EU sanctions on banking guarantees and the existing legal solutions to confront with them

Document Type : Original Article

Authors

lawyer and legal advisor

Abstract

The sanctions imposed on Iran by the EU Council prohibit any dealings with specific Iranian banks. Sanctions may restrict a foreign bank’s ability to perform its obligations under guarantee contracts. According to these sanctions, no claim in connection with any contract or transaction the performance of which has been affected by the measures imposed under this Regulation, including claims for indemnity or any other claim of this type, such as a claim for compensation or a claim under a guarantee, notably a claim for extension or payment of a bond, guarantee or indemnity, particularly a financial guarantee or financial indemnity, of whatever form, shall be satisfied and European banks invoke these sanctions as a force majeure or frustration condition and accordingly terminate their contract. Since the bank guarantees are noticeably important in nature, introducing the conditions in which the sanctions could frustrate an agreement is also crucial.
Considering the fact that a substantial amount of funds is accounted for the guarantees, a detailed study in the EU regulations and reviewing Banks' claims andfinding appropriate legal solutions are necessary. It is to be examined whether the European Union sanctions as conditions of force majeure or frustration are considered as barriers of contract’s performance or not. The study of this issue involves the examination of sanctions pertinent to bank guarantees under the provisions of the European Union. In addition to considering EU decisions and regulations on bank guarantees, prohibitions,restrictions and permissions, it is necessary to find a legal solution for these sanctions.

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Main Subjects

References

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Journal of Comparative Law
Volume 3, Issue 1 - Serial Number 4
April 2019
Pages 111-143

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History

  • Receive Date: 12 May 2018
  • Revise Date: 14 October 2018
  • Accept Date: 19 February 2019

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