EXTRATERRITORIAL SANCTIONS – GOING BACK TO THE FUTURE?
On 8 May 2018, President Donald Trump announced that the United States will withdraw from the Iran nuclear deal, the Joint Comprehensive Plan of Action (JCPOA) and re-impose sweeping sanctions aimed at the Iranian economy. This decision will have potentially severe consequences for international companies engaged in business, or substantially invested in potential projects, with Iran.
In response, the European Commission announced its intention to activate EU Council Regulation No. 2271/96 (the EU Blocking Statute), by updating the list of US sanctions against Iran within its scope.
Adding to this diplomatic furore, on 13 May, President Trump revealed in a tweet that he had instructed the US Commerce Department to get Zhongxing Telecommunications Equipment Corporation (“ZTE”), a multinational telecommunications manufacturer in China, convicted of violating US sanctions imposed against Iran and North Korea, “back into business, fast”.
The re-impositon of US sanctions against Iran and the indication of potentially softer penalties to be imposed against ZTE has caused uncertainty, particularly among EU companies (EU investment in Iran has grown to more than €20bn since 2016, including a significant investment by supermajor oil company Total and aircraft manufacturer Airbus), regarding the extent to which the US will seek to impose financial, and other, penalties for breach of US sanctions.
Jul-Sep 2018 issue
Kirkland & Ellis International LLP