In the case of Ministry of Defence and Support for Armed Forces of the Islamic Republic of Iran v International Military Services Ltd  EWHC 1994 (Comm), the High Court examined in detail the effect of the EU sanctions regime against Iran in the context of the enforcement of arbitral awards.
The High Court found that EU sanctions precluded Iran’s Ministry of Defence (“MODSAF”) from enforcing the interest element of an ICC award against International Military Services Limited, a UK state-owned supplier of military vehicles (“IMS”), which would have accrued during the period MODSAF has been subject to EU sanctions. The judgment provides insight into the approach of the English courts in interpreting sanctions regimes and suggests that English courts may be sympathetic under certain circumstances to the argument that obligations owed to EU sanctioned entities should be suspended while sanctions remain in place.
Although this case dealt with the application of the EU sanctions regime at the enforcement stage, the same analysis may also be relevant to the merits phase of certain international arbitration proceedings, given the prevalence of arbitral institution rules that hold that arbitral tribunals should make all efforts to ensure that an award is enforceable.
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