Mutual Assistance and Economic Sanctions

Chapter 8 analysed the legal responses of some leading states in resisting the extra-territorial application of US economic sanctions by adopting blocking laws and clawback statutes that are designed to neutralise the extra-territorial effect of such laws in the home jurisdiction. Although these laws at least in theory appear to block the extra-territorial assertion of US sanctions in regard to third country trade and investment with US-targeted states, they have had little practical effect in insulating third country businesses from potential liability under US sanctions. Indeed, there are various reasons why third country blocking laws have failed to shield third country entities, but the most prominent reason appears to be that most blocking laws and regulations have not been implemented or consistently enforced in their jurisdictions. Moreover, the Brodie case shows how US authorities have enhanced the effectiveness of extra-territorial sanctions by selectively enforcing sanctions against foreign persons and entities that have used US territory for part of their transactions with US-targeted states, while not attempting to enforce sanctions against foreign persons whose transactions occur solely in another country with blocking laws. Consequently, some major multinational firms with operations in Canada and the European Union have entered agreements with the US government that seek to reduce their liability exposure under US sanctions in return for their compliance with certain requirements of US sanctions law.