In the midst of the Ukrainian crisis, where the economic sanctions adopted by the European Union against a country are reaching unprecedented levels, France has decided to strengthen its internal blocking mechanism against foreign extra-territorial laws. Extraterritoriality is a characteristic of US OFAC sanctions.
This initiative may also reflect the inefficiency of the European blocking mechanism. If Regulation 2271/96, in its last version of 2018, sets up a regime allowing to neutralize foreign laws with extraterritorial scope and to obtain compensation, it does not consider the necessary support of the companies which would be confronted to the action of a foreign authority based on these extraterritorial laws. It is this aspect that the French update develops.
On April 1, the latest updates to the provisions of the French blocking statute came into effect. This legislation from 1968 gives companies tools to fight against the extraterritorial application of foreign laws. This is the “first reform of the blocking statute in 41 years” (B. Lemaire).
The executive, following some of the Gauvain’s report’s recommendations (2019), has strengthened administrations role in supporting targeted companies.
This decree and order clarify the procedure for companies to refer to the administration when they are subject to a request for information disclosure issued by a foreign public authority.
Their objective is to allow companies to have an opinion from the administration regarding the transfer of sensitive information requested by a foreign authority. This opinion should reinforce the enforceability of the blocking statute against foreign jurisdictions.
This update also reinforces the assistance and support provided to companies by the French administration and more particularly by the Strategic Information and Economic Security Department (SISSE) of the French General Directorate for Companies.
Nevertheless, if France seems to be determined to change its internal legislation concerning the blocking of extraterritorial sanctions, it has still not transposed nor taken measures to allow the implementation of Regulation 2271/96.
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