Last Friday the European Commission stated it wants to deploy the EU anti-boycott regulation (EG/2271/96) against the US sanctions regarding Iran. This regulation was established in 1996 as a result of the US sanctions regarding amongst others Cuba.

The aim now is to protect European businesses against the far reaching extraterritorial application the US gives its sanction regulations. These US sanctions could also hit European businesses, whilst the European sanctions impose far less restrictions. Pursuant to the anti-boycott regulation European parties do not have to but also are not allowed to follow the US sanctions.

As we, together with some other lawyers, indicated last Friday in the Dutch financial newspaper (FD, only available in Dutch, login required) expectations are that in practice this regulation will make little difference and is more likely to put European parties in between a rock and a hard place. European parties will on the one hand be required not to follow US sanctions, whilst at the same time they still risk high US penalties when violating those sanctions. Whilst European parties perform business activities all over the world, the regulation only provides protection with the EU.

The deployment of the anti-boycott regulation must therefore be seen much more as a heavy political instrument, than an adequate instrument which will actually help out European businesses.