What has happened?
The UK Parliament has approved the draft Protection against the Effects of the Extraterritorial Application of Third Country Legislation (Amendment) (EU Exit) Regulations 2019 (the UK Regulations), which transpose the EU Blocking Regulation into UK domestic law.
What does this mean?
The draft UK Regulations are implemented under the European Union (Withdrawal) Act 2018, which permits amendments to be made to EU legislation to ensure that the UK's legal system will continue to operate properly if the UK withdraws from the EU.
For instance, the provisions prohibiting EU persons from complying with the relevant third-country legislation will become provisions prohibiting UK persons from doing so.
By way of background, the EU Blocking Regulation aims at countering the unlawful effects of third country extra-territorial sanctions on EU operators.
The new UK Regulations are particularly relevant following the EU's response to the re-imposed U.S. sanctions in relation to Iran and Cuba.
Post-Brexit, UK businesses will still be required to comply with the provisions of the EU Blocking Regulation.
The UK Regulations in effect implement the existing provisions of the EU Blocking Regulation, and among other things confirm that:
- Courts in the UK will not recognise or allow the enforcement of judgments against UK businesses for fines that they incur in a third country for breaching sanctions with extraterritorial effect (Article 4).
- UK businesses can seek damages through the courts in any member state should they be negatively impacted by the application of extraterritorial legislation (Article 6).
What happens now?
The UK Regulations were approved by the House of Commons and the House of Lords on 2 April 2019 and will come into effect if the UK leaves the EU without a deal (i.e. on exit day) or at end of the end of the transition period subject to any other arrangement.
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