Telekom Deutschland case: EU blocking statute ‘gives right of action to third-country undertakings’
If an EU entity terminates a contractual relationship with an Iranian entity subject to US primary sanctions, the decision should be regarded as invalid ‘if it cannot be justified on any ground other than the desire to comply with US legislation providing for secondary sanctions.’ Further, while the blocking regulation is intended to protect EU entities from the effects of EU sanctions, it gives a right of action to [e.g.,] Iranian companies who are affected.
So said the EU’s Advocate General Gerard Hogan in a non-binding opinion given, 12 May, in a case brought by Iranian Bank Melli against Telekom Deutschland before the German courts and referred to the European Court of Justice.
A press release issued by the ECJ explain that Bank Melli Iran, which has a branch in Hamburg, ‘claims before the German Courts that the notice of ordinary termination given by the German telecommunication provider Telekom Deutschland with respect to their contracts for telecommunication services is invalid. The services provided by Telekom Deutschland form the exclusive basis of the internal and external communication structures of Bank Melli Iran in Germany and are therefore indispensable to its business activities.’
It says, ‘The Advocate General finds, first, that the general prohibition contained in the EU blocking statute for EU undertakings which is directed against compliance with certain third country legislation providing for secondary sanctions applies even in the event that such an undertaking complies with that legislation without first having been compelled by a foreign administrative or judicial agency to do so. This is clear from the wording, the objective and the context of the prohibition.
‘Second, an EU undertaking seeking to terminate an otherwise valid contract with an Iranian entity subject to the US sanctions must demonstrate to the satisfaction of the national court that it did not do so by reason of its desire to comply with those sanctions.’
Further, he said, while the blocking statute does not aim at protecting third-country undertakings directly targeted by US measures, ‘it confers on such undertakings, like Bank Melli Iran, a right of action.’
He said that if such a right of action was not acknowledged, ‘…the net effect would be that the enforcement of the policy expressed in the EU blocking statute would rely only on the willingness of the Member States and, indirectly, of the Commission’, and the ‘entire public policy behind the EU blocking statute could be quickly undermined by a state of affairs in which many European entities quietly decide to comply (even indirectly) with those sanctions.’
For the advisory opinion in full see: https://curia.europa.eu/jcms/upload/docs/application/pdf/2021-05/cp210078en.pdf
Also see the following article on the case, written by Dario Gorji and published in WorldECR in July 2020:
