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April 15, 2014

European Union (EU) Imposes More and More Sanctions and Restrictive Measures: Compliance is an Absolute Necessity

Following the social unrest in the Middle East and parts of Africa, the United Nations Security Council (UNSC) adopted a number of UN Resolutions over the last few years. These UN Resolutions introduced restrictive measures against certain countries, persons, entities and bodies involved in, among other things, serious human rights abuses. Amongst others, restrictive measures have been imposed by the UNSC in view of the situation in Iran, Cote d’Ivoire and Libya.

Further to the UNSC Resolutions, the EU Authorities have implemented various sanctions and restrictive measures against the aforementioned countries by means of Decisions and Regulations. In many cases, the EU sanctions and restrictions are even stricter than the measures imposed by the UN. In addition to the EU measures, national EU Member States’ authorities can implement specific national restrictions. The EU is very active in this field. Recent EU sanctions (updates) include, for example, restrictive measures on countries and regimes such as Iran, Syria and Tunisia, as well as on individuals deemed to be terrorists or in some way related to terrorism.

Current EU sanctions and restrictive measures include, but are not limited to:

  • embargo on arms and related material;
  • embargo on equipment that may be used for internal repression;
  • ban on the provision of certain services;
  • prior information requirements on cargo;
  • restrictions on admission of listed persons;
  • freezing of funds and economic resources of listed persons, entities and bodies; and
  • prohibition to grant certain claims to listed persons and entities.

EU sanctions and restrictive measures generally apply not only within the territory of the EU, including its airspace, but also:

  • onboard any aircraft or any vessel under the jurisdiction of a Member State;
  • to any person inside or outside the territory of the EU who is a national of a Member State;
  • to any legal person, entity or body which is incorporated or constituted under the law of a Member State; and
  • to any legal person entity or body in respect of any business done in whole or in part within the EU.

As such, the EU measures have a direct consequence for many companies and people doing business in or with, for example, Iran, Syria or Tunisia. Not only for EU companies, but potentially also for U.S. companies with international (EU) operations or an international workforce including nationals of an EU Member State. Failure to comply with the EU and, if applicable, national sanctions can have serious consequences. Recently, multiple (international) companies have been subject to legal measures in various EU Member States. These measures vary from a “simple” warning to, for example, penalties and/or even imprisonment of responsible personnel. In addition, the reputation of a company can be at risk. Given the fact that there is a growing interest among EU legislators and enforcement agencies for sanctions and export controls compliance, ensuring such compliance by implementing compliance proceedings, providing compliance training to personnel and, where and to the extent possible, obtaining prior written approval on specific transactions from the competent authorities is strongly recommended.

With a view to the current situation in various countries in the Middle East and Africa, it is a virtual guarantee that the UN and the EU will continue to monitor the developments on an ongoing basis. New developments may lead to additional sanctions and restrictive measures being imposed, thereby increasing the need for a comprehensive compliance program.

©2014 Greenberg Traurig, LLP. All rights reserved.

About the Author

Associate

Erik Zietse is a senior tax lawyer and attorney-at-law and focuses his practice on all aspects of international trade including, Customs, VAT, anti-dumping, export controls and excise duty related matters, including litigation. He has represented many companies before Dutch and European Courts. Erik also works on developing and implementing tax savings programs and export control compliance programs, and optimizing customs structures.

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