The Risk of Doing Business Abroad - How to Deal with Contradictory Extraterritorial Sanction Regimes?

42 Pages Posted: 28 Jan 2022

See all articles by Maxime Delabarre

Maxime Delabarre

Institut d'Etudes Politiques de Paris (Sciences Po); Georgetown University, Law Center

Date Written: December 22, 2021

Abstract

This article studies the conflicting sanction context to which multinational companies and corporations exercising in foreign jurisdictions are subjected. On the one hand, the United States uses extraterritorial measures and secondary sanctions to follow foreign policy objectives. On the other hand, the European Union is objecting to most of those measures through the implementation of blocking statutes and regulations, which prohibit European operators to comply with specific foreign sanction regimes.

This article demonstrates how corporations are facing a deadlock. Undertakings do not possess an effective ability to contest the application of U.S. sanctions in front of U.S. courts or authorities. Reliance on blocking regulations is not persuasive in those jurisdictions. As a result, most corporations prefer to settle with U.S. authorities. European corporations also face stronger enforcement of blocking regulations by the E.U., leading to an adverse crossfire. More specifically, the E.U. seems on the way to open a third-party cause of action to contest European corporations’ decisions not to contract with sanctioned undertakings. Such contestations could lead to the specific performance of the contract, then automatically triggering U.S. penalties.

This paper ultimately argues that both systems are ill-conceived as they put the burden on corporations rather than political regimes. Companies, however, should act with extreme caution while doing business abroad, as their activities are likely to trigger either sanctions or penalties under blocking regulations.

Keywords: international law, international affairs, sanctions, EU, european affairs, blocking statutes

JEL Classification: K33, K41, K42

Suggested Citation

Delabarre, Maxime, The Risk of Doing Business Abroad - How to Deal with Contradictory Extraterritorial Sanction Regimes? (December 22, 2021). Available at SSRN: https://ssrn.com/abstract=4015577 or http://dx.doi.org/10.2139/ssrn.4015577

Maxime Delabarre (Contact Author)

Institut d'Etudes Politiques de Paris (Sciences Po) ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

Georgetown University, Law Center ( email )

Washington, DC
United States

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