On 8 May the US withdrew from the JCPOA and set two dates when various sanctions against wide Iran interests would be brought back. Such were also deadlines by which all affected business should be concluded, on pain of broader US sanction of any not complying.
The day after the first waypoint of 6 August, the EU reintroduced an updated version of the unused Blocking Statute of 1996. This is said to protect defined EU entities and persons (“EU operators”, as they are known) from US measures that may result from continued, and otherwise legitimate, trade with Iran.
The intended protective provisions (a) neuter the effect within the EU of any relevant non EU provision or related decision and (b) allow recovery of damages by any who suffer loss due to US action.
Thus the EU says it will protect its operators with a shield of non enforcement and a sword of litigation.
But where these steps are untested, confined to the EU and could later encounter matching US fetter, the likely immediate result is not sustained trade but legal uncertainty. For example, parties may now ponder whether a term contract arguably made illegal or frustrated by US steps on 8 May has been rehabilitated by the EU response on 7 August. There are many factors in play, but what had become legally or commercially unworkable might now be very different.
This could be so even if most are disinclined to embrace these new measures. However, as a practical and also logical matter, test case yardsticks will be too few and far off to underpin market confidence now. It therefore remains to be seen how many EU operators will want to press ahead against very explicit threat of exclusion from US trade and the US banking system.
This is all the more so when the core of the Blocking Statute is that EU operators shall not comply with the US sanctions, unless on application they get exemption on the ground that breach would seriously harm their own or the EU interest.
It is likely that many will seek to avoid this uncomfortable twin dilemma by continuing to decline relevant Iran-related business.
M Taher & Co has long experience and great expertise in advising on all aspects of sanctions, including of course their interpretation, scope and applicability and any action that either must be avoided or might be taken, whether in general or as regards any individual case, and on a personal life or corporate trade basis.
If you need specific advice or would like generally to discuss any point or topic in this note please contact
Maryam Taher or
Tim Stephenson.