united nations sanctions (iran) (amendment) regulation 2016

216 Pages·2016·1.6 MB·English

File reference: CITB CR 67/53/1

LEGISLATIVE COUNCIL BRIEF

United Nations Sanctions Ordinance
(Chapter 537)

UNITED NATIONS SANCTIONS
(IRAN) (AMENDMENT) REGULATION 2016

INTRODUCTION

At the meeting of the Executive Council on 12 January 2016, the
Council advised and the Chief Executive (“the CE”) ordered that the United Nations
Sanctions (Iran) (Amendment) Regulation 2016 (“the Amendment Regulation”), at
A
Annex A, should be made under section 3 of the United Nations Sanctions
Ordinance (Cap. 537) (“the Ordinance”). The Amendment Regulation was
gazetted on 15 January 2016 and came into operation on the same day.

BACKGROUND

Obligation and Authority
2. Under section 3(1) of the Ordinance, the CE is required to make
regulations to give effect to an instruction from the Ministry of Foreign Affairs of
the People’s Republic of China (“MFA”) to implement sanctions decided by the
Security Council of the United Nations (“UNSC”). In August 2015, the CE
received an instruction from the MFA to implement UNSC Resolution (“UNSCR”)
B 2231 (at Annex B) in respect of Iran. The Amendment Regulation was made
pursuant to the instruction. A document issued by the Chief Secretary for
C
Administration confirming the MFA’s instruction is at Annex C.
Sanctions against Iran
3. In view of Iran’s failure to comply fully with its international
obligations concerning non-proliferation of nuclear weapons and suspension of
enrichment-related activities, the UNSC passed UNSCR 1737 and UNSCR 1747 in
December 2006 and March 2007 respectively to impose a range of sanctions against
Iran. Concerned by the proliferation risks presented by the Iranian nuclear
programme and in response to Iran’s continued refusal to comply with its
international obligations, in March 2008 and June 2010, the UNSC expanded the
sanctions regime vide UNSCR 1803 and UNSCR 1929. The sanctions against Iran
imposed under the above UNSCRs, inter alia, include –

(a) prohibition against the direct or indirect supply, sale, transfer and
carriage of certain nuclear-related items, materials, equipment, goods
and technologies to Iran;

(b) prohibition against the provision or transfer of certain technical and
financial assistance, training, services and financial resources related to
the supply, sale, transfer, manufacture or use of prohibited items, and
the transfer of technology or technical assistance related to nuclear
activities to Iran;

(c) prohibition against the procurement of certain nuclear-related items or
equipment, or arms or related materiels from Iran;

(d) prohibition against the making available of funds or other financial
assets or economic resources to or for the benefit of certain persons or
entities designated by the UNSC or the Committee established under
paragraph 18 of UNSCR 1737 (“the Committee”), or by persons or
entities acting on their behalf or at their direction, or by entities owned
or controlled by them;

(e) prohibition against the entry into or transit through the territories of
Member States by persons designated by the UNSC or the Committee;

(f) prohibition against the investment in the territories of Member States
commercial activities involving uranium mining, production or use of
nuclear materials and technology by certain persons; and
(g) prohibition against the provision of bunkering and other services to
Iranian-owned or -contracted vessels, including chartered vessels, if the
vessels are carrying prohibited items.

4. Pursuant to the instructions of the MFA, the United Nations
Sanctions (Iran) Regulation (Cap.537 sub. leg. AF) (“the existing Regulation”) (at
D Annex D) was first made in September 2007 and subsequently amended in May
2008, March 2011 and June 2013 to implement and update sanctions against Iran
specified in the relevant UNSCRs.

UNSCR 2231
5. On 14 July 2015, the five permanent members of the UNSC (the
United States, United Kingdom, France, China and Russian Federation) together
with Germany and the European Union reached a solution to the Iranian nuclear
issue culminating in the Joint Comprehensive Plan of Action (“JCPOA”). The
JCPOA provides a timeline for the removal of sanctions upon verification by the
International Atomic Energy Agency (“IAEA”) that all nuclear materials in Iran
remain in peaceful activities. The JCPOA also provides that any non-compliance
by Iran of commitments under the JCPOA will result in reinstatement of the
sanctions regime.

6. On 20 July 2015, the UNSC adopted UNSCR 2231 (at Annex B),
endorsing the JCPOA and adopting its provisions for the removal of sanctions upon
verification by IAEA. In the interim, pending IAEA’s confirmation, the UNSC
decided that the following exemptions to the existing sanction measures against Iran
should be put in place to support the implementation of the JCPOA -

(a) the sanction measures imposed on Iran shall not apply to the supply,
sale, or transfer of items, materials, equipment, goods and technology,
and the provision of any related technical assistance, training,
financial assistance, investment, brokering or other services, by
JCPOA participant States or Member States acting in coordination
with them, that is directly related to:
i. the modification of two cascades at the Fordow facility for stable
isotope production;
ii. the export of Iran’s enriched uranium in excess of 300 kilograms
in return for natural uranium; and
iii. the modernization of the Arak reactor based on the agreed
conceptual design and subsequently, on the agreed final design of
such reactor
(paragraph 21 of UNSCR 2231 refers);

(b) Member States engaging in the activities permitted in paragraph 21 of
UNSCR 2231 shall ensure that:
i. all such activities are undertaken strictly in accordance with
the JCPOA;
ii. the Committee and the Joint Commission established under the
JCPOA are notified ten days in advance of such activities;
iii. the requirement of the Guidelines as set out in the relevant
IAEA document (“INFCIRC”) referenced in UNSCR 1737
have been met;
iv. they have obtained and are in a position to exercise effectively
a right to verify the end-use and end-use location of any
supplied item; and
v. the IAEA be notified within ten days of the supply, sale or
transfers, in case of supplied items, materials, equipment,
goods and technology listed in the INFCIRCs referenced in
UNSCR 1737
(paragraph 22 of UNSCR 2231 refers);

(c) the sanction measures imposed on Iran shall not apply to the extent
necessary to carry out transfers and activities, as approved on a
case-by-case basis in advance by the Committee, that are
i. directly related to implementation of the nuclear-related
actions specified in paragraphs 15.1-15.11 of Annex V of the
JCPOA;
ii. required for preparation for the implementation of the JCPOA;
or,
iii. determined by the Committee to be consistent with the
objectives of UNSCR 2231
(paragraph 23 of UNSCR 2231 refers).
7. Regarding the UNSC’s decision to terminate the sanctions against
Iran upon receipt of the report from the IAEA confirming that all nuclear materials
in Iran remain in peaceful activities, we will keep in view the development and
launch another round of legislative exercise to implement the relevant decisions set
out in UNSCR 2231 when appropriate.

8. The implementation of UNSCR 2231 is also relevant to HKSAR’s
compliance with the relevant recommendation promulgated by the Financial Action
Task Force in relation to the prevention and disruption of the financing of
proliferation of weapons of mass destruction.

THE AMENDMENT REGULATION

9. The Amendment Regulation, at Annex A, seeks to amend the existing
Regulation to implement the exemptions to sanction measures against Iran as
decided by UNSCR 2231. The main provisions of the Amendment Regulation
include –

(a) sections 4 and 6, which add sections 4A and 5A to the existing
Regulation to reflect the new exceptions to the prohibition against the
procurement of certain nuclear-related items or equipment, or arms or
related materiels from Iran as per paragraph 23 of UNSCR 2231;

(b) section 10, which adds section 8AAB to the existing Regulation to
reflect the new exceptions to the prohibition against sale and
acquisition of interest in commercial activity involving uranium
mining as per paragraph 23 of UNSCR 2231;

(c) section 11, which amends section 8B of the existing Regulation to
reflect the new exceptions to the prohibition against entry or transit by
certain persons as per paragraph 23 of UNSCR 2231;

(d) section 13, which amends section 9 of the existing Regulation to
reflect the new exceptions to the prohibition against supply, sale,
transfer or carriage of arms and nuclear-related items as per paragraphs
21 – 23 of UNSCR 2231;
(e) section 14, which amends section 10 of the existing Regulation to
reflect the new exceptions to the prohibition against the provision of
certain training, services or assistance as per paragraphs 21 – 23 of
UNSCR 2231;

(f) section 15, which adds section 10A to the existing Regulation to
reflect the new exceptions to the prohibition against the transfer of
technology or assistance related to ballistic missiles as per paragraphs
21 – 23 of UNSCR 2231;

(g) section 16, which amends section 11 of the existing Regulation to
reflect the new exceptions to the financial sanctions against relevant
persons and relevant entities as per paragraph 23 of UNSCR 2231; and

(h) section 17, which adds section 11A to the existing Regulation to
reflect the new exceptions to the prohibition against the provision of
certain services to certain ships as per paragraphs 21 - 23 of UNSCR
2231.

A marked-up version showing amendments to the existing Regulation is at Annex E
E for easy reference by Members.

IMPLICATIONS OF THE PROPOSAL

10. The proposal is in conformity with the Basic Law, including the
provisions concerning human rights. It will not affect the current binding effect of
the Ordinance. It has no financial, civil service, economic, productivity,
environmental, sustainability, family or gender implications.

PUBLICITY

11. A press release was issued on 15 January 2016 when the Amendment
Regulation was published in the Gazette.
INFORMATION ON IRAN AND RELATION WITH THE HKSAR

12. For information on Iran, background of the sanction regime against
the country as well as its bilateral trade relation with the HKSAR, please refer to
F Annex F.

ADVICE SOUGHT

13. Members are invited to note the implementation of paragraphs 21 to
23 of the UNSCR 2231 in the HKSAR by the Amendment Regulation.

Commerce and Economic Development Bureau
January 2016