolution and the previous resolutions;

15. Affirms that any application of the provisions of previous resolutions
pursuant to paragraph 12 is not intended to harm individuals and entities
that, prior to that application of those provisions, engaged in business
with Iran or Iranian individuals and entities that is consistent with the
JCPOA and this resolution, encourages Member States to consult with each
other with regard to such harm, and to take action to mitigate such
unintended harm for these individuals and entities, and decides if the
provisions of previous resolutions are applied pursuant to paragraph 12 not
to impose measures with retroactive effect on individuals and entities for
business activities with Iran that were consistent with the JCPOA, this
resolution and the previous resolutions prior to the application of these
provisions;