Revue - Les Cahiers de l'Arbitrage N°4-2022 - 15

DOCTRINES - DÉBATS
most extreme being inclusion in OFAC's list of " Specially Designated Nationals "
(SDNs). In the context of the Russia-related programme, secondary sanctions are
found in various Executive Orders that expose non-U.S. persons to a designation
on the SDN list if determined " to have materially assisted, sponsored, or provided
financial, material to " an SDN. 5
If a non-U.S. person is added to the SDN list,
that person's assets are blocked and U.S. persons are generally prohibited from
dealing with them. Given the ramifications of such designation (that person would
effectively be excluded from the international finance system), the available
penalties under U.S. secondary sanctions are harsh.
Unlike the United States, neither the European Union nor the United Kingdom,
nor other countries that have imposed sanctions on Russia, such as Canada,
Australia and Japan, have adopted " secondary " sanctions with an explicit extraterritorial
remit. Indeed, in respect of other U.S. sanctions regimes, such as those
imposed on Cuba and Iran, the European Union, the United Kingdom and other
countries have adopted blocking legislation intended to protect their nationals
from the extra-territorial effect of those U.S. sanctions, which they perceive to be
unlawful from the perspective of international law. 6
However, EU and U.K. (and certain other) sanctions regimes nevertheless have
an effective extra-territorial application in the sense that they apply to conduct of
their own nationals that take place outside the territory of the respective countries.
Thus, EU Council Regulations (which have direct legal effect as a matter of EU
law) contain standard language that the sanctions (or " restrictive measures " ) set out
in these legal acts apply:
" (a) within the territory of the Union;
(b) on board any aircraft or any vessel under the jurisdiction of a Member State;
(c) to any person inside or outside the territory of the Union who is a national
of a Member State;
(d) to any legal person, entity or body, inside or outside the territory of the
Union, which is incorporated or constituted under the law of a Member State;
(e) to any legal person, entity or body in respect of any business done in whole
or in part within the Union. " 7
Since leaving the European Union, the United Kingdom has implemented an
autonomous sanctions regime which applies to all individuals and legal entities
who are within or undertake activities within the territory of the United Kingdom.
All U.K. nationals and legal entities established under U.K. law, including their
branches, must also comply with U.K. sanctions, irrespective of where their
activities take place.
The Office of Financial Sanctions Implementation (OFSI), the U.K. financial
sanctions authority, has further issued guidance that states that a U.K. jurisdictional
nexus (in which case U.K. sanctions would apply) " might be created by such things
as a UK company working overseas, transactions using clearing services in the UK,
5. See Executive Order 14024 of April 15, 2021.
6. See, for example, Council Regulation (EC) No. 2271/96, the preamble of which reads:
" Whereas by their extra-territorial application such laws, regulations and other legislative instruments
violate international law ... "
7. See, for example, Article 13 of Council Regulation (EU) No 833/2014.
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Revue - Les Cahiers de l'Arbitrage N°4-2022

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