Sanctions Termination Under the US-Iran Agreement: Legal Considerations

The publication of the full text of the recently announced US-Iran agreement has brought into sharper focus one of its most significant legal provisions: the proposed termination of sanctions imposed against Iran. While much of the public discussion has centred on the cessation of hostilities and regional security implications, lawyers, businesses and policymakers will be particularly interested in Point 7 of the agreement, which provides:

“The United States of America undertakes to terminate all types of sanctions against the Islamic Republic of Iran, including the United Nations Security Council resolutions, International Atomic Energy Agency (IAEA) Board of Governors resolutions and all unilateral U.S. sanctions, primary and secondary, in an agreed upon schedule.”

The provision goes on to recognise the “critical importance” of sanctions termination and commits both parties to addressing the issue immediately in negotiations aimed at achieving mutual agreement on implementation. From a legal perspective, this language is remarkable in both its breadth and ambition.

A Shift from Sanctions Relief to Sanctions Termination

Historically, agreements involving Iran have focused on sanctions relief through waivers, suspensions or limited exemptions. Such mechanisms leave the underlying sanctions architecture intact and permit restrictions to be reimposed if political circumstances change or compliance concerns arise. Point 7 appears to contemplate something materially different: the termination of sanctions themselves.

The distinction is significant. A waiver provides temporary relief from the application of sanctions. Termination, by contrast, involves removing the legal basis for the restrictions altogether. Depending on the source of the sanctions concerned, this may require executive action, legislative amendment, international agreement, or a combination of all three. If implemented as drafted, Point 7 would represent a substantial departure from previous approaches to sanctions diplomacy involving Iran.

The Scope of Point 7

The agreement identifies three categories of measures that would be affected.

First, it refers to United Nations Security Council sanctions. Any sanctions imposed through binding Security Council resolutions can generally only be amended, suspended or terminated through further action by the Security Council itself. This requires international consensus and engagement with the procedures established under the UN Charter.

Secondly, the agreement refers to resolutions of the International Atomic Energy Agency (IAEA) Board of Governors. Although such resolutions do not operate as sanctions in the same way as Security Council measures, they form part of the international legal framework governing Iran’s nuclear programme. Their inclusion suggests an intention to resolve outstanding nuclear-related disputes through established international mechanisms.

Thirdly, and perhaps most significantly, the agreement contemplates the termination of all unilateral US sanctions, including both primary and secondary sanctions. Primary sanctions generally prohibit US persons and entities from engaging in specified transactions involving Iran. Secondary sanctions, however, have a much broader reach, threatening restrictions against non-US persons and businesses that engage in designated dealings with Iran. It is these secondary sanctions that have historically had the greatest impact on international commerce.

Can All US Sanctions Be Terminated?

The agreement’s commitment raises important questions regarding the extent of executive authority within the United States. While some sanctions can be removed through presidential action or amendments to regulations administered by the executive branch, others are embedded in legislation enacted by Congress. As a result, the practical implementation of a commitment to terminate “all” unilateral sanctions may require legislative cooperation as well as executive action. This distinction is not merely technical. It goes to the heart of whether sanctions termination can be achieved fully and permanently, or whether certain restrictions may remain in force pending Congressional approval. The legal durability of any sanctions termination programme will therefore depend not only on diplomatic agreement between the parties but also on domestic constitutional and legislative processes within the United States.

The Importance of Secondary Sanctions

For international businesses, the most consequential aspect of Point 7 may be its express reference to secondary sanctions. Secondary sanctions have long operated as a powerful deterrent to foreign banks, insurers, shipping companies and multinational corporations considering engagement with Iran. Even where a transaction had little or no connection to the United States, the possibility of exclusion from US financial markets often proved sufficient to discourage commercial activity. The removal of secondary sanctions could therefore have significant implications for international trade and investment. Businesses that have remained cautious about the Iranian market may find new opportunities emerging, particularly in the energy, infrastructure and financial sectors. Nevertheless, the existence of sanctions relief does not eliminate wider compliance concerns. Companies will still need to consider export controls, anti-money laundering obligations, counter-terrorist financing requirements and other regulatory risks that may continue to apply.

Implementation and Legal Certainty

The agreement also contains an important qualification. Sanctions are to be terminated “in an agreed upon schedule”. This wording indicates that implementation will not be immediate and that substantial negotiations remain regarding sequencing, verification and compliance mechanisms. The agreement establishes a political commitment, but many of the legal details necessary for implementation appear yet to be settled. Questions remain as to how sanctions will be removed, what benchmarks will trigger successive stages of termination, and whether any mechanism will exist for the reimposition of sanctions in the event of future disputes. For businesses considering re-entry into Iran, legal certainty will be essential. Commercial actors are likely to seek clarity not only as to which sanctions have been terminated, but also whether those changes are intended to be permanent and what protections exist against future policy reversals.

Conclusion

Point 7 may prove to be the most legally consequential provision of the US–Iran agreement. If implemented in full, it would represent one of the broadest commitments to sanctions termination seen in modern international diplomacy. At the same time, the provision highlights the complexity of dismantling sanctions regimes that have developed over decades through domestic legislation, executive action and international institutions. The success of the agreement may therefore depend less on the promise of sanctions termination itself and more on the legal mechanisms ultimately agreed to achieve it. For lawyers, regulators and businesses alike, the coming negotiations on implementation may prove every bit as important as the agreement that has now been signed.