Effects of foreign legislation on the EU’s financial interests

SUMMARY OF:

Regulation (EC) No 2271/96 protecting against the effects of the extra-territorial application of legislation adopted by a non-EU country

WHAT IS THE AIM OF THE REGULATION?

It aims to protect the economic and/or financial interests of individuals or legal entities against the extra-territorial effects of legislation adopted by non-EU countries.

KEY POINTS

The laws covered by the regulation are specified in its annex. The protection concerns:

international trade; and/or
the movement of capital; and
related commercial activities between the EU and non-EU countries.

The regulation applies to:

any individual who is a resident in the EU and a national of an EU country;
any legal entity incorporated within the EU;
nationals of EU countries who are established outside the EU and shipping companies established outside the EU and controlled by nationals of an EU country (for example a French person working in a Dutch-owned shipping company in a non-EU country), if their vessels are registered in that country in accordance with its legislation;
individuals who are a resident in the EU, unless that person is in the country of which he or she is a national;
any other individual within the EU, including its territorial waters and airspace and in any aircraft or on any vessel under the jurisdiction or control of an EU country, acting in a professional capacity.

Any person whose economic and financial interests are affected by foreign legislation must inform the European Commission within 30 days. This 30-day period runs from the date on which the person obtained this information.

If a court or tribunal or an administrative authority located outside the EU handed down a decision giving effect, directly or indirectly, to the laws specified in the annex (such as the US’s ‘Iran Sanctions Act of 1996’), this decision would not be recognised or enforceable in any manner. The persons referred to in this regulation shall not comply with any requirement or prohibition based on the laws specified in the annex. Nonetheless, a person may be authorised to comply fully or partially with the said requirements or prohibitions to the extent that non-compliance would seriously damage their interests or those of the EU. This authorisation is granted by the Commission, which is assisted by a committee composed of representatives of the EU countries.

The EU countries determine the sanctions to be imposed in the event of a breach of any relevant provisions of this regulation.

Amendments to the regulation

Regulation (EU) No 37/2014 empowers the Commission to adopt delegated acts. It also states that Regulation (EC) No 2271/96 requires uniform conditions for establishing criteria for the authorisation of persons to comply fully or partially with any requirement or prohibition, including requests of foreign courts, in cases where non-compliance would seriously damage their interests or those of the EU. Those measures should be adopted in accordance with Regulation (EU) No 182/2011. (Committees’ role in European Commission’s implementing powers).

Delegated Regulation (EU) 2018/1100 amends the annex to take into account the fact that in May 2018, the US announced they will no longer waive their national restrictive measures relating to Iran. Some of those measures have extra-territorial effect and may have adverse consequences for the interests of the EU and the interests of natural and legal persons engaged in economic activities with Iran.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 29 November 1996.

MAIN DOCUMENT

Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom (OJ L 309, 29.11.1996, pp. 1-6)

Successive amendments to Regulation (EC) No 2271/96 have been incorporated in the basic text. This consolidated version is of documentary value only.