EU’s public consultation on its Blocking Regulation

On 4 November 2021, the European Commission closed its public consultation on proposed amendments to the EU’s Blocking Regulation, which seeks to protect EU firms and persons from the effects of extraterritorial sanctions in third countries, principally the US. The Commission will now move forward by contacting respective stakeholders directly in order to organise the targeted consultation activities.

To recap, the European Union’s blocking statute (Council Regulation (EC) No 2271/96) prohibits compliance by EU operators with any requirement or prohibition based on the specified foreign laws. EU operators whose economic and financial interests are affected by the extra-territorial application of those laws are obligated to inform the Commission.

Overall, the Blocking Statute protects EU interests, persons and companies by:

• Nullifying the effect in the EU of any foreign court ruling based on the listed extra-territorial laws (Article 4)
• Prohibiting EU persons and companies from complying with any requirement or prohibition contained in the listed extra-territorial laws (Article 5, first paragraph)
• Allowing EU persons and companies to recover in court damages caused by the extra-territorial application of the listed extra-territorial laws (Article 6)
• Requiring EU persons and companies to inform the Commission if these listed extra-territorial laws affect their economic or financial interests (Article 2)

In practical terms the statute is relevant to EU persons engaged in business in Iran and Cuba, two jurisdictions subject to what may be described as extra-territorial ‘secondary’ US sanctions.

The Commission will review the blocking statute in order to include additional deterrence mechanisms and streamline the application of the Regulation, including by reducing compliance costs for EU persons and businesses.

The European Commission’s consultation page and the feedback instances received can be found here. It is interesting to note that most responses have been received from France, UK and Germany.

Additional information on the EU’s blocking statute can be found here.

Our past posts on the Iran aspects of the blocking statute can be found here.