Facing a turbulent period such as the one we are going across you could run up against a country under international sanctions.
In case your business is directed towards a foreign country, it is crucial to check carefully whether the country of destination is subject to any kind of restrictive measures and what the penalties for breaching them may be.
Restrictive measures are essential tools of the international community in order to safeguard certain values and interests such as:
• The security of the international community;
• Consolidate and support democracy, the rule of law, human rights and the principles of international law;
• Preventing Conflicts and Strengthening International Security.
They are characterized by economic or commercial sanctions imposed by several countries on another country or entity that is deemed to have violated one or more of its obligations enshrined in international law.
There are several types of economic sanctions, including:
• Embargo on arms and oil;
• Prohibition of import and / or export;
• Financial restrictions based on seizure of bank accounts, corporate investments and foreign investment funds etc.
The European Union applies its sanctions by means of a regulation approved by a unanimous decision taken by the EU’s Common Foreign and Security Policy (CFSP) Council.
With regards to sanctions imposed by the United Nations, it is useful to take Iran as an example:
Since 2006 the Security Council has adopted a series of resolutions calling on Iran to cease nuclear enrichment for nuclear proliferation. In addition to implementing the sanctions of the United Nations the European Union has added a broad range of economic and financial sanctions against Iran, including restrictions on the financial sector, restrictions on trade of various products and moreover restrictive measures regarding transportation.
On 16th January 2016 (date of implementation of the Joint Comprehensive Plan of Action – JCPOA) the Council abolished all EU financial and financial sanctions on nuclear power against Iran, yet leaving in place some limitations.
Violations to these restrictions can have serious consequences to businesses doing unauthorised trade, such as, administrative sanctions, seizure of goods, reputational damage and also criminal sanctions.
Before starting to trade with a country subject to international sanctions, it is preferable to consult professionals in order to develop a suitable business plan and furthermore carefully overview the contractual relationships with the various business entities involved.
For further information please do not hesitate to contact us.