After the end of the US participation to the Joint Comprehensive Plan of Action (JCPOA), on 5 August 2018, which marked the first set of sanctions, primary sanctions regarding US persons, entered into force. Secondary sanctions also addressed non-US persons with extraterritorial effect then took place in November 2018.
The European Union did not hold back, as on 7 August 2018 the delegated Commission Regulation (EU) 2018/1100 was published, amending the Blocking Regulation. This was not related to the articles of the Regulation, but only to the Annex of the Blocking Regulation. However, the effect of this was a game changer for insurance, Prof. Dr. Dieter Schwampe notes.
Until 4 November 2018, EU persons did not have to worry much about the Blocking Regulation, as the US legislation did not include extraterritorial sanctions for non-US insurers or insurance brokers.
After 1996 the US launched intensive extraterritorial sanctions against non-US persons, while the reference in the Annex to some US Acts was a so-called 'static reference', which did not last to later changes of those Acts or of new Acts.
As a result, the Blocking Regulation did not prevent EU persons from compliance with US sanctions law, but this changed on 7 August 2018 regarding those extraterritorial sanctions that were applied on 4 November 2018.
The Annex now relates to the new set of sanctions law under the Trump administration. In fact, what previously was allowed, is now breaching the amended Blocking Regulation, Mr. Schwampe adds. The Blocking Regulation also incorporates a mechanism to enable EU persons comply with the US sanctions, but the procedure is complicated. Specifically, practitioners often see clauses in the market which have been created during the old EU Blocking Regulation, but are still being used without any changes.
In the brave new sanctions world insurers may even be more between Scylla and Charybdis when having to decide whether to breach their own EU law by following US sanctions, or whether to decide for the lesser evil and follow US laws breaching EU law. But this decision should be an informed decision
...explains Prof. Dr. Dieter Schwampe, saying that insurers should not face any unexpected problems by the continued use of sanctions clauses which were once fine, but now they may present problems.