Will we see a flood of damages litigation in the EU?
Multinationals might soon find themselves caught in the middle of more U.S.-EU trade tensions as the EU prepares to block the extraterritorial effects of the sanctions that the United States has reimposed on Iran following the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA). This could lead to a high degree of legal uncertainty and risk for both EU and U.S. companies doing business in the EU and to an increase in damages litigation.
Background
The JCPOA is a milestone agreement concluded in June 2015 following intense negotiations between China, France, Russia, the United Kingdom, the United States, Germany, the European Union, and Iran. Under the JCPOA Iran had agreed to stop its nuclear program and submit to supervision and controls by the United Nations. In January 2016, the International Atomic Energy Agency confirmed that Iran had fulfilled its nuclear-related commitments under the JCPOA, and, in response, the United Nations, the EU, and the United States eased their economic sanctions on Iran.
On 8 May 2018, the U.S. administration announced its unilateral withdrawal from the JCPOA and the reimposition of the U.S. primary and secondary sanctions on Iran. In response to the unilateral U.S. withdrawal from the agreement, the other signatories made strong declarations that they would continue to abide by the agreement. Certain countries not party to the JCPOA, such as Australia, Japan, and Turkey, also regretted President Trump's decision. Others, like Israel, Saudi Arabia, and Bahrain, welcomed the U.S. administration's steps.
In addition to expressing its disagreement, the EU announced the passing of a modification of an old existing law ("Blocking Statute") that would prohibit EU companies under threat of sanctions from complying with the reimposed U.S. Iran sanctions. The modifications of the Blocking Statute are scheduled to enter into force in early August.
