In reaction to the U.S. announcement, the European Union reiterated its commitment to the 2016 nuclear deal known as the Joint Comprehensive Plan of Action or JCPOA. On May 18, 2018, the European Commission proposed the following countermeasures to ensure that EU companies will (under certain conditions) be allowed to continue doing business with Iran even if such business is prohibited under the reinstated U.S. economic sanctions:
1. Applying the so-called “EU Blocking Statute” to U.S. economic sanctions against Iran. The EU Blocking Statute refers to Council Regulation 2271/96, which the EU adopted in 1996 in reaction to U.S. economic sanctions against Cuba, Iran and Libya. The EU Blocking Statute prohibits EU companies from complying with some of the extraterritorial effects of certain U.S. economic sanctions. It also allows them to recover damages arising from such economic sanctions from the person causing them and nullifies the effect in the EU of any foreign court judgments based on them.
In effect, EU companies dealing with Iran may need to decide whether to comply with U.S. economic sanctions or with the EU Blocking Statute, prohibiting them from complying with those U.S. economic sanctions.
It is difficult to assess the consequences of non-compliance with the EU Blocking Statute for EU companies as this may differ according to Member States, which are in charge of enforcement. In fact, the level of implementation of the EU Blocking Statute has differed significantly among Member States. While some Member States have not adopted specific enforcement legislation, others have adopted penalties amounting to an administrative infringement or in some instances a criminal offense punishable by monetary fines or imprisonment.
In any event, the process of updating the EU Blocking Statute at the EU level is estimated to take at least two months, to allow time for the European Parliament and the Council of the EU to weigh in before a new version enters into force. The aim is to have the amended EU Blocking Statute in force before August 6, 2018, when the first batch of U.S. sanctions takes effect.
2. Removing obstacles for the European Investment Bank to finance activities and facilitate EU companies’ investment in Iran.
3. Strengthening the ongoing sectoral cooperation with, and assistance to, Iran, including in the energy sector and with regard to small- and medium-sized companies.
4. Encouraging Member States to explore the possibility of one-off bank transfers to the Central Bank of Iran.