EU SANCTIONS ‘CARROT AND STICK’: ARE DEALS RISK-FREE WITHOUT EU NEXUS?
Brussels is adamant: the European Union (EU) has not and will not impose secondary sanctions. On closer scrutiny, this position no longer holds true, assuming it ever did. As ends justify means, the 20th sanctions package against Russia illustrates the EU’s willingness to increasingly use list-based sanctions to compel operators outside its jurisdiction to nonetheless abide by its rules.
The theory: EU sanctions are not extraterritorial
The EU’s everlasting, official position is simple. EU sanctions only apply if the EU has jurisdiction, i.e., in situations where links exist with the EU. This does not mean they cannot or will never produce any effect extraterritorially. By design, EU sanctions can do so. EU courts have notably recognised that transactions carried out entirely outside the EU remain within the territorial scope of EU sanctions if they concern assets located within the EU.
What the EU has always publicly opposed is the extraterritorial application of sanctions to citizens and companies of third countries, in the absence of any link with the EU, considering this would violate international law. Effectively, the EU’s opposition focused on the implementation by the US of so-called ‘secondary sanctions’, leading to the adoption in 1996 of a ‘blocking statute’ and its ‘reactivation’ in 2018 following the reinstatement of US sanctions against Iran under the first Trump administration.
EU criticisms against secondary sanctions, along with plans to modernise the blocking statute, became more discreet in the wake of Russia’s invasion of Ukraine. This notwithstanding, the official line remains that “the EU does not apply so-called secondary sanctions”.
Jul-Sep 2026 Issue
Mayer Brown