Blocking Statute Regulation

One of the principles of international law is that one state cannot enforce its national law on the territory of another state without the consent of the latter. Accordingly, the EU does not recognise the extraterritorial reach and application of laws adopted by third countries. In 1996, the United States took such measures concerning Cuba, Iran and Libya. In response, the EU enacted Regulation (EC) 2271/96, known as the Blocking Statute. It aims to protect EU operators and persons engaged in lawful international trade and/or movement of capital, (as well as related commercial activities), against the negative effects of the extraterritorial legislation. The Blocking Statute explicitly forbids EU entities and persons from complying with extraterritorial sanctions. It also permits companies to recover damages arising from such sanctions, and nullifies the effect in the EU of any foreign court judgment based on them. Entities may request an exemption from the regulation if they can demonstrate that non‑compliance would seriously damage their interests or the interests of the EU. The Blocking Statute is activated by a European Commission delegated act which modifies the annex to the regulation. This modification stipulates the third‑country sanctionary laws against which the statute is activated.

Application of the statute in the past

In 1996, the US imposed sanctions with extraterritorial effect on economic operators from third states, including the EU, that were investing in Cuba, Iran and Libya. The EU considered these contrary to international law, adopted its Blocking Statute, and challenged the US sanctions before the World Trade Organization. Ultimately, an understanding was reached in 1998, waiving the application of sanctions.

The Blocking Statute returned to the spotlight in 2018, when the first Trump administration withdrew from the Joint Comprehensive Plan of Action (JCPOA), also known as the 'Iran nuclear deal'. The US decided unilaterally to reintroduce far‑reaching economic measures against Iran, which included the extraterritorial 'secondary sanctions'. European Union and other third‑country entities' activities, such as investing in Iran, purchasing petroleum or carrying out significant financial transactions, fell under these measures. The sanctions for breach involved, for example, banning the companies engaging in business with Iran from using the dollar, asset seizures, possible criminal charges in the US, and prohibition of payments between such entities and US financial institutions. In response, the Commission adopted a delegated act to update the annex to the statute and included the US extraterritorial sanctions, effectively prohibiting EU entities from complying with those sanctions.

Views on effectiveness

The effectiveness of the Blocking Statute is highly disputed. The prevailing view is that sanctioned EU operators with activities or connections to the US find themselves caught between a rock and a hard place: on the one hand, they risk US sanctions enforcement, such as losing access to US markets or the financial system; on the other hand, the statute prohibits them from complying with such US sanctions. Instances of use or referral to the statute in court cases in Member States are very limited, and EU‑level rulings to date have raised further questions, such as the consequences of a breach for EU entities, leaving key issues like proportionality, proof and remedies to national proceedings. Indeed, the statute provides a legal framework to express the EU's objection to the extraterritoriality of sanctions imposed by a third country. The EU can make use of the statute as a bargaining chip in negotiations with the respective third country. However, the EU lacks the necessary operational strength, coherence, and strong enforcement. One major drawback is that the statute does not effectively shield EU companies from the grave consequences of sanctions, such as being cut off from the US market and financial system, nor for any other effects outside the EU's jurisdiction. Taking all this into consideration, the Commission considered amending the statute, but there have been no new developments since 2021.

International Criminal Court sanctions

Following the ICC's arrest warrants for Israeli Prime Minister Benjamin Netanyahu and former Minister of Defence Yoav Gallant, since February 2025 the US has launched waves of extraterritorial sanctions against the Court and its senior members, including judges, the former chief prosecutor and the president of the Court. Starting with asset freezes and travel restrictions on individual Court members, the US added escalatory measures on 9 October 2026, extending the sanctions to the institution as a whole (with a 180‑day grace period). The US imposed asset freezes on any ICC property in the US and in the possession or control of US persons. It also prohibited US individuals or entities from carrying out any transactions involving the ICC. In practice this can severely disrupt the ICC's daily operations, since the majority of its work is directly or indirectly reliant upon US companies, whether in technology or payments. If applied, it would also pressurise EU companies to cut their services or face US sanctions. Targeted ICC members report their credit cards, Amazon and Google accounts were cancelled. Many international transactions are dollar-denominated and they too become subject to sanctions.

The European Union institutions have expressed dismay regarding this escalation. The European Commission expressed a willingness to seek a negotiated solution, while standing ready to take any necessary measures. Furthermore, the European Parliament supported amending the annex to the Blocking Statute to include the ICC sanctions imposed by the US, in numerous resolutions adopted in 2025 and 2026. Activating the statute could help to achieve a coordinated response at EU‑level, as opposed to a national response to sanctions, while possibly also strengthening the EU's hand in negotiations during the grace period. However, this could be challenged, as the Blocking Regulation was designed to protect trading interests rather than a court. Other features of the statute will also persist, such as its limited use to date and related legal uncertainty, coupled with the significant US economic leverage and EU entities' dependence on the US and its markets, technology and payments.