Yesterday, the Office of Foreign Assets Control (“OFAC”) published Iran General License I which is designed to permit U.S. persons seeking to sell civil passenger aircraft and parts to Iran to negotiate executory contracts to make such sales provided that all such contracts are expressly contingent upon OFAC approval. Four new FAQs, labelled J.9 through through J.12, were added to explain the general license.

Specifically, the license permits “all transactions ordinarily incident to negotiation of and entry into” contracts for activities eligible for authorization under OFAC’s policy permitting the sale of passenger aircraft and parts to Iran. The general license is needed because the new policy required a license for the sales of those aircraft and parts and, by extension, would require licenses for the negotiations leading to such sales. At least one company had requested and received such licenses, leading OFAC to decide to issue a general license to eliminate the burden of processing such applications.

Not surprisingly, the license excludes any negotiations with “any person whose property and interests in property are blocked pursuant to any part of 31 C.F.R. chapter V other than part 560.” The key language here is “other than part 560.” Some Iranian airlines, and theoretical purchasers of passenger aircraft and parts, are designated under OFAC regulations other than the Iran Transactions and Sanctions Regulations found in part 560. For example, Mahan Air, the éminence noire of Iranian airlines, is sanctioned under part 561 (Iran Financial Sanctions Regulations) and part 594 (Global Terrorism Sanctions Regulations). Iran Air, the great white whale of Iranian airlines, on the other hand, is sanctioned only under part 560 as an entity controlled by the Government of Iran, meaning that negotiations with Iran Air under General License I would be permitted.

The most significant take-away from General License I is less what it specifically permits than what it implies is not permitted.  Many U.S. companies outside the aircraft sector, hoping against hope that all U.S. sanctions against Iran may soon be lifted, are wondering if they can negotiate with potential Iranian customers “just in case” provided any resulting agreement is contingent upon OFAC approval.  The answer now is quite clearly no unless a specific license to do so is obtained from OFAC.

Photo Credit: Iran Air Boeing 747SP-86 by Aero Icarus [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/91vXkv [cropped and processed]]

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