US Sanctions Can't Prevent EU Business With Iran, CJEU Advocate General Says

European individuals and entities should not be allowed to cancel contracts with entities in Iran, or other countries sanctioned by third parties, solely on the basis of seeking to avoid third party sanctions on that nation, a legal adviser to the Court of Justice of the European Union said in a May 12 opinion. Advocate General Gerard Hogan said in the non-binding opinion that a German company's decision to cut ties with an Iranian bank could be met by a European blocking statute that was passed to counter U.S. sanctions and to ensure that the bloc does not recognize any court ruling that enforces American penalties.

"A decision by an EU undertaking to terminate a contractual relationship with an Iranian undertaking subject to US primary sanctions should be regarded as invalid if it cannot be justified on any ground other than the desire to comply with US legislation," Hogan said. The case prompting Hogan's opinion was brought by Bank Melli Iran which has a branch in Hamburg, Germany, and currently has proceedings before a regional court in Germany. Upon requesting a scope ruling of the blocking statute which is intended to "sterilise the intrusive extraterritorial effects of U.S. sanctions within the EU," Hogan found that an EU entity must prove to the satisfaction of the national court that it did not welch on the contract soley to comply with third-party sanctions and that the national court is required to maintain the contract if this was indeed the reason for termination of the contract.