On the 7th August, in conjunction with the reintroduction of the first block of US sanctions to Iran, the EU enacted several provisions updating its blockade statute – also known as an antidote provision. The purpose of these rules is to counteract, or limit, the extraterritorial effects – deemed illegal by the international community – of the sanctions imposed by other States, and protect EU companies and individuals when they carry out legal, commercial, or investment operations in connection with the sanctioned States.
The EU has reacted like this because the US provisions which were reintroduced on the 6th August, and those that will be reintroduced on the 5th November, affect important sectors such as the oil sector, and have a marked extraterritorial effect since they require European companies, and those of other countries, to choose between operating with the United States or Iran, so that whoever chooses to work with the latter will be denied access to the US market. The EU also wants to demonstrate that it considers the Trump Administration´s actions unacceptable, since Iran is fulfilling its obligations as set out in from the Nuclear Agreement of 2015 and therefore there is no legitimate reason to reintroduce sanctions.
The European blocking statute originated in Regulation (EC) 2271/96, of the 22nd November 1996, which was issued to deal with the extraterritorial effects of US sanctions on Cuba, Iran and Libya. It applies to the provisions listed in its annex which have extraterritorial effect. For this reason, the recent European regulation takes the fundamental step of including the US sanction legislation regarding Iran introduced after 1996 in the annex.
The core mandate of the blockade statute is that EU economic operators must not comply with the extraterritorial legislation cited in the annex. It protects these operators in several ways: first, it cancels the effects of any foreign decision (ruling, arbitration, etc.) in the Union that is dictated by extraterritorial legislation, that is, such decisions will not have any effect on the EU territory; secondly, it allows European operators to claim economic compensation from the natural or legal persons or entities causing the damages of any kind suffered by the application of extraterritorial sanctions, such as if a US company failed to fulfil a contract; thirdly, and most importantly, it allows European subjects to request an authorisation from the Commission to comply with extraterritorial regulations when their non-compliance could cause serious harm to their interests or to those of the EU itself. Nevertheless, one must always be very clear about a fundamental idea: the blocking statute protects European companies and their assets in the territory of the Union, but not outside of it.
The authorities of the Member States of the Union are responsible for applying the blocking statute and for introducing its provisions into their respective national laws in which sanctions for infractions of the same are contained. They are also responsible for applying these sanctions. As we are dealing with national laws, their content and consequences may be marginally different in each of the 28 European States. To this effect, Spain established Law 27/1998 on the 13th of July 2998. It is a rule that has become obsolete and we understand it will soon be updated.
The fact that European operators can ask the Commission for authorisation to comply with US extraterritorial legislation when their non-compliance could cause them serious damage is of particular practical importance. Implementing Regulation (EU) 2018/1101 focuses on this issue. In addition to the procedural aspects, it regulates in detail the evaluation of the applications and enumerates, in an open manner, the criteria that the Commission must consider in order to grant or deny the application for compliance; in this sense, it cites criteria such as the substantial connection of the company with the United States (having subsidiaries in this country, participation in its capital, etc.), which is subject to an investigation by the US authorities, the magnitude of the economic losses that you may suffer if you do not comply with the extraterritorial sanctions, etc.
We are facing a regulation whose real effectiveness we will not be able to appreciate until a certain amount of time has passed, but undoubtedly it is a firm step by the EU to gain weight in the international scene and be consistent with its own policies.