Search for:

On 21 December 2021, the Court of Justice of the European Union (“CJEU”) issued its judgment in Bank Melli Iran (C-124/20), which we have previously written about here.

The judgment relates to the application of the EU Blocking Regulation (Regulation (EC) No 2271/96). The Blocking Regulation prohibits EU businesses from complying with certain extraterritorial US sanctions targeting Iran and Cuba. In many Member States, breaches of the Blocking Regulation can expose you to criminal penalties, albeit that enforcement has been very minimal to-date.  It also gives EU parties a right of action where they suffer loss resulting from the blocked US sanctions. This direct conflict between the EU and US positions places businesses in a difficult position having to find a middle ground between the conflicting requirements of the EU Blocking Regulation and of US extraterritorial sanctions.

In brief, the judgment found that:

  • The prohibition in the EU Blocking Regulation applies even in the absence of a specific order or instruction directing compliance issued by an administrative or judicial authority of the United States.
  • It is possible to terminate contracts concluded with a person included in blocked US sanctions without providing reasons. However, in the context of civil proceedings, if available evidence suggests prima facie that the terminating party complied with the blocked US sanctions, that party has the burden of proving to the requisite legal standard that his or her conduct did not seek to comply with those laws.
  • The termination of contracts (which were terminated to comply with blocked US sanctions) may be annulled provided that such annulment does not entail disproportionate effects, including economic loss, for the person concerned. When assessing the proportionality of a limitation on the freedom to conduct business, it is necessary to weigh up the balance, on the one hand, the pursuit of the objectives of the Blocking Regulation and, on the other hand, the probability that the terminating party would be exposed to economic loss and the extent of those losses if it were unable to terminate its commercial relationships.

We will provide an in-depth analysis of the case on this blog in the New Year, along with an update on possible reforms of the Blocking Regulation at the EU level.


Sunny Mann is a Partner in Baker McKenzie's London office and co-leads the UK Compliance and Investigations Practice, as well as the UK International Commercial and Trade Practice. Both these practices are ranked Tier 1 by Legal 500 UK. He has also worked in our Firm's Washington DC, New York and Sydney offices. Sunny also advises many clients on risk matters in India. He advises clients (including numerous FTSE 100 and Fortune 100 businesses) on compliance and investigations with respect to export controls, trade sanctions and anti-bribery rules. The Legal 500 ranked Sunny as a “Leading Practitioner", and as "excellent", with a ‘calm’ and "very practical" approach. The India Business Law Journal also noted that Sunny is "excellent and has deep experience in India". He is a Visiting Professor at the College of Europe, the leading institute for post-graduate European studies, where he teaches a course on Corporate Compliance.


Eren Kilich is an associate in the EU, Competition and Trade team of Baker McKenzie's London office. Eren's practice covers compliance and investigations, behavioural antitrust, merger control, dominance, anti-bribery and corruption, and sanctions.

Write A Comment