After the Trump-era breakdown in nuclear negotiations, the EU’s Blocking Statute—introduced to shield European businesses from U.S. sanctions and assert legal independence—ended up bottlenecking courts, costing millions, and is now widely dismissed as a farce.
Europe’s last real experiment in sanctions defiance has now ended with a regulatory whimper after it snapped back sanctions on Iran.
The EU’s decision to return to the sanctions policies it paused after the 2015 Iran nuclear deal (JCPoA) has revealed the weaknesses of the Blocking Statute, a mechanism created to protect European businesses with lawful dealings in the Islamic republic. Updated in 2018 as a legal shield for European sovereignty, the Statute was meant to counter US extraterritorial coercion after Washington abandoned the JCPoA. At the time, it seemed to mark a red line against decades of increasing U.S. sanctions encroachment.
Seven years later—and after dozens of expensive court disputes and damages claims from affected Iranian plaintiffs—the Statute has disappointed those who expected a meaningful assertion of EU self-reliance. None of the lawyers, diplomats, or policy experts interviewed for this article had a positive view of its implementation. “It’s dead in the water,” said one prominent British sanctions lawyer. “The government should amend it or scrap it entirely. It’s a useless document now.”
The Statute’s purpose was straightforward: EU operators were prohibited from complying with designated US sanctions against Iran, and firms could recover damages for losses caused by the application of those foreign laws inside the EU. While this was envisioned as a bold expression of European legal sovereignty, the Statute became largely symbolic. Brussels spoke the language of defiance but hesitated to generate the political or commercial friction necessary to enforce it. Practitioners dealing with Iran during this period agree the Statute did not alter commercial outcomes in any predictable or enforceable way. “It’s meaningless,” said a former E3 ambassador involved in JCPoA diplomacy during its window of applicability.
What Went Wrong?
From the outset, the Statute contained escape hatches that weakened its force. Companies could request authorization from the Commission to comply with prohibited US sanctions if ignoring them would cause “serious harm.” Courts then transformed a categorical “shall not comply” obligation into a balancing test by adopting proportionality reasoning, allowing firms to plead commercial viability as a legal defence.
In its landmark Bank Melli v. Telekom Deutschland ruling, the Court of Justice (CJEU) confirmed that following US sanctions breached EU obligations but held that violations could nevertheless be excused when obeying EU law would inflict disproportionate or commercially destructive harm.
German courts expanded this logic further, accepting speculative exposure to US penalties as sufficient justification for non-compliance. They used the Sekundäre Darlegungslast doctrine, which lets a court require a company to explain itself when it alone holds the facts, placing the burden on the company rather than the plaintiff. This shifted evidentiary burdens in favour of firms claiming risk.
A similar dynamic emerged in the Netherlands, where prosecutors declined to pursue a Blocking Statute violation after a company voluntarily disclosed Iran-related exports to US authorities, effectively treating anticipatory US compliance as an excusable response to regulatory ambiguity.
The judicial embrace of proportionality has created striking outcomes. A Frankfurt court this summer awarded damages to an Iranian-German client whose bank closed his accounts in violation of the Statute, but the court refused to reinstate those accounts, denying the very restitution the Statute was designed to provide. The case reflects the increasing authority of commercial comfort as a determinant of legality, with judges accepting economic exposure as grounds to disobey political or legal commitments that once would have been considered categorical.
One German lawyer suggested that, in recent years, Europe’s own growing interest in extraterritorial regulation—particularly in response to China and Russia—has made Brussels reluctant to criticize Washington’s sanctions practices too aggressively. When asked whether the Statute should be formally repealed, this same lawyer argued that it should remain as an “empty framework to fill when needed,” even if unenforced.
Europe’s newer self-protection instruments show similar design constraints. The Anti-Coercion Instrument (ACI), widely presented as a major innovation in EU economic statecraft, is structurally limited by the same deference to market continuity that blunted the Blocking Statute. Maintaining frictionless access to international markets has become a powerful constraint on Europe’s willingness to impose meaningful countermeasures against coercive state actors. If the original sovereignty statute could be hollowed out through proportionality clauses, waivers, and evidentiary shortcuts designed to avoid judicial enforcement of foreign-policy preferences, future instruments are likely to face the same pressures unless the EU is willing to internalize greater commercial cost.
The fanfare that greeted the 2018 Blocking Statute has vanished. Europe’s effort to preserve legitimate trade with Iran and defend its own legal order faded into a slow retreat, culminating in a complete snapback of the sanctions regime, accompanied by language indistinguishable from Washington’s. The Statute technically remains on the books, but only as a monument to managed impotence—an embarrassing pillar of sovereignty that nobody wishes to enforce, reform, or remove. It captures a broader political mood: Europe continues to speak the language of autonomy while practicing habits of subordination.
Ali Ahmadi, a former Iranian diplomat involved in the JCPoA negotiations, argues that the Blocking Statute “can be effective if Europe has power,” but power asymmetry with the United States is now too great for the Statute to be practically usable. The limitation is structural, he says: the Statute was “never about legal framework” but about whether Europe was prepared to bear the political costs of enforcement. Because it was not, “Europeans don’t mean anything they say,” not as deception but as a chronic lack of agency. He believes the Statute illustrates Europe’s broader “impotence,” as the continent repeatedly discovers that enforcing its nominal sovereignty would require openly confronting US power. With snapback last month, Ahmadi concludes, Europe has been reduced to “an appendage” of the United States, no longer viewed— even aspirationally—as an honest broker.