The Impacts of European Blocking Regulation on International Commercial Contracts

Blocking statutes are enacted to neutralize the effects of third-country extraterritorial laws and, on the one hand, prohibit all covered persons from complying with these laws and, on the other hand, provide protective measures to protect covered persons against damages caused by non-compliance. The European Union passed the Blocking Regulation to counteract the effects of US unilateral sanctions against Iran, Libya, and Cuba. The Regulation was amended after the withdrawal of the United States from the JCPOA, then, another US sanction law against Iran was blocked. Currently, the covered persons face a dilemma; they are punished by American authorities in the case of violating US extraterritorial sanctions in their contractual relations with US-sanctioned operators. In return,they also may be fined by their countries if they comply with the Blocked Laws because of violating the Blocking Regulation. The hypothesis of the article is that irrespective of applying administrative and criminal sanctions in the case of violation of the Blocking Regulation by the covered persons, from the civil viewpoint, the sanctioned person being a party to the contract with covered persons can litigate and invoke this Regulation against them. The claimant can ask the dispute resolution tribunals to enforce the covered undertaking.