European Court of Justice – Companies can abandon their business in Iran if sanctions costs are too high

The European Court of Justice, the highest court in the European Union, issued this ruling on Tuesday. The background to this is a lawsuit brought by the German branch of Iran’s state bank Melli against Deutsche Telekom. The Telecom Group terminated its contract with the bank in 2018, before the contract expired. Now the Higher Regional Court in Hamburg must decide whether retaining the contract with Bank Melli der Telekom, which generates about half of its sales from its US business, will cause such disproportionate damage. It was not clear when OLG’s decision would be made.

Also in 2018, then US President Donald Trump unilaterally terminated the international nuclear agreement with Iran and again imposed severe economic sanctions that were lifted in the context of the 2015 agreement. Companies doing business with Iran were also threatened with punitive measures. Unlike the United States, the signatories to the agreement which are Great Britain, France, Germany, China and Russia have adhered to the agreement. A year after its exit from the United States, Iran has gradually violated its terms, it announced.

The European Union, which supports the nuclear deal, has sought to salvage the deal and passed a law banning individuals and companies from complying with renewed US sanctions. The European Court of Justice upheld this law in its decision and said: “EU law on compliance with US secondary sanctions against Iran can be invoked in civil proceedings.”