EU Firms Can Scrap Iran Deals If U.S. Sanctions Costs Too High, EU Top Court Says

December 21, 2021


Sabine Siebold



Related Country: 

  • European Union
  • Germany

On December 21, the European Court of Justice (ECJ) ruled that EU-based firms can terminate contracts with Iranian companies if adhering to the contract would cause "disproportionate economic loss" due to U.S. sanctions. The existence of a "blocking statute," which prohibits EU companies from complying with U.S. sanctions on Iran that were re-imposed when the United States withdrew from the Joint Comprehensive Plan of Action (JCPOA) in 2018, had previously cast legal doubt on such terminations. The lawsuit at issue involved a terminated contract between Deutsche Telekom and Bank Melli, a U.S.-sanctioned Iranian bank. Deutsche Telekom argued that the contract could harm its business, of which about half comes from its operations in the United States. The ECJ remanded the case to a court in Hamburg to determine whether such a loss will occur if the contract is upheld.