Iran – Doing Business and Due Diligence

Iran – Doing Business and Due Diligence

Iran is Back.

Now that Iran is coming back to the international community, there are many factors that can hinder any potential dealings with Iranian entities. Below are a few services we believe UK companies should consider before conducting any business in Iran.

(RISK) The Risk of Doing Business In Iran

Although there is no major threat of terrorism in the majority of the country some people do still have the perception, created by the mainstream media, of major internal terrorism problems. Having said that, Iran does have some occasional issues in some border towns (i.e. Sistan/Baluchestan region) as well as a relatively high risk of earthquakes. Iran is politically challenged and certain unique laws have to be taken seriously.

We believe conducting risk assessments for companies should be a priority regardless of the nature of their business, personnel and to make sure they do not end up in a compromising situation whilst operating inside Iran.

(CRISIS) What if Iran suddenly violates the Security Council resolutions?

Iran has a history of violating resolutions set by the United Nations and also occasionally being punished “over-night” by the USA. Businesses that establish a long-term strategy towards Iran should have certain “exit plans” and standard operating procedures in place in case of any such incidents happening again.

A “What-If” plan, addressing the scenario of Iran violating the Joint Comprehensive Plan Of Action (JCPOA) terms certainly would be good to have in place.

(RESEARCH) Complexity of doing business in Iran 

With severe sanctions and embargoes still in place by the USA and United Nations along with strict guidelines/resolutions and Human Rights issues – Iran is definitely not a country to conduct business with on short notice.

It is very clear that foreign companies need to be careful what they sell, how they sell and to whom they sell their products and services [also buying]. Initial and continuous efforts must be made to avoid infringement on resolutions and sanctions that are currently valid.

(RECOVERY) What if business goes sour?

Iran, like any other country has issues of fraud, bankruptcies and misconduct. Due Diligence will not remove the risk of this, but it will serve to intend to minimise it.

In addition to insurance policies, there is a possibility of added comfort of knowing asset/debt recovery from a difficult country like Iran is achievable.

Sanction History

(USA) 1979 Islamic Revolution

The USA has, since the Revolution in 1979, sanctioned the Islamic Republic of Iran. The sanctions and embargoes by the US have been tough, broad and increased throughout the years.

(UN/EU) 2006 Nuclear ambition

Although Iran has had sanctions in place by EU/UN on entities and nationals because of Human Rights issues prior to 2006, it was during 2006 the bulk of the United Nations Security Council resolutions came into affect because of a failure of negotiations on the Iranian Nuclear program.

2015/2016 Iran Nuclear Agreement (Joint Comprehensive Plan Of Action – JCPOA)

JCPOA (the Iran deal) was officially implemented on the 16th of January 2016. Essentially, the Iran deal through United Nations resolution #2231 (ratified by EU) replaces all previous UNSC resolutions and creates a 10-year framework to remove all embargoes and sanctions completely in stages.

The Iran deal is undoubtedly very complex, containing more than 100 pages of guidelines, timelines, terms and conditions. In simple terms, the world community would welcome Iran by removing some sanctions, releasing Iranian funds around the world and making it more transparent and legal to trade with.

The US is part of the JCPOA deal. Although they do not support in similar terms as EU and UN, they have promised to lift “secondary” sanctions post the implementation day of 16th January 2016. Primary sanctions remain in place.

Additionally, the UN and EU still have Human Rights sanctions in place (ref.EC 359/2011) until the UNSCR “Termination Day”, approximately 10 years from the implementation day.

General Outlook

UK Bribery Act 2010 & US Foreign and Corrupt Practices Act

Besides the sanctions and embargoes in place, UK companies must take into consideration guidelines on bribery and corruption stipulated in UK Bribery Act 2010 and have an eye to the US Foreign Corrupt Practices Act (FCPA).

It is vital that there are continuous measures in place for a company to be certain that either party does not infringe these rules in any way.

Summary

Doing business in Iran presents a challenge, but by no means an insurmountable one. Undoubtedly there are many resolutions, embargoes and regulations in place, in addition to normal business considerations such as bribery to consider before doing business in Iran. There is simply no reason why you should not consider doing business there, it just requires better planning.

If you would like to discuss Iran and doing business there you can get in touch with us via our website at www.proeliumlaw.com or call the office on +44 (0) 20 3875 7422 as well as looking at our webpage www.proeliumlaw.com/doing_business_in_iran.

About Proelium Law LLP:

Proelium Law LLP was originally founded in 2015 and offers focused legal advice and support for defence, security, international development, communications and technology and political risk insurance companies in high risk and complex jurisdictions.  

Consultant – Behnam Nozowhour is our Iranian consultant. Born in Tehran, but brought up in Norway, he has unique experience and understanding of the requirements, which are essential for international companies wishing to develop new business opportunities arising in Iran. For the last 13 years he has been doing business in Iran from a base in Dubai and has broad experience in a variety of sectors, for example oil and gas, construction and FMCG. Throughout his career he has grown an extensive private and public network of contacts and knowledge of the complex environment of the Middle East to advise and consult international companies that were seeking to conduct business in the region. 

Need advice?

If you’d like further information, or to discuss working with us, you can get in touch via our Contact Us page

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Proelium Law LLP

Proelium Law LLP is a Limited Liability Partnership registered in England and Wales No.OC411568.

Proelium Law LLP is authorised and regulated by the Solicitors Regulation Authority No. 629608 (www.sra.org.uk)

VAT Registration No. 242 4002 59.

© www.proeliumlaw.com

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Duty of Care – are YOU fulfilling your employer obligations for contractors in high-risk locations?

Duty of Care – are YOU fulfilling your employer obligations for contractors in high-risk locations?

Duty of Care

If you are an employer or a company that utilises contractors in complex locations it’s time to sit up and pay attention….’Accountability’ and ‘Responsibility’ may well be the words that partially define this decade.

In the past, companies often felt more comfortable utilising contractors, believing this minimised their risk of being found liable for any injuries that the contractor suffered, or worse still, their death, because the duty of care was not clearly owed. Those lines are blurring now and certainly from a UK legal perspective, courts are finding that there is more likely to be a finding of an employee / employer relationship, even when an individual is recruited as a contractor, when a contractor has been seriously injured.

 

So what does this mean and what exactly is ‘duty of care’?

The obvious first issue is your risk assessments need to be good enough to encompass these considerations and you need to be able to demonstrate that you did all that was reasonably possible to minimise risk to your staff, however they are employed, when working in high risk jurisdictions.  Your insurance needs to be adequate and by that we mean you need to sit down and really go over exactly what your insurance is providing, or not providing as the case may be. Kidnap and Ransom is a complex area and you may think you have it covered in your insurance, but is it really? Pay close attention to the wording.

A duty of care, to put it at its most basic, is when one entity is expected to do all they reasonably can to ensure another entities safety. We use the term ‘entity’ because there are many ways to describe relationships between entities. For example a duty of care has been found to be owed from a teacher to a student; driving instructor to a learner; employer to employee to name but a few. These are very clearly defined examples with lots of case law to support them but, the important ones are becoming those that have previously been less defined, or outside the scope of duty of care and are now moving into grey areas.

 

How do you know if a duty of care is owed?

In the UK the concept of duty of care is well understood; in conflict affected states it isn’t so clear and often the jurisdiction that a contract is agreed under, is not quite as clear cut as in the UK, this provides ambiguity for contractors and companies alike.

The rule of law is heavily focused on conflict affected states where a lot of donor money is poured in. The reasons for that are beyond this blog (maybe another time…) but as we have seen in Iraq, with the recently enacted Labour Law (2015), the onus is on the employer to provide safe working environments – and that applies to foreign companies too.

 

We can help

If you would like to understand more about these issues, or indeed feel your company could benefit from a health-check on your processes involving duty of care issues, please get in touch.

 

 

 

Need advice?
If you’d like further information, or to discuss working with us, you can get in touch via our Contact Us page

Read our latest news & articles

Proelium Law LLP

Proelium Law LLP is a Limited Liability Partnership registered in England and Wales No.OC411568.

Proelium Law LLP is authorised and regulated by the Solicitors Regulation Authority No. 629608 (www.sra.org.uk)

VAT Registration No. 242 4002 59.

© www.proeliumlaw.com

Web Design by Tim Mitchell Design | Web Consultancy by John Griffin, Up Marketing Co

Is your business structured for failure or success?

Is your business structured for failure or success?

Is a good business simply born or created? Is it nature or nurture? Organic or engineered? Businesses get to where they are by a number of routes, frequently being reactive to opportunities that present in the course of their growth.

If they’re lucky, their structure will serve them well for the foreseeable future but luck isn’t much of a guarantee of success. So how can you judge if your business is well structured, and what does a good structure look like?

Be Client-Focused

  • Everything you do should be about delivering what the client needs and making it easy for them to give you their money

Be Business Savvy

  • Get the mechanics of the business working predictably well, in such a way that clients repeatedly receive a high standard from you

Think ‘Continual Improvement’

  • Think Team Sky and England Rugby with their marginal improvement mantra (one notably more successful than the other in that regard..); look to constantly improve what you do, tweak systems, fix things before they go wrong, listen to feedback

Build a Community

  • Lead, don’t just manage. Engage with your people and invest in them

Have a Strategy

  • What’s your vision? Your big plan? Do you know what success looks like? You need a strategy so that everyone steers in the same direction.

Spending some time thinking critically and constructively about your business structure is an investment in your future success, and one that Proelium Law can help you with.

                                                                                      

If you would like to talk to Proelium Law about organising your business or receiving a bespoke report on a business issue you are facing, please contact us on: law@proeliumlaw.com +44 (0) 151 363 2212 Mobile +44 (0) 7725329437

 

Need advice?

If you’d like further information, or to discuss working with us, you can get in touch via our Contact Us page

Read our latest news & articles

Proelium Law LLP

Proelium Law LLP is a Limited Liability Partnership registered in England and Wales No.OC411568.

Proelium Law LLP is authorised and regulated by the Solicitors Regulation Authority No. 629608 (www.sra.org.uk)

VAT Registration No. 242 4002 59.

© www.proeliumlaw.com

Web Design by Tim Mitchell Design | Web Consultancy by John Griffin, Up Marketing Co

Expanding your business into a high-risk location

Expanding your business into a high-risk location

For anyone thinking about setting up a business in a high-risk location, there are many things to consider. Is the country you are considering is at a higher risk of political violence or is about to submerge into conflict? Is it a place where conflict is already a part of daily-life or is the country considered to be a ‘post-conflict’ environment?

Whilst the financial gains of setting up an operation in a high-risk location may well be attractive, it is vital you are adequately prepared to run your business safely and legally abroad. The considerations in this list are by no means exhaustive however they are a good starting point of what to consider when planning such a move.

  1. What sort of control do you want over the company? Decide if being a branch-office or stand-alone head office is important; depending on which country you operate in, will depend on what requirements each type of set-up imposes
  2. Be aware that some countries require part ownership by a local national
  3. What local regulatory (voluntary or mandatory) requirements will be required to be in operation?
  4. Are there any tax (Income or Corporation) implications in setting up abroad?
  5. Will your international staff require visas and are there any additional requirements for leaving and remaining beyond a time period, such as reporting to a local police station?
  6. Know the difference between contracts issued for consultants and employees – there is a difference.
  7. What are the local employment laws and how will they affect your business?
  8. Duty of care – when is enough, enough? Duty of Care is nothing new and the law is well developed. However if you are sending international experts into high risk jurisdictions then you need to ensure you understand who owns the ‘risk’ when it comes to duty of care.
  9. What international (UK, US & EU) sanctions/embargo’s are in place in the country? Are they government / country wide or simply individual/financial ? Read More: Consolidated List of Targets
  10. How will you send/transfer money to your new office/staff? What sort of relationship do you have with your bank? Now more than ever explaining to your bank and your company activities is even more important. 
  11. What local equipment licenses are required? For instance do your staff require driving national driving licences? Are you using radio communications and therefore require a licence to use a specific frequency?
  12. What would you do if one of your locally employed staff or international consultants was arrested for a criminal offence? What are your standard procedures for this situation and would these still be effective/appropriate in the new country?
  13. Do you have the correct insurance to operate overseas? Ensure your policy accurately reflects the risk in the country and make sure you are fulfilling all the requirements of the policy
  14. Are your Anti Money Laundering and Counter Terrorist Financing Process adequate enough to ensure you don’t fall foul of extra territorial law covering these subjects?
  15. How will you transfer money overseas? Do you understand the increased monitoring of US Dollar transactions as a result of OFAC activity? Read More: OFAC FAQ’s
  16. Should you decide to cease trading, how would you close your business down? Would you be left with legacy liabilities?

 

If you are thinking of setting up an office in a ‘high risk’ environment and would like help with any of the above, please contact us.

 

Need advice?

If you’d like further information, or to discuss working with us, you can get in touch via our Contact Us page

Read our latest news & articles

Proelium Law LLP

Proelium Law LLP is a Limited Liability Partnership registered in England and Wales No.OC411568.

Proelium Law LLP is authorised and regulated by the Solicitors Regulation Authority No. 629608 (www.sra.org.uk)

VAT Registration No. 242 4002 59.

© www.proeliumlaw.com

Web Design by Tim Mitchell Design | Web Consultancy by John Griffin, Up Marketing Co

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