Opinion of Advocate General Hogan delivered on 12 May 2021.

JurisdictionEuropean Union
CourtCourt of Justice (European Union)
ECLIECLI:EU:C:2021:386
Date12 May 2021
Celex Number62020CC0124

Provisional text

OPINION OF ADVOCATE GENERAL

HOGAN

delivered on 12 May 2021(1)

Case C124/20

Bank Melli Iran, Aktiengesellschaft nach iranischem Recht

v

Telekom Deutschland GmbH

(Request for a preliminary ruling from the Hanseatisches Oberlandesgericht Hamburg (Hanseatic Higher Regional Court, Hamburg, Germany))

(Request for a preliminary ruling – Trade policy – Protection against the effects of the extraterritorial application of legislation adopted by a third country – Restrictive measures against Iran – Secondary sanctions adopted by the United States – Prohibition of compliance with such legislation – Exercise of an ordinary right of termination of a contract)






I. Introduction

1. The present reference for a preliminary ruling concerns the interpretation of Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of the extraterritorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom (‘the EU blocking statute’), (2) as last amended by Commission Delegated Regulation (EU) 2018/1100 of 6 June 2018. (3) It arises directly from the May 2018 decision of the (then) US President, Donald Trump, on behalf of the United States of America to withdraw from what is popularly known as the Iranian nuclear weapons deal, an agreement that had previously been reached in July 2015. The effect of that decision was to trigger the re-application of certain US sanctions against Iranian companies and other Iranian entities, the application of which had previously been suspended in 2015.

2. For reasons of foreign policy and national security, particularly in the fight against terrorism, the United States of America has imposed various types of economic sanctions against States and individuals or legal entities. Some of those sanctions are long-standing, such as the embargo on Cuba, which was authorised by the Foreign Assistance Act of 1961 and codified, in 1996, by the Cuban Liberty and Democratic Solidarity (Libertad) Act. Since 11 September 2001 and the intensification of the fight against terrorism, the US economic-sanctions programme has grown.

3. While these sanctions apply mainly to US persons and non-US persons within US jurisdiction who trade or invest with the countries concerned (primary sanctions), some of the provisions also target activities outside of the US jurisdictions, primarily by foreign companies (secondary sanctions). Indeed, much of the US legislation implementing these sanctions seeks either to impose penalties on third-State entities that trade with the target State or by prohibiting those third-State entities in turn from trading with the US. (4)

4. These attempts at US extraterritorial jurisdiction have historically been criticised at EU level, (5) as such endeavours typically amount to a form of exorbitant jurisdiction which some think is not easily reconciled with general principles of public international law. (6) Here it may be observed that Article 21(1) and Article 21(2)(h) TEU enjoin the Union to protect and promote this system of international law. In addition, the European business community has objected to this type of legislation on the grounds that, in practice, it affects almost exclusively foreign companies. (7)

5. For all of these reasons, the existence of such legislation with potentially considerable extraterritorial effect did not go unnoticed. In 1996, the EU blocking statute was adopted by the Union, the first paragraph of Article 5 of which prohibits European companies from complying with US measures. (8) Nevertheless, the tensions between the two legal regimes which are at the core of this reference for a preliminary ruling present potential geopolitical problems, not only in terms of conflict of sovereignty, but also in terms of the competing regulatory barriers in the EU and US markets. As the facts of this case graphically show, the operation of the EU blocking statute gives rise to a series of hitherto unresolved legal issues and a variety of intensely practical problems, not least of which is that European companies find themselves facing impossible – and quite unfair – dilemmas brought about by the application of two different and directly opposing legal regimes. (9) I cannot avoid observing that the nature of these dilemmas, together with the failure to provide clear guidance on important legal issues which directly arise from the operation of the EU blocking statute, is such that the EU legislature might with advantage review the manner in which that statute presently operates.

6. In particular, many of these difficulties have been brought sharply back into focus following the May 2018 decision of the then US President, Donald Trump, to withdraw from the Iranian nuclear deal (formally known as the Joint Comprehensive Plan of Action) reached by the Islamic Republic of Iran and the informally called ‘P5 plus 1’ in Vienna in July 2015. (10) This does not appear to have been a formal treaty as such but rather a political agreement between the five Permanent Members of the Security Council (the United States of America, the Russian Federation, the People’s Republic of China, the United Kingdom and the French Republic) along with the Federal Republic of Germany and the European Union, on the one hand, and the Islamic Republic of Iran, on the other. That agreement envisaged, inter alia, that the Islamic Republic of Iran would reduce its stockpiles of enriched uranium and centrifuges and agree to a programme of routine inspection in return for the gradual lifting of certain economic sanctions. The whole object of this agreement was to ensure that the Islamic Republic of Iran would not realise any ambition it might have had to achieve the capacity to manufacture and produce nuclear weapons.

7. President Trump’s decision to withdraw from that agreement led in turn to fresh US sanctions. This posed considerable difficulties for certain major European companies. (11) Therefore, in order to forestall the effects of this reactivation of US sanctions against Iranian entities following the withdrawal of the United States of America from the Joint Comprehensive Plan of Action, the European Union has added the US legislation related to the Iran sanctions programme to the items of foreign legislation covered by the EU blocking statute.

8. Before turning to address these issues, it is first necessary to lay out the relevant provisions.

II. Legal framework

A. EU law

1. The EU blocking statute

9. The first to seventh recitals of the EU blocking statute provide:

‘Whereas the objectives of the Community include contributing to the harmonious development of world trade and to the progressive abolition of restrictions on international trade;

Whereas the Community endeavours to achieve to the greatest extent possible the objective of free movement of capital between Member States and third countries, including the removal of any restrictions on direct investment – including investment in real estate – establishment, the provision of financial services or the admission of securities to capital markets;

Whereas a third country has enacted certain laws, regulations, and other legislative instruments which purport to regulate activities of natural and legal persons under the jurisdiction of the Member State;

Whereas by their extra-territorial application such laws, regulations and other legislative instruments violate international law and impede the attainment of the aforementioned objectives;

Whereas such laws, including regulations and other legislative instruments, and actions based thereon or resulting therefrom affect or are likely to affect the established legal order and have adverse effects on the interests of the Community and the interests of natural and legal persons exercising rights under the Treaty establishing the European Community;

Whereas, under these exceptional circumstances, it is necessary to take action at Community level to protect the established legal order, the interests of the Community and the interests of the said natural and legal persons, in particular by removing, neutralising, blocking or otherwise countering the effects of the foreign legislation concerned;

Whereas the request to supply information under this Regulation does not preclude a Member State from requiring information of the same kind to be provided to the authorities of that State’.

10. The first paragraph of Article 1 of the EU blocking statute states:

‘This Regulation provides protection against and counteracts the effects of the extra-territorial application of the laws specified in the Annex of this Regulation, including regulations and other legislative instruments, and of actions based thereon or resulting therefrom, where such application affects the interests of persons, referred to in Article 11, engaging in international trade and/or the movement of capital and related commercial activities between the Community and third countries.’

11. Article 4 of the EU blocking statute provides:

‘No judgment of a court or tribunal and no decision of an administrative authority located outside the Community giving effect, directly or indirectly, to the laws specified in the Annex or to actions based thereon or resulting there from, shall be recognised or be enforceable in any manner.’

12. Article 5 of the EU blocking statute states:

‘No person referred to in Article 11 shall comply, whether directly or through a subsidiary or other intermediary person, actively or by deliberate omission, with any requirement or prohibition, including requests of foreign courts, based on or resulting, directly or indirectly, from the laws specified in the Annex or from actions based thereon or resulting therefrom.

Persons may be authorised, in accordance with the procedures provided in Articles 7 and 8, to comply fully or partially to the extent that non-compliance would...

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3 practice notes
  • Pilatus Bank plc and Pilatus Holding ltd. v European Central Bank.
    • European Union
    • General Court (European Union)
    • 2 February 2022
    ...que se les permitiera pronunciarse sobre las conclusiones del Abogado General Hogan presentadas en el asunto Bank Melli Iran (C‑124/20, EU:C:2021:386), referidas a la interpretación del Reglamento n.º 2271/96, tal como se modificó en último lugar por el Reglamento Delegado 2018/1100. 275 El......
  • EU Top Court Issues First-Ever Judgment On The EU Blocking Statute Against US Sanctions
    • European Union
    • Mondaq European Union
    • 11 January 2022
    ...9. Opinion of Advocate General Hogan of May 12, 2021, Bank Melli Iran, C-124/20, EU:C:2021:386, available at: 10. Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions......
  • EU Top Court Issues First-Ever Judgment On The EU Blocking Statute Against US Sanctions
    • European Union
    • Mondaq European Union
    • 11 January 2022
    ...9. Opinion of Advocate General Hogan of May 12, 2021, Bank Melli Iran, C-124/20, EU:C:2021:386, available at: 10. Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions......
1 cases
  • Pilatus Bank plc and Pilatus Holding ltd. v European Central Bank.
    • European Union
    • General Court (European Union)
    • 2 February 2022
    ...procedure and inquiry in order to enable them to state their views on the Opinion of Advocate General Hogan in Bank Melli Iran (C‑124/20, EU:C:2021:386), which concerns the interpretation of Regulation No 2271/96 as last amended by Delegated Regulation 275 The ECB and the Commission submitt......
2 firm's commentaries
  • EU Top Court Issues First-Ever Judgment On The EU Blocking Statute Against US Sanctions
    • European Union
    • Mondaq European Union
    • 11 January 2022
    ...9. Opinion of Advocate General Hogan of May 12, 2021, Bank Melli Iran, C-124/20, EU:C:2021:386, available at: 10. Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions......
  • EU Top Court Issues First-Ever Judgment On The EU Blocking Statute Against US Sanctions
    • European Union
    • Mondaq European Union
    • 11 January 2022
    ...9. Opinion of Advocate General Hogan of May 12, 2021, Bank Melli Iran, C-124/20, EU:C:2021:386, available at: 10. Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions......

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