Secondary Sanctions: Why the US Approach Is Unlawful and the EU’s Response Is Ineffective

Abstract

In recent years, the United States has increasingly reverted to imposing secondary sanctions on friends and foes alike. Realizing that other major economic actors, such as the European Union, China and India, are very often unwilling to follow the United States’ foreign policy dictum, and exploiting its position as a major economic power and holder of the world’s reserve currency, the United States has begun penalizing third state actors that continue trading with US primary sanction targets. In some cases, that has gone so far as to lead to the issuance of US arrest warrants and the subsequent arrest of third state citizens for violating US sanction laws while engaged in transactions that took place outside of the US. Seen from an international law perspective, such conduct raises jurisdictional issues. I will explain that the US cannot rely on any jurisdictional principle recognized by the international community to justify its approach to secondary sanctions. In fact, the international community has come to reject the US modus operandi of imposing secondary sanctions as unlawful, creating a customary international law prohibition. I will then examine the European Union’s ineffective response by imposing a Blocking Statute and, in the case of Iran, by creating a Special Purpose Vehicle (SPV). Secondary Sanctions, Customary International Law, Jurisdiction, Blocking Statute, Special Purpose Vehicle