The JCPOA Dispute Mechanism: Resolving Noncompliance or Stalling for Time?

February 27, 2020

Publication Type: 

  • Articles and Reports

Weapon Program: 

  • Nuclear

Related Country: 

  • China
  • France
  • Russia
  • United Kindom

Author: 

Ashley Curtis and Valerie Lincy

The Joint Comprehensive Plan of Action (JCPOA) with Iran entered a new phase last month when the European parties to the agreement triggered its dispute resolution mechanism. The move comes months after Iran began taking steps that violate the JCPOA's nuclear restrictions. Iran announced the fifth and apparently final step on January 5, stating that it would no longer observe any "limitations in the number of centrifuges" in operation.[1] This was a step too far for France, Germany, and the United Kingdom (the European parties to the agreement, or E3), which had until then focused on coaxing Iran back into compliance. Cumulatively, the actions taken by Iran since last July were considered by the E3 to have "increasingly severe and non-reversible proliferation implications."[2]  

As a result, the Europeans were "left with no choice" but to refer Iran's noncompliance to the JCPOA's Joint Commission, using a mechanism in the agreement aimed at resolving disputes. In a January 14 joint statement announcing the decision, however, the E3 made clear that their action in no way indicates a decision to join "a campaign to implement maximum pressure against Iran."[3] Their statement reiterated a commitment to preserving the JCPOA, a desire to facilitate Iranian exports through the Instrument in Support of Trade Exchanges (INSTEX), and continued "regret and concern" about the U.S. decision to withdraw from the agreement and re-impose sanctions. The statement closed with a warning: "Given recent events, it is all the more important that we do not add a nuclear proliferation crisis to the current escalation threatening the whole region."

Consistent with this measured approach, EU High Representative Josep Borrell announced on January 24 that the Joint Commission would "pursue expert-level discussions" about the dispute beyond the initial 15-day period set forth in the agreement, "due to the complexity of the issues involved."[4] The agreement allows this period to be extended by consensus of the parties, and the E3 has an interest in doing so. If the parties fail to resolve the dispute and Iran's noncompliance is found to constitute "significant non-performance," the issue could be sent to the U.N. Security Council. Any one party to the agreement may provoke this action. At the Security Council, the United States could weigh-in and force the re-imposition – or "snapback" – of all previous U.N. sanctions, an outcome the E3 would like to avoid.

By maintaining a balancing act within the first step of the dispute resolution process for now, the E3 may be able to exert some punitive pressure on Iran without upending the agreement. However, consensus among the E3 countries may weaken over time. If even one of the three countries finds Iran's continued violations sufficiently flagrant to warrant the involvement of the Security Council, that country may on its own notify the Council.

The dispute resolution mechanism is set forth in paragraphs 36 and 37 of the JCPOA, representing only two paragraphs in an agreement that runs over 150 pages.

Who pulled the trigger first?

Iran contends that it triggered the dispute resolution mechanism in response to the U.S. withdrawal from the JCPOA and the subsequent re-imposition of U.S. sanctions in 2018.[5] Iran further contends that the U.S. failure to maintain sanctions relief constitutes "significant non-performance" under the agreement and allows Iran "to cease performing its commitments under this JCPOA in whole or in part.”[6] In support of its claim, Iran cites communications by President Hassan Rouhani to European leaders as well as a number of meetings among deputy foreign ministers and foreign ministers of the remaining parties between May 2018 and May 2019.[7]

The E3 counter that Iran never sought to resolve the dispute using the JCPOA's formal channels and therefore has no grounds to cease implementing the agreement's nuclear restrictions.[8] Rather, the E3 consider their January 14 announcement to mark the first time that the JCPOA's dispute resolution mechanism has been triggered.

The text of the agreement appears to support the E3 position: a party first must seek to resolve the dispute through the formal process before ceasing to carry out its commitments. Paragraph 36 of the JCPOA authorizes any one party to trigger the dispute resolution mechanism if it believes that another party is not meeting its commitments under the agreement. This prompts the JCPOA's Joint Commission to convene with the aim of resolving the issue. If an issue deemed to constitute "significant non-performance" remains unresolved, the complaining party "could treat the unresolved issue as grounds to cease performing its commitments under this JCPOA in whole or in part.”[9]

The process itself was designed to address violations by Iran rather than Iranian complaints of non-performance by other parties. Notably, the ultimate outcome of an unresolved dispute is discussion at the U.N. Security Council and, assuming an absence of consensus, the re-imposition of all past U.N. sanctions. Hardly an ideal outcome for Iran. The mechanism was designed by U.S. and European negotiators to automatically re-instate past sanctions without protracted debate in the Security Council, where Russia and China could prevent speedy action.

Indeed, China and Russia have expressed some understanding about what a Chinese foreign ministry spokesperson called "Iran's reduction in compliance."[10] This reduction is "retaliatory in nature," according to the Russian foreign ministry – a response to the U.S. withdrawal from the JCPOA.[11] Both countries criticized the E3 decision to trigger the dispute resolution mechanism as needlessly escalatory. Russia appealed to the E3 not to "aggravate the situation" and China called for all parties "to resolve differences regarding compliance through dialogue and consultation under the JCPOA Joint Commission" – both clearly appealing for the E3 not to move the issue to the Security Council.

Dispute Resolution Mechanism: Step-by-Step

If one party to the agreement deems another to be in violation of its commitments, the complaining party may take the steps described below in an effort to resolve the dispute. The E3 chose to trigger this dispute resolution mechanism together. However, the internal E3 consensus on extending discussion could fray if one country deems Iran's actions sufficiently flagrant to warrant more punitive measures. This country, on its own, should be able to move the issue through the following steps and ultimately to the U.N. Security Council.
 

Step 1: Joint Commission Discussion (Senior Officials)
Procedure: The complaining party refers the issue to the JCPOA's Joint Commission, which is comprised of representatives of current JCPOA participant governments, including China, France, Germany, Iran, Russia, and the United Kingdom, as well as the EU High Representative for Foreign Affairs and Security Policy. The Commission convenes at the senior policy official level and seeks to resolve the dispute to the satisfaction of the complaining party within an initial 15 day consultation period; this period may be extended by consensus.
Status: The E3 formally triggered this step in its January 14 letter to EU High Representative Josep Borrell. On January 24, Borrell first extended the consultation period. On February 4, Borrell reportedly said that he would "continuously postpone" the consultation period because the aim "is not to start a process that goes to the end of JCPOA, but to keep it alive."[12]
Analysis: Article 36 sets no limit on the length of time the parties may deliberate over a dispute, as long as there is consensus to continue consultations. The E3 appear willing to extend consultations at this level for some time if Iran reverses some of its nuclear violations or at a minimum does not take further steps that violate its nuclear commitments. Reducing cooperation with IAEA inspectors or expanding uranium enrichment at the fortified Fordow plant might cause the E3 to reconsider this preference for avoiding escalation.

Step 2: Consideration by Foreign Ministers
Procedure: If consultations at the senior policy official level within the JCPOA's Joint Commission fail to resolve the dispute, any party may refer the compliance issue to ministers of foreign affairs for further consideration. Foreign ministers from China, France, Germany, Iran, Russia, and the United Kingdom would have an initial 15 days to resolve the issue. But here too the time period may be extended by consensus.
Status: EU High Representative Borrell suggested that foreign ministers might meet in February. However, no such meeting has taken place.
Analysis: A review by foreign ministers may take place in parallel with ongoing deliberation by the Joint Commission among senior officials. It is not clear whether convening the foreign ministers would be used by the E3 to escalate the dispute and pressure Iran to resume compliance, or whether the objective of a foreign ministers meeting would be to win higher-level support for a resolution.

Step 3: Advisory Board Input (optional)
Procedure: If the Joint Commission and the foreign ministers are unable to resolve the dispute, either the complaining party or the party accused of violating the agreement may request that the issue be considered by an Advisory Board. This Board would consist of three members – one each from the parties involved in the dispute and a third independent member. The Board would provide a non-binding opinion on the compliance issue within 15 days. The Joint Commission would then have no more than five days to consider the Board's opinion in order to resolve the dispute.
Status: No steps taken.
Analysis: If the E3 were to proceed with this step, it is not clear how the Board members would be selected, in particular the neutral third member. The JCPOA does not describe a process for selecting Board members.

Step 4: Cease Performance
Procedure: If none of the previous steps resolve the compliance issue to the satisfaction of the complaining party, this party may deem the issue to constitute "significant non-performance" and "grounds to cease performing its commitments" under the JCPOA. This party may also notify the Security Council of its decision.
Status: No steps taken.

Analysis: For the E3, this would mean the re-imposition of EU-wide sanctions waived or lifted as part of the agreement. This is a step the E3 would like to avoid taking as it would likely augur the end of the agreement.

Iran has already ceased performing many of its nuclear obligations related to uranium enrichment. Iran claims that the U.S. decision to re-impose sanctions constitutes non-performance under the agreement, which justifies its actions. Iran argues that it waited one year for the E3 to offer an economic solution following the U.S. withdrawal, including through the creation of the INSTEX trade mechanism. Iran also refers to paragraph 26 of the agreement, which states that "Iran will treat a re-introduction or re-imposition of the sanctions […] or such an imposition of new sanctions, as grounds to cease performing its commitments."

Step 5: Notifying the U.N. Security Council
Procedure: In addition to reducing or ceasing to perform its commitments under the JCPOA, the complaining party also may notify the U.N. Security Council about an issue of non-performance by another party. This notification would include an explanation of the efforts made to resolve the issue using the JCPOA's dispute resolution process. The Security Council would then vote on a resolution to continue lifting the sanctions pursuant to the JCPOA. If, 30 days after receiving a notification, such a resolution is not adopted, then the provisions of all past Security Council resolutions would be re-imposed automatically, unless Council decides otherwise.
Status: No steps taken.

Analysis: This is the so-called "snapback" provision of the agreement. The provision was designed with the assumption that Iran might violate the terms of the agreement and that past sanctions should be re-imposed without protracted deliberation in the Security Council and obstruction by China and Russia.

The current situation is quite different, with the U.S. withdrawal preceding Iran's violations. As a result, the remaining parties to the JCPOA have some measure of tolerance for Iran's actions. The complaining parties – in this case the E3 – appear reluctant to move the issue to the Security Council because it would give the United States the clear opportunity to force the "snapback" of past U.N. sanctions. The United States is no longer party to the agreement and cannot force the issue from the Joint Commission to the Security Council, but it is a permanent member of the Security Council and could act quickly once the issue is sent there.

According to news reports, the U.S. State Department has prepared a legal opinion arguing that the United States could invoke "snapback" at any time given its status as a "participant state" named in U.N. Security Council resolution 2231, which endorsed the nuclear agreement. The opinion reportedly argues that any such participant may initiate the snapback process by submitting a notification to the Security Council of an issue deemed to constitute significant non-performance.[13]

Footnotes: 

[1] Atomic Energy Organization of Iran, “I.R. of Iran's Fifth Step Statement on JCPOA Commitments Reduction.” Islamic Republic of Iran, January 6, 2020. https://www.iranwatch.org/library/governments/iran/atomic-energy-organization-iran-aeoi/ir-irans-fifth-step-statement-jcpoa-commitments-reduction. Accessed 26 Feb 2020.

[2] Foreign and Commonwealth Office, “E3 Foreign Ministers' Statement on the JCPoA: 14 January 2020.” United Kingdom, January 14, 2020. https://www.iranwatch.org/library/governments/united-kingdom/foreign-commonwealth-office/e3-foreign-ministers-statement-jcpoa-14-january-2020. Accessed 26 Feb 2020.

[3] Foreign and Commonwealth Office, “E3 Foreign Ministers' Statement on the JCPoA: 14 January 2020.” United Kingdom, January 14, 2020. https://www.iranwatch.org/library/governments/united-kingdom/foreign-commonwealth-office/e3-foreign-ministers-statement-jcpoa-14-january-2020. Accessed 26 Feb 2020.

[4] High Representative of the Union for Foreign Affairs and Security Policy, “JCPOA: Chair's Statement following the meeting of the Joint Commission.” European Union, January 24, 2020. https://www.iranwatch.org/library/multilateral-organizations/european-union/statement-high-representative-josep-borrell-following-consultations-jcpoa-participants. Accessed 26 Feb 2020.

[5] Ministry of Foreign Affairs, “Spokesman’s Reaction to E3's Move to Trigger JCPOA Dispute Mechanism.” The Islamic Republic of Iran, January 14, 2020. https://en.mfa.ir/portal/newsview/571266. Accessed 4 Feb. 2020.

[6] UN Security Council, Security Council resolution 2231 (2015) [on Joint Comprehensive Plan of Action (JCPOA) on the Islamic Republic of Iran's nuclear programme], 20 July 2015. https://www.refworld.org/docid/55b9e2084.html Accessed 2 Feb. 2020.

[7] Ministry of Foreign Affairs, “Fact Sheet on Iran’s Reduction of Some JCPOA Commitments.” Islamic Republic of Iran, Mary 9, 2020. https://www.iranwatch.org/library/governments/iran/ministry-foreign-affairs/fact-sheet-irans-reduction-some-jcpoa-commitments. Accessed 26 Feb 2020.

[8] Ministry for Europe and Foreign Affairs, “Joint statement by the Foreign Ministers of France, Germany and the United Kingdom on the Joint Comprehensive Plan of Action.” The Republic of France, January 14, 2020. https://nz.ambafrance.org/Joint-statement-by-the-Foreign-Ministers-of-France-Germany-and-the-United. Accessed 31 Jan. 2020.

[9] UN Security Council, Security Council resolution 2231 (2015) [on Joint Comprehensive Plan of Action (JCPOA) on the Islamic Republic of Iran's nuclear programme], 20 July 2015. https://www.refworld.org/docid/55b9e2084.html Accessed 2 Feb. 2020.

[10] Ministry of Foreign Affairs, “Foreign Ministry Spokesperson Geng Shuang's Regular Press Conference.” The People’s Republic of China, January 15, 2020. https://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/t1732612.shtml. Accessed 17 Feb 2020.

[11] Ministry of Foreign Affairs, “Comment by the Information and Press Department on the decision of the United Kingdom, Germany and France to formalize the dispute resolution mechanism under the Joint Comprehensive Plan of Action on the Iranian nuclear programme.” The Russian Federation, January 14, 2020. https://www.mid.ru/en/foreign_policy/news/-/asset_publisher/cKNonkJE02Bw/content/id/3994344. Accessed 31 Jan. 2020.

[12] Emmott, Robin. “Europe to Avoid Taking Iran Nuclear Dispute to U.N., EU's Top Diplomat Says.” Reuters, February 4, 2020. https://www.reuters.com/article/us-iran-nuclear-eu/europe-to-avoid-taking-iran-nuclear-dispute-to-u-n-eus-top-diplomat-says-idUSKBN1ZY18Y.

[13] Lee, Matthew. “Horse-Trading Iran Hawks Seize on Pompeo’s Senate Interest.” Associated Press, December 15, 2019. https://apnews.com/a9befc75d569d97c82f18d164cc3283d.