EU court scorns German firm over Iran contract
An opinion provided by the European Union’s top court to German judges says that termination of a contract involving Bank Melli Iran by a major German company over fears of US sanctions was legally invalid.
Advocate General Gerard Hogan, a legal advisor to the European Court of Justice (CJEU), said on Wednesday that Germany’s Telekom Deutschland had acted illegally in its decision to terminate its contract with Bank Melli on the justification that its mother company Deutsche Telekom group might become entangled in US sanctions on Iran.
The legal opinion would not go to the CJEU and is not binding on the German court where a case is being heard against Telekom Deutschland on a complaint lodged by Bank Melli’s branch in Hamburg.
However, it could provide the German court and other European courts with a basis on which they can rule against European companies that have ended doing business with Iranian partners because of US sanctions.
Hogan's opinion statement, released by the CJEU in Luxembourg, said that Telekom Deutschland’s decision to stop dealing with an Iranian firm “should be regarded as invalid if it cannot be justified on any ground other than the desire to comply with US legislation.”
Hogan's opinion reiterated that Iranian courts are legally entitled to invoke an EU law which blocks the reach of US secondary sanctions on businesses in the EU states.
EU’s blocking statute bans any EU company from complying with US sanctions while nullifying court rulings in EU states that enforce Washington’s penalties.
The blocking statute has never been used in any case involving US sanctions.
Iranian companies operating in Europe have been grappling with an array of business and legal issued since a former government in the US imposed sanctions on Iran in 2018 after it pulled out of an international agreement on Iran’s nuclear program.
The opinion by ECJ advisor said that EU companies are obliged to explain to an Iranian company under US sanctions why they are ending commercial relationships.
“If it were otherwise, an entity could quietly decide to give effect to the US sanctions legislation and ... the major policy objectives of the EU blocking statute would be compromised and set at naught, as seems to have happened here,” said the opinion in reference to the case involving Telekom Deutschland and Bank Melli Iran.
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