Sanctions and legislation that affect export processes in my ISO 9001 system

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How importing and exporting affects the ISO 9001 context of the organisation

If your organisation is involved in exporting or importing products your quality management system should reflect the requirements of international regulations and legislation. There are a multitude of US sanctions that have been imposed on international countries and businesses based in the UK and EU may inadvertently breach the US requirements. To protect UK and EU businesses from the conflicting US-EU sanctions and legislation, Council Regulation CE 2271/1996 has been put in place. In a quality management system, managers should identify issues that effect the context of the organisation. Export and import activities will definitely effect the context. Therefore, managers should have processes in an ISO 9001 system that recognize imposed sanctions, the blocking statute and the impact these can have. Managers should ensure that they identify legislation for ISO 9001 procedures and regularly carry out compliance audits as part of their ISO 9001 audit programme. 

Conflicting EU-US sanctions legislation

International businesses seeking to comply with the multitude of imposed sanctions may experience problems due to clashing legislation from both EU and US agencies. This due to each regime’s respective approach toward Iran. The 2015 Joint Comprehensive Plan of Action (JCPOA) enabled the US and EU to impose strict controls on Iran’s nuclear program in return for sanctions relief. This allowed European businesses to considerably increase their investments in and trade with Iran (Cozzi, 2019). However, due to the breakdown in relationship between Iran and the US in 2018, the US left the JCPOA and re-imposed sanctions on Iran.

Blocking Statute

In response to this, the Council of the European Union reintroduced the Council Regulation (CE) No 2271/1996 (see here) to act as a blocking statute. This blocking statute aimed to protect EU businesses from the extraterritorial application of foreign laws – specifically the ones imposed by the US. One of the main features of this blocking statute was that it prohibited EU businesses from requesting a license from the US in order to comply with their imposed sanctions regimes, as well as entitled EU business operators to recover any damages caused by those US sanctions. In short, any measures with which sanctions were imposed under US law could not be enforced within EU jurisdiction (Cozzi, 2019). EU businesses found themselves potentially having to choose between continuing business with Iran and breaching US sanctions or ceasing any activity in and with Iran and breaching the blocking statute. 

However, the blocking statute was not imposed to force EU business operators to make a black-and-white choice between ceasing or continuing activities with Iran, as it gave some flexibility to these choices. These choices could be made based on their assessment on their economic situation in Iran and would therefore not be in breach of the blocking statue if evidence of the case was made available to Member State authorities (Cozzi, 2019). Furthermore, as outlined in the legislation, the blocking statute allows EU operators to apply for authorisation to comply with US sanctions if not doing so would seriously damage their interests or those of the EU. The criteria EU authorities will consider in assessing whether serious damage may occur include, amongst other things:

• a situation where the operator would face significant economic losses, which could, for example, threaten its viability or pose a serious risk of bankruptcy;
• a situation where the applicant’s activity would be rendered excessively difficult due to a loss of essential inputs or resources, which cannot be reasonably replaced;
• broader consequences, such as risk to the ‘security of supply of strategic goods or services within or to the Union or a Member State and the impact of any shortage or disruption therein’;
• or the ‘impact on the employment market of one or several Member States and its cross-border consequences within the Union

A more detailed outline of information on business compliance and practice guidelines can be viewed by accessing the link for the Council Regulation (CE) No 2271/1996 (see above link). It is still a complex meta to navigate as, according to Anna Bradshaw of Peters & Peters Solicitors, London, “[Businesses] must accept the reality that they’re never going to be able to ensure full compliance” (Love, 2020).

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Sources:

Council Regulation (CE) No 2271/1996. 1996. Official Journal L 309, 29/11/1996 P.0001 – 0006. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:31996R2271&from=EN [25 July 2020].

Cozzi, F. 2019. US secondary sanctions and EU blocking statute: will the political clash have real impact on EU operators? International Bar Association. Available at: https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=785FC4D7-624B-43D4-882F-08FB123A8EE1#9 [25 July 2020].

Love, B. 2020. Companies caught in EU-US sanctions crossfire. Financial Times. Available at: https://www.ft.com/content/97a75318-16a8-11ea-b869-0971bffac109 [24 July 2020].

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Author

Nic Farrell

Published on 10 August 2020

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