potential to cause problematic extraterritorial effects which has even resulted in
cumbersome “blocking statutes” of the EU aiming to prohibit compliance with
foreign (i.e. United States) sanctions laws.
16
Generally, we live now a commercial era where continuous monitoring and
compliance of virtually all business sectors with global, regional and national
sanctions regimes has become indispensable. Non-compliance can result in severe
consequences, including financial penalties and even criminal liability for representatives of the executive management of companies. Even lower financial penalties—
if combined with the loss of export privileges and a damaging impact to a company’s
reputation—have the potential to harm companies’ business activities significantly.
Shipping companies and transportation services providers are particularly affected
by this development as they represent the most important facilitators of international
trade and operating globally. In particular, the “personal” scope of application of
modern sanctions regimes is intentionally designed in an extensive manner. As a
result, it will often be impossible for any internationally-operating company to
escape the legal impacts of those public instruments—even if the respective home
country or host State has not passed any applicable sanctions legislation itself. Thus,
from a perspective of international shipping, sanctions truly represent an extraterritorially induced compliance challenge.
2.2 EU and US Sanctions Applied in Respect of Actions
Relating to Ukraine
There are several reasons why the sanctions regime as established after the Crimean
events of March 2014 has been described as “opaque”.
17 First, there are no globally
applicable sanctions in respect of any actions relating to the developments of March
2014. As a permanent member of the UN Security Council, the Russian Federation
can effectively veto against any legal steps which would compromise its legal
position. As a result, in 2014, the UN General Assembly only passed a legally
non-binding Resolution on the Territorial Integrity of Ukraine.
18 Apart from bilateral
Ukrainian countermeasures, sanctions were thus unilaterally introduced by the EU
and the USA (sanctions introduced by further countries are not discussed in this
paper). The evolution of the applicable sanctions regimes will be described in the
following sub-sections, focussing in more detail on the measures introduced unilaterally by the EU.
16 The first blocking statute dates even back to 1996, see Council Regulation (EC) No 2271/96 of
22 November 1996 protecting against the effects of the extra-territorial application of legislation,
for further information and updates see: https://ec.europa.eu/fpi/what-we-do/updated-blockingstatute-support-iran-nuclear-deal_en.
17 Supra, note 9.
18 Supra, note 2.
294
H. Jessen
cumbersome “blocking statutes” of the EU aiming to prohibit compliance with
foreign (i.e. United States) sanctions laws.
16
Generally, we live now a commercial era where continuous monitoring and
compliance of virtually all business sectors with global, regional and national
sanctions regimes has become indispensable. Non-compliance can result in severe
consequences, including financial penalties and even criminal liability for representatives of the executive management of companies. Even lower financial penalties—
if combined with the loss of export privileges and a damaging impact to a company’s
reputation—have the potential to harm companies’ business activities significantly.
Shipping companies and transportation services providers are particularly affected
by this development as they represent the most important facilitators of international
trade and operating globally. In particular, the “personal” scope of application of
modern sanctions regimes is intentionally designed in an extensive manner. As a
result, it will often be impossible for any internationally-operating company to
escape the legal impacts of those public instruments—even if the respective home
country or host State has not passed any applicable sanctions legislation itself. Thus,
from a perspective of international shipping, sanctions truly represent an extraterritorially induced compliance challenge.
2.2 EU and US Sanctions Applied in Respect of Actions
Relating to Ukraine
There are several reasons why the sanctions regime as established after the Crimean
events of March 2014 has been described as “opaque”.
17 First, there are no globally
applicable sanctions in respect of any actions relating to the developments of March
2014. As a permanent member of the UN Security Council, the Russian Federation
can effectively veto against any legal steps which would compromise its legal
position. As a result, in 2014, the UN General Assembly only passed a legally
non-binding Resolution on the Territorial Integrity of Ukraine.
18 Apart from bilateral
Ukrainian countermeasures, sanctions were thus unilaterally introduced by the EU
and the USA (sanctions introduced by further countries are not discussed in this
paper). The evolution of the applicable sanctions regimes will be described in the
following sub-sections, focussing in more detail on the measures introduced unilaterally by the EU.
16 The first blocking statute dates even back to 1996, see Council Regulation (EC) No 2271/96 of
22 November 1996 protecting against the effects of the extra-territorial application of legislation,
for further information and updates see: https://ec.europa.eu/fpi/what-we-do/updated-blockingstatute-support-iran-nuclear-deal_en.
17 Supra, note 9.
18 Supra, note 2.
294
H. Jessen