Newsflash: EU Anti Boycott Regulation takes effect today

 

Cologne, 7th August 2018

 

Newsflash: EU Anti Boycott Regulation takes effect today

 

In our last Newsflash we drew your attention to current developments regarding Iran - and in particular to the amendment of the EU Anti Boycott Regulation 2271/1996 - in reaction to the unilateral termination of the JCPOA by the US Government.

This amended Regulation, which was enacted as a delegated regulation, entered into force today upon the expiry of the 2-month period following its enactment.

After the announcement of the amendment, regrets were expressed that many questions connected with the Regulation had been left open, especially the question of how, for example, the permit pursuant to Art. 5 paragraph 2 for the fundamentally prohibited observance of the unilateral US sanctions should be applied for and what prerequisites apply to them.

The EU Commission has remedied this with the entry into force of the revised Regulation, by adopting today an Implementation Regulation for the application of Art. 5 paragraph 2 (the permit criteria), which determines 14 criteria for the granting of the permit.  The EU Commission has simultaneously published a template for the application.

The criteria are - as expected - worded somewhat abstractly and cover very different aspects. In detail:

  • a probable specific risk to the protected interest, taking into consideration the context, type and origin of any damage to the protected interest;
  • the existence of pending official or judicial investigations against the applicant by the third country from which the listed extraterritorial legal acts stem, or a previous settlement agreement with this third country;
  • the existence of a substantial connection with the third country from which the listed extraterritorial legal acts or the follow-up measures stem; for example, where applicants have parent companies or subsidiaries or a participation of natural or legal entities who are subject to the primary jurisdiction of the third country from which the listed extraterritorial legal acts or follow-up measures stem;
  • the question of whether the applicant could take reasonable measures to avoid or minimise the damage;
  • the detrimental effects upon the business activities, in particular whether the applicant would incur considerable economic losses which could, for example, jeopardise its profitability or represent a substantial insolvency risk;
  • the question of whether, due to the loss of substantial input or resources which cannot be replaced with reasonable effort, the applicant’s activities would not be made excessively difficult;
  • the question of whether the exercise of the individual rights of the applicant would not be considerably hindered;
  • the existence of a safety threat, hazard prevention, protection of human life and health as well as environmental protection;
  • the existence of a threat to the Union’s ability to implement its policies in the areas of humanitarian aid, development and trade policy or the external aspects of its internal policy areas; 
  • the safety of the supply of strategic goods or services within the Union or en route to the Union, respectively within a Member State or en route to a Member State, as well as the effects of any related supply bottlenecks or disruptions; 
  • the consequences for the Internal Market in respect of the free movement of goods, services and capital as well as for the financial and economic stability or for central infrastructures of the Union;
  • the systemic effects of the damage, particularly regarding the spill-over effects into other sectors;
  • the effects upon the employment market of one or several Member States and their cross-border effects within the Union.
  • other relevant factors.

 

The wording of the Implementation Regulation can be found here.

The template for the application can be found here.

The enactment of the Implementation Regulation can be taken as a clear political signal that the EU Commission, unlike in its previous 22 years of existence, now also wishes to execute the Anti Boycott Regulation.

 

 

Stephan Müller

Partner

Telephone: +49 221 2091 448
Telefax: +49 221 2091 333

stephan.mueller@oppenhoff.eu

Denmark, Finland, Israel, Norway, Sweden