Clearstream can block Iranian money. This is the conclusion reached by the Court of Justice of the European Union (CJEU) on Wednesday 12 July.

By withdrawing from the Iran nuclear deal in 2018--which since 2015 had aimed to control the country’s nuclear programme in exchange for the lifting of economic sanctions--the United States put the embargo back in place. The embargo prohibits any person from doing business “outside the United States with persons on the SDN [specially designated nationals and blocked persons] list.”

What does this have to do with Clearstream, a financial institution ? Following the US decision, the European Commission adopted a regulation. The text “prohibits the persons concerned from complying with the laws in question or with actions arising therefrom, except where authorisation is granted by the European Commission where failure to comply with such foreign laws would seriously harm the interests of the persons covered by the Regulation or those of the Union,” explained the CJEU.

Regulation does not require the commission to seek alternatives

The US SDN list includes IFIC Holding, a German company whose shares are indirectly held by the Iranian state. And it itself holds stakes in various German companies, entitling it to dividends. Clearstream Banking AG is the only authorised securities depository in Germany. It has therefore stopped paying IFIC its dividends and blocked them in a separate account. This was done with the authorisation of the commission, as required by the European regulation. IFIC challenged this authorisation decision before the CJEU, which ruled against it.

"The commission did not commit an error of assessment by failing to take account of the applicant’s interests or by not examining whether less restrictive alternatives existed. It also held that the restriction on the applicant’s right to be heard by the commission in the context of the adoption of those decisions was necessary and proportionate,” the court explained in detail.

Conclusion: it “confirms the commission’s decisions authorising Clearstream Banking AG to comply with the US sanctions imposed on Iran” and “dismisses IFIC Holding’s action.”

This article was first published in French on . It has been translated and edited for Delano.