REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL relating to Article 7(a) of Council Regulation (EC) No 2271/96 (‘Blocking Statute’)
Date: 2021-09-03
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: application of EU law, exchange of information, extra-territoriality, free movement of capital, international law, international trade, legal person, national law, natural person, third country

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.9.2021  COM(2021) 535 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL relating to Article 7(a) of Council Regulation (EC) No 2271/96 (‘Blocking Statute’)  
 
 
Report from the Commission to the European Parliament and the Council relating 
to Article 7(a) of Council Regulation (EC) No 2271/96 (‘Blocking Statute’) 

Restrictive  measures  (sanctions)  are  an  essential  tool  for  the  Union’s  common  foreign 
and  security  policy,  through  which  the  European  Union  (EU)  can  intervene  where 
necessary  to  prevent  conflict  or  respond  to  emerging  or  current  crises.  While  EU 
sanctions inherently aim to  affect  policies or activities in  non-EU countries, they apply 
only  where  the  EU  has  jurisdiction.  In  other  words,  the  obligations  they  impose  are 
binding  on  EU  nationals  or  persons  located  in  the  EU  or  doing  business  here.  By 
contrast,  other  jurisdictions  apply  some  of  their  sanctions  extra-territorially  i.e.  they 
expect  citizens  and  companies  of  third  countries,  including  EU  countries  to  act  in 
accordance  with  them.  As  a  matter  of  principle,  the  EU  considers  the  extra-territorial 
application of sanctions contrary to international law. 

In 1996, the EU adopted Council Regulation (EC) No 2271/961 (the ‘Blocking Statute’) 
to give effect to this principle. The purpose of the Blocking Statute is to counteract the 
extra-territorial application of laws, regulations, and other legislative instruments of non-
EU  countries  that  purport  to  regulate  activities  of  natural  and  legal  persons  under  the 
jurisdiction of the Member States. 

Under the Blocking Statute, the Commission must inform the European Parliament and 
the Council of the effects of the legislative instruments and ensuing actions, based on the 
information obtained under the Regulation, and regularly provide a full public report on 
its findings2. 

Following the reactivation of the Blocking Statute through an amendment of its annex in 
20183,  EU  persons  and  companies  share  with  the  Commission  information  on  how  the 
listed  extra-territorial  sanctions  are  affecting  their  economic  and/or  financial  interests4. 
From the amendment  to the  Blocking Statute in  2018 onwards, and the  reactivation by 
the  United  States  of  Title  III  and  Title  IV  of  the  Helms-Burton  Act  in  2019,  the 
Commission has received a substantial number of notifications. This report details these 
notifications and aims to provide an overview of the effects caused by the extra-territorial 
application of non-EU countries’ sanctions. The report is based on information provided 
to the Commission under this procedure. As such, it is not exhaustive and cannot address 
cases not reported to the Commission.  

1 Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of the extra-
territorial  application  of  legislation  adopted  by  a  third  country,  and  actions  based  thereon  or  resulting 
therefrom (OJ L 309, 29.11.1996, p.1). 

2 Article 7(a) of the Blocking Statute. 
3 See Section 2 below. 
4 Article 2 of the Blocking Statute. 

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1.  THE BLOCKING STATUTE 

The Blocking Statute consists of 12 articles and contains an annex that lists the specific 
laws it targets5 (‘listed extra-territorial laws’). It should be read alongside three other key 
texts: 

  Commission  Delegated  Regulation  (EU)  2018/11006  which  implemented  the  most 

recent amendments to the Blocking Statute’s annex, 

  Commission Implementing Regulation (EU) 2018/11017, which lays down the criteria 
that the Commission applies in authorising applications to comply with a listed extra-
territorial law, and 

  The Guidance note: Questions and Answers on the adoption of update of the Blocking 
Statute  (2018/C  277  I/03)8  which  provides  for  a  comprehensive  explanation  to 
common enquiries in a ‘question and answer’ format.  

Overall, the Blocking Statute protects EU interests, persons and companies9 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); and 

 

requiring  EU  persons  and  companies  to  inform  the  Commission  if  these  listed 
extra-territorial laws affect their economic or financial interests (Article 2). 

Specific provisions of the Blocking Statute of particular relevance for this report: 

  Obligation to report damage to economic and financial interests 

The  Blocking  Statute  provides  that  EU  persons  and  companies  must  inform  the 
Commission if the listed extra-territorial laws affect directly or indirectly their economic 
or  financial  interests10.  They  should  inform  the  Commission  within  30  days  of  any 

5 Currently, the annex contains US laws targeting Iran and Cuba. 
6 OJ L 199I , 7.8.2018, p. 1–6. 
7 OJ L 199I , 7.8.2018, p. 7–10. 
8 OJ C 277I , 7.8.2018, p. 4–10.  
9 The Blocking Statute applies to the natural and legal persons specified in Article 11.  
10 Article 2 of the Blocking Statute. 

2 

 
 
                                                 
damage  or  event11.  For  a  company,  this  obligation  lies  with  directors,  managers  or 
persons exercising management responsibilities12.  

Through  such  notifications,  the  Commission  collects  information  from  EU  persons  and 
companies  on  the  possible  application  of  the  listed  extra-territorial  laws.  When  a 
‘notification’  is  submitted  directly  to  the  Commission,  it  immediately  informs  the 
competent authorities of the Member State. EU persons and companies can also reach out 
to  the  competent  authority  of  the  Member  State  where  the  person  is  living  or  the 
company is based. 

 

Information to the European Parliament and the Council 

Building  on  the  information  it  collects  from  notifications  in  the  implementation  of  the 
Blocking Statute, the Commission informs the European Parliament and the Council of 
the effects of the listed extra-territorial laws13.  

Other competences of the European Commission under the Blocking Statute are: 

  Granting  authorisations  to  comply  with  the  listed  extra-territorial  laws:  in 
exceptional  circumstances, the Commission  can  grant  EU persons or  companies 
an  authorisation  to  comply  fully  or  partially  with  a  listed  extra-territorial  law  if 
not doing so would seriously damage their interests or those of the EU14.  

Such  an  authorisation  may  be  granted  in  specific  and  duly  motivated 
circumstances  as  an  exception  to  the  prohibition  to  comply  with  listed  extra-
territorial  laws.  Applications  are  assessed  based  on  the  criteria  set  out  in 
Implementing  Regulation  2018/1101.  The  Committee  on  Extra-territorial 
Legislation, which is composed of a representative of each Member State, assists 
the Commission in assessing these applications15. 

  Supporting  EU  countries,  persons  and  companies:  the  Commission  liaises 
with  EU  persons  and  companies,  and  Member  States  to  support  them  in  the 
application  of  the  Blocking  Statute,  including  by  issuing  guidance.  The 
Commission  also  supervises  and  monitors  the  implementation  of  the  Blocking 
Statute by Member States. 

  Updating the list of the extra-territorial laws: the Commission  is  empowered 
to  add  to  the  annex  to  the  Blocking  Statute  any  laws  of  non-EU  countries  with 
extra-territorial application that affect the interests of EU persons and companies, 
and the EU as a whole16. This was last done in 2018.  

11 See note 6 above. 
12 See note 6 above. 
13 Article 7(a) of the Blocking Statute. 
14 Articles 5 and 7(b) of the Blocking Statute. 
15 Article 8 of the Blocking Statute. 
16 Article 1 of the Blocking Statute. 

3 

 
                                                 
  Outreach  to  international  partners:  the  Commission  supports  the  European 
External  Action  Service  in  the  outreach  to  international  partners  who  share  the 
concerns on the extra-territorial application of non-EU sanctions17. 

  Publication  of  the  details  of  the  national  competent  authorities  for  the 
Blocking Statute: the Commission publishes in the Official Journal of the EU the 
names and addresses of the competent authorities of the Member States referred 
to in Article 2 of the Blocking Statute18. 

2.  LISTED EXTRA-TERRITORIAL LAWS IN THE ANNEX TO THE BLOCKING STATUTE 

The  Blocking  Statute  applies  exclusively  to  sanctions  of  the  United  States  against  Iran 
and Cuba.  

The following extra-territorial laws are listed in the annex. 

2.1.  Iran: 

Following  its  withdrawal  from  the  Joint  Comprehensive  Plan  of  Action  (‘JCPOA’  or 
‘Iran  nuclear  deal’),  the  US  re-imposed  sanctions  against  Iran.  On  7 August 2018,  the 
European  Commission  amended  the  Blocking  Statute  to  take  into  account  these 
developments. The listed extra-territorial laws concerning Iran are the following:  

— The ‘Iran Sanctions Act of 1996’; 

— The ‘Iran Freedom and Counter-Proliferation Act of 2012’; 

—  The ‘National Defense Authorization Act for Fiscal Year 2012’;  

— The ‘Iran Threat Reduction and Syria Human Rights Act of 2012’; and 

—  The ‘Iran Transactions and Sanctions Regulations’. 

A  summary  of  these  laws  and  regulations  is  published  in  Commission  Delegated 
Regulation (EU) 2018/1100. For full provisions, see the relevant instruments19.  

Generally, the risks associated with the violation of US extra-territorial sanctions are the 
following: 

17  See  e.g.  the  Joint  Statement  by  Federica  Mogherini,  Chrystia  Freeland  and  Cecilia  Malmström  on  the 
decision of the United States to further activate Title III of the Helms-Burton (Libertad) Act, available at: 
https://eeas.europa.eu/headquarters/headquarters-homepage/61181/joint-statement-federica-mogherini-
chrystia-freeland-and-cecilia-malmström-decision-united_ko.  

18  List  of  national  competent  authorities  is  available,  OJ  C  251,  28.6.2021,  p.  11–15,  https://eur-

lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52021XC0628%2801%29. 

19 See https://www.govinfo.gov/ 

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  Civil,  criminal  and  administrative  penalties.  Companies  and  individuals  may 
face  civil  fines  up  to  USD  250 000  or  double  the  transaction  value20. 
Administrative sanctions, such as the denial of export and re-export rights for US-
origin goods, are also in place. In addition, wilful violations can be considered a 
criminal  offence,  with  fines  and  the  possibility  of  prison  sentences  for 
individuals.  

  Specially  designated  nationals  (SDN)  listings. The  US  Treasury  Department’s 
Office  of  Foreign  Assets  Control  (OFAC)21  maintains  a  list  of  individuals  and 
companies,  referred  to  as  ‘specially  designated  nationals  and  blocked  persons’ 
(‘SDNs’) that are placed on the list if they have acted against US sanctions policy. 
EU  persons  and  companies  can  be  listed  if  OFAC  finds  they  have  acted  in 
violation  of  US  extra-territorial  legislation  by  engaging  in  certain  transactions. 
EU persons and companies can also be designated for engaging in business with 
an SDN (for example a listed Iranian entity). 

  Restrictions to the United States. Such restrictions can result in exclusion from 
the US market due to a denial of access to the US financial system, or the loss of 
US  correspondent  banking  accounts  or  prohibition  of  entry  into  the  US  for 
individual persons.  

2.2.  Cuba: 

— 

The National Defense Authorization Act for Fiscal Year 1993, Title XVII ‘Cuban 
Democracy Act 1992, sections 1704 and 1706’; 

—        The Cuban Liberty and Democratic Solidarity Act of 1996 (‘Helms-Burton Act’). 

The  Helms-Burton  Act  codifies  US  measures  against  Cuba.  It  aims  to  discourage 
companies from doing business in Cuba by subjecting them to US embargo compliance 
(Title I), exposing them to private civil litigation (Title III) and administrative sanctions 
(Title IV).  

The US had suspended application of the Helms-Burton Act since 1996. On 2 May 2019, 
the US announced the full reactivation of Title III and re-enforcement of Title IV of this 
Act.   

  Title I: Title I provides for an economic and financial embargo concerning Cuba 
and has an extra-territorial scope of application. In practice, this mainly concerns 
exports  to  the  US  of  goods  from  Cuba  or  transported  through  Cuba,  imports  of 
goods or services originating from the US to Cuba and the blocking of financial 
transactions with Cuba.  

20  31  Code  of  Federal  Regulations,  part  501  Economic  Sanctions  Enforcement  Guidelines,  see 

https://home.treasury.gov/system/files/126/fr74_57593.pdf 

21 OFAC is the US agency that administers and enforces economic and trade sanctions in  support of US 

national security and foreign policy objectives. 

5 

 
                                                 
  Title  III:  Title  III  provides  a  cause  for  legal  action  in  US  courts  against 
individuals or companies which, in the view of the claimant, ‘traffic’ in property 
that was expropriated by the Cuban Government. The term ‘trafficking’ is defined 
very broadly (owning property, occupying land, profiting from land or property).  

  Title IV: The US Department of State also pursues proceedings under Title IV of 
the Helms-Burton Act. Under this Title, the administration may deny entry to the 
US  to  foreign  persons,  in  particular  executives  of  companies,  as  well  as  their 
family members.  

3.  OVERVIEW OF NOTIFICATIONS UNDER ARTICLE 2 OF THE BLOCKING STATUTE 

The  Commission  has  received  a  majority  of  notifications  from  companies  engaged  in 
international  trade  or  banking  activities.  It  has  also  received  a  number  of  notifications 
from individuals and other entities, like associations, diplomatic missions, and business 
federations. 

In  total,  between  1 August 2018  and  1 March 2021  the  Commission  received  63 
notifications:  

o  35 related to US sanctions against Cuba; and 

o  28 related to US sanctions against Iran.  

The Commission received notifications from  persons and entities based in  12 different 
Member States. The number of notifications received varies greatly by Member State.  

The  Commission  was  made  aware  of  10  notifications  linked  to,  or  followed  by,  court 
proceedings before EU national courts (see section 4.2). 

This report breaks down the notifications received by type of adverse effects reported: 

  Adverse effects related to banking activities or other financial services: many 
EU  persons  and  companies  informed  the  Commission  about  adverse  effects 
relating  to  access  to  daily  banking  services  or  unilateral  terminations  by  a 
financial institution of the provision of banking services.  

  Adverse  effects  caused  by  one  or  several  business  partners:  EU  persons  and 
companies  frequently  notified  the  Commission  about  adverse  effects  caused  by 
their  business  partners,  most  often  due  to  a  business  partner’s  decision  to 
terminate the business relationship with the notifying party.  

  Administrative  and  judicial  proceedings  in  the  United  States:  many 
notifications related to Cuba, and some notifications regarding Iran, reported the 
existence  or  threat  of  proceedings  before  US  administrative  or  judiciary 
authorities.   

6 

 
  Reluctance  to  invest,  or  to  engage  in  business  in  countries  targeted  by  the 
listed  extra-territorial  laws:  a  limited  number  of  EU  persons  and  companies 
formally notified the Commission about their reluctance to invest, or to engage in 
business, in the countries targeted by the listed extra-territorial laws because they 
anticipated adverse effects if they were to do so. 

7 

 
The  distribution  of  adverse  effects  among  the  63  notifications  received  by  the 
Commission is as follows:  

8 

 
 
 
 
 
 
 
 
 
3.1.  Methodology for the counting of notifications 

The  scope  of  this  report  covers  notifications  directly  received  by  the  Commission  or 
notified  to  the  Commission  by  a  national  competent  authority  between  1 August 2018 
and 1 March 2021.  

Notifications consist of formal submissions to the Commission in order to report adverse 
effects  caused  by  the  listed  extra-territorial  laws.  Notifications  can  be  submitted  by 
individuals,  companies or other entities like  associations, diplomatic missions,  business 
federations. Joint notifications have also been received (i.e. several notifying parties for 
one notification).  

Strictly speaking, the Commission can only consider notifications sent by persons falling 
under the scope of Article 11 of the Blocking Statute. Nevertheless, the Commission has 
also  included  a  number  of  notifications  received  by  foreign  representations  in  EU 
countries.  

In  some  cases,  the  notifying  party  provides  the  Commission  or  the  national  competent 
authority with additional information and updates relating to the same adverse effect. In 
such cases, these follow-ups are not considered as new notifications but are handled as a 
follow-up to the first notification. 

If,  however,  the  adverse  effects  reported  by  the  notifying  party  in  its  subsequent 
exchanges  with  the  Commission  or  the  national  competent  authority  is  not  identical  to 
the  adverse  effects  reported  in  its  first  notification,  it  is  considered  a  new  notification. 
Only  a  few  EU  persons  and  companies  have  informed  the  Commission  or  the  national 
competent authority of their being affected by various types of adverse effect. 

The following sections provide detailed information on the identified negative effects on 
EU persons and companies, and on their context.  

3.2.  Adverse effects related to banking activities and other financial services 

EU persons and companies, including banks, have regularly notified the Commission of 
adverse effects relating to banking activities or financial services, whether in relation to 
Cuba or to Iran. In some instances, the same notification was made by several persons or 
companies by way of a joint notification.  

Between  1 August 2018  and  1 March 2021,  the  Commission  received  18  notifications 
reporting adverse effects relating to banking activities. Most of these notifications were 
linked to US extra-territorial sanctions against Iran.  

There is a high level of interaction between financial systems which exposes EU banks 
and other financial service providers to extra-territorial sanctions. Accordingly, EU banks 
and other financial service providers suffer adverse effects but also, through a knock on 

9 

 
effect, may cause other EU persons and companies such adverse effects when complying 
with extra-territorial sanctions. 

The adverse effects are manifold and may include the following:  

  blocking  of  banking  operations  relating  to  Cuba  or  Iran  (for  instance,  when  the 
operation involves a national of these countries or an ultimate client or supplier in 
these countries); 

  excessive undue delay in processing unrelated banking operations;  

 

termination of the banking relationship; or 

 

inability to open or have a functioning bank account.  

In several  cases, the suspension of the banking relationship  has caused severe  financial 
and  economic  damage  to  the  notifying  party.  Typically,  a  bank  will  block  transfers 
relating to the export of goods or services from or to Cuba and Iran, and the EU company 
will, in turn, be unable to receive payment. Many notifying parties pointed out that their 
business partner was not an SDN-listed person. 

In  addition,  several  banks  operating  in  the  EU  with  head  offices  located  in  Iran  or  in 
Cuba  reported  unilateral  termination  by  EU  banks  of  banking  and  financial  services 
contracts. In the same vein, the Commission was notified of such terminations by foreign 
representations in EU countries.  

Lastly,  a  few  individuals  also  notified  the  Commission  about  the  blocking  of  certain 
banking operations relating to Cuba or Iran.  

3.3.  Adverse effects caused by one or several business partners 

Adverse  effects  caused  by  a  business  partner  are  recurrent,  irrespective  of  whether  the 
notifying party did business with Iran or Cuba. The persons notifying the Commission of 
these adverse effects are EU companies, including EU banks, and individuals.  

Between  1 August 2018  and  1 March 2021,  the  Commission  received  15  notifications 
reporting  adverse  effects  caused  by  one  or  several  business  partners  of  the  notifying 
party. Most of these notifications related to Iran. 

The  reported  adverse  effects  relate  to  the  unilateral  termination  of  the  business 
relationship, often in breach of contract. Business partners that have allegedly infringed 
the  Blocking  Statute  are  import-export  companies,  software  and  telecommunication 
providers,  industrial  firms,  airlines,  postal  and  delivery  services,  and  shipping  and 
consumer product companies22.  

22 Banks and other financial services providers are not included in this category as they were included in 

the dedicated category mentioned above (see above 3.2). 
10 

 
                                                 
Notifying  parties  reported  having  suffered  severe  detrimental  effects  as  a  result  of  the 
non-fulfilment of contractual obligations or as a result of the termination of the business 
relationship. These effects vary from serious impediments to export or deliver goods to 
Iran  or  Cuba,  to  the  material  inability  to  carry  out  any  economic  operation.  Several 
notifying  parties  chose  to  start  legal  proceedings  to  challenge  these  violations.  The 
Commission  closely  monitors  court  cases  of  which  it  has  been  made  aware  and,  on 
request, it provides technical support on request to EU persons and companies who have 
been adversely  affected.  

Typically,  an  EU  company  will  face  a  sudden  unilateral  termination  of  the  business 
relationship from one or several business partners. These business partners are allegedly 
infringing  their  contractual  obligations  despite  the  notifying  party’s  not  being  directly 
concerned by US  sanctions. The stated, implied or suspected reasons  may  relate to,  for 
example,  Cuba  or  Iran  being  the  country  of  the  parent  company  or  ultimate  beneficial 
owner  of  the  EU  affected  company,  the  destination  of  the  products  in  question,  or  the 
country of the beneficiary of the services or products. On rare occasions, the Commission 
was notified by  an EU company of  adverse effects  caused by  foreign business partners 
being directly subject to US sanctions.  

In  addition,  several  banks  operating  in  the  EU  with  head  offices  located  in  Iran  or  in 
including 
Cuba  reported 
telecommunication  providers  and  manufacturers,  interrupted  their  relationships  to 
comply with US sanctions (so called overcompliance). 

they  believed  some  of 

their  business  partners, 

that 

Lastly, one individual notified the Commission about the refusal of a postal company to 
deliver a package to Cuba. The postal company indicated expressly to its client that the 
delivery was not possible due to the US embargo on Cuba.  

3.4.  Administrative and judicial proceedings in the United States 

In total, 28 notifying parties informed the Commission or the relevant national competent 
authority  about  litigation  before  a  US  judicial  authority  or  proceedings  before  a  US 
administrative authority. Most of these notifications concern the application of Title III of 
the Helms-Burton Act which covers ‘trafficking’ in property expropriated by the Cuban 
government. While actions taken under Title III exclusively affect EU companies, Title 
IV proceedings target individuals. There were limited cases concerning Iran.  

3.4.1.  Litigation 

related 

to 

the  application  of  Title 

III  of 

the Helms-Burton Act (Cuba) 

Several EU persons and companies reported that they received a notice of intent to start 
an action before US courts under Title III of the Helms-Burton Act. These notices were 
sent  by  US  persons  or  companies  claiming  that  EU  companies  had  engaged  in 
‘trafficking’ of expropriated properties in Cuba. They generally inform the EU company 
that legal action will be initiated unless the recipient of the notice immediately ‘ceases to 
traffic’ in the property.  

11 

 
The Commission was also notified of the start of formal proceedings before US courts. 
In this regard, courts in the US on two occasions accepted to stay the proceedings while 
the  EU  defendant  requests  authorisation  from  the  Commission.  The  Commission  is 
currently assessing an application for authorisation in such a case.  

3.4.2.  Administrative proceedings in the United States under Title IV of 

the Helms-Burton Act (Cuba) 

A  few  individuals  reported  that  the  US  Department  of  State  had  informed  them  of  the 
start of, or the intention to initiate, proceedings under Title IV of the Helms-Burton Act. 
Title IV allows the US Department of State to deny entry to US territory to any foreign 
natural  person  and  their  families  whom  the  Department  of  State  recognises  as  having 
‘trafficked’ in confiscated property in Cuba claimed by US nationals.  

The individuals targeted are managers or high-level employees of companies accused of 
‘trafficking’ in confiscated US properties. The Commission is also aware that certain EU 
citizens and their families have been barred from entering the US on these grounds.  

3.4.3.  Notifications regarding United States court proceedings related to 

United States sanctions against Iran 

A  few  notifications  concern  court  proceedings  in  the  US  against  EU  persons  and 
companies  relating  to  US  extra-territorial  sanctions  against  Iran.  Other  notifications 
reported  requests  by  the  US  to  extradite  Iranian  nationals  living  in  the  EU  who  are 
accused  of  breaches  of  US  sanctions.  Further  notifications  are  linked  to  administrative 
proceedings in the field of banking.  

3.5.  Reluctance to invest, or to engage in business in  countries targeted by the 

listed extra-territorial laws 

EU persons and companies also notified the Commission of their reluctance to invest in 
countries  targeted  by  the  listed  extra-territorial  laws.  Anticipating  possible  adverse 
effects,  they  were  deterred  from  pursuing  legitimate  and  lawful  business  in  Cuba  and 
Iran. EU persons and companies informing the Commission or their national competent 
authorities also sought reassurances and support before making an investment decision.  

While  the  Commission  has  received  only  a  limited  number  of  notifications  on  these 
grounds,  its  assessment  is  that  many  more  EU  persons  and  companies  may  share  the 
same  concern.  The  Commission  closely  monitors  all  notifications  and  encourages  EU 
persons and companies  to contact  its services23 to notify them of the adverse effects  of 
the listed extra-territorial laws.  

23 The  Commission can be reached at Unit E5, Rue de Spa  2, 1049 Brussel Belgium or at the  following 

email address: RELEX-SANCTIONS@ec.europa.eu.  
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4.  JUDICIAL  INTERPRETATION  OF  THE  BLOCKING  STATUTE  BEFORE  EU  AND 

NATIONAL COURTS 

The Commission is aware of the following judicial proceedings regarding the Blocking 
Statute at EU and national levels. 

4.1.  EU level 

Request for a preliminary ruling (Bank Melli Iran v. Telekom Deutschland GmbH, case 
C-124/20) 

The  case  pending  before  the  European  Court  of  Justice  concerns  a  request  for  a 
preliminary  ruling  pursuant  to  Article  267  of  the  Treaty  on  the  Functioning  of  the 
European  Union  (TFEU)  from  the  Hanseatisches  Oberlandesgericht  Hamburg 
(Germany).  The  dispute  concerns  the  termination  of  telecommunications  services 
between  the  applicant,  Bank  Melli  Iran,  and  the  defendant,  Telekom  Deutschland 
GmbH. The applicant is an Iranian bank incorporated under Iranian law, which has a 
branch  in  Hamburg,  Germany.  The  defendant  is  a  subsidiary  of  Deutsche  Telekom 
AG,  which  is  one  of  the  leading  German  telecommunication  service  providers, 
headquartered in Bonn, Germany.  

Action  for  annulment  before  the  General  Court  (IFIC  Holding  v  Commission,  case  T-
8/21) 

IFIC Holding, an investment arm of Iran Foreign Investment Company (IFIC) based 
in  Germany,  has  brought  an  action  before  the  General  Court,  challenging  the 
authorisation granted by the European Commission on 28 April 2020 to Clearstream 
Banking AG, pursuant to Article 5 paragraph 2 of Council Regulation 2271/96 inter 
alia  on  the  following  grounds:  infringement  of  the  plaintiff’s  right  to  be  heard  and 
infringement of the obligation to state reasons. 

It is expected that these pending cases before the European Court of Justice will make it 
easier  to  interpret  and  implement  certain  provisions  of  the  Blocking  Statute  and  bring 
additional legal certainty and clarity in the different procedures enshrined therein. 

4.2.  National level 

The  Commission  was  made  aware  of  10  legal  proceedings  that  made  reference  to  the 
Blocking Statute before courts of EU Member States.  

In Germany, a bank notified an international logistics company that it would terminate its 
services, citing the risk of the potential application of US extra-territorial sanctions as a 
reason24. Under the bank’s general terms and conditions, it could terminate its services if 
it provided a valid reason. The court deemed the termination lawful considering that the 
Blocking Statute did  not oblige EU companies to  continue trading  with  Iranian entities 

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when doing so would run against their commercial interests. It found that the risk at stake 
and  the  risk  that  other  corresponding  banks  would  terminate  their  cooperation  to  avoid 
exposing  themselves  to  extra-territorial  sanctions  constitutes  such  a  justified  reason  to 
terminate the contract.  

Another  case  in  Germany  concerned  the  termination  of  telecommunication  services 
between  an  EU-based  branch  of  an  Iranian  bank  subject  to  US  sanctions  and  a  major 
telecommunication provider25. As the bank was able to demonstrate that it could continue 
to  pay  for  the  services,  and  that  it  had  always  done  so,  the  German  court  granted  an 
interim  injunction  ordering  the  telecommunication  provider  to  restore  its  services  until 
the expiry of the contracts. The proceedings have been stayed following a request for a 
preliminary ruling pending before the European Court of Justice (see above, Bank Melli 
Iran v. Telekom Deutschland GmbH, C-124/20). 

In  the  Netherlands,  a  case  concerned  a  distribution  agreement  between  Exact  B.V.  and 
Curaçao-based  PAM  International  N.V.  (‘PAM’)26.  PAM  distributed  software  supplied 
by Exact B.V. to companies in Cuba. Exact B.V. terminated this agreement following its 
acquisition  by  a  US-based  investment  company.  The  court  ordered  Exact  B.V.  to 
continue to  provide its services  and further noted that Exact  B.V. might have breached 
the Blocking Statute by terminating the agreement. 

The Commission was made aware of two cases initiated in Italy. In the first case, a bank 
notified  its  client,  a  company  controlled  by  partners  in  Iran,  that  it  would  terminate  its 
banking  services.  The  company  initiated  interim  relief  proceedings  to  have  the  bank 
ordered  to  continue  its  services.  An  Italian  court  determined  that  terminating  these 
services  would  amount  to  a  breach  of  the  Blocking  Statute  and  issued  a  provisional 
injunction against the bank to prevent the termination of these services27. 

In  the  other  case,  an  Italian  company  concluded  a  supply  contract  with  an  Iranian 
company that later became subject to US sanctions. The payment by the Iranian company 
was frozen by the Italian company’s bank. The court ordered the release of the funds as, 
under the Blocking Statute, the US’ placing of the Iranian company on the OFAC SDN 
list had no effect in the EU, and it was not subject to any sanctions in the EU28. 

The Commission was informed of multiple proceedings concerning the same company in 
France. After the conclusion of a contract for the provision of goods to Iran, the company 
was unable to receive payment. This was a long-standing issue as the company had faced 
several closures of its bank accounts over many years. The bank refused to transfer these 
funds,  invoking  various  reasons,  including  compliance  with  US  sanctions.  In  the  latest 
update on the court proceedings received by the Commission, the court of first instance 

24 LG Hamburg 18th civil chamber, judgment of 15.10.2018, 318 O 330/18. 
25 LG Hamburg 19th civil chamber, judgment of 28.11.2018, 319 O 265/18. 
26 PAM International N.V., Curaçao v Exact Software Nederland B.V., judgement of 25.06.2019, Case no. 

C-09-573240-KG ZA 19-430. 

27  See  ‘Italian  Judgments  on  the  EU  Blocking  Regulation’  (EU  Sanctions,  2  October  2019), 

www.europeansanctions.com/2019/10/italian-judgments-on-the-eu-blocking-regulation  

28 See note 27. 

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found  that  the  bank  should  not  have  closed  the  company’s  account  and  terminated  the 
banking services without notice. However, the court also considered that terminating the 
banking  services  was  legitimate  on  the  grounds  that  the  bank  faced  economic  and 
strategic constraints, including the possible imposition of US sanctions. 

5.  CONCLUSION 

The  EU  considers  that  the  extra-territorial  application  by  third  countries  of  measures 
against  EU  operators  is  contrary  to  international  law.  These  measures  threaten  the 
integrity of the Single Market and the EU’s financial systems, reduce the effectiveness of 
the EU’s foreign policy and puts strain on legitimate trade and investment in violation of 
basic principles of international law. 

With the  information  collected  inter  alia  through  the  notification  procedure  pursuant  to 
Article 2 of the Blocking Statute, the Commission has been kept abreast of a variety of 
policy, legal, economic and financial developments affecting EU persons and companies, 
and the Union as a whole. The Commission  will continue to  monitor the impact  of the 
listed  extra-territorial  laws  and  inform  the  European  Parliament  and  the  Council  in 
accordance with Article 7(a) of the Blocking Statute. 

The  proliferation  of  such  sanctions  requires  a  deeper  debate  on  possible  additional 
measures to increase deterrence and, if needed, to counteract them. This report will feed 
into  the  discussion  on  the  implementation  of  the  Commission’s  19 January 2021 
communication  on  “The  European  economic  and  financial  system:  fostering  openness, 
strength  and  resilience”29.  The  Commission  launched  a  general  reflection  on  policy 
options  to  modernise  the  EU’s  toolkit  to  counter  the  effects  of  the  unlawful  extra-
territorial application of third-country unilateral sanctions to EU individuals and entities. 

29 See https://ec.europa.eu/info/publications/210119-economic-financial-system-communication_en 

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