Applying the Rules of a Third Country Establishing a Sanction: “the Existence of a Close Connection” and “the Prevalence of the Benefits of Giving Effect to a Sanction” Requisites

Golshani, Esmat; Hosseini Modarres, Seyed Mahdi

doi:10.22096/law.2022.131873.1726

Applying the Rules of a Third Country Establishing a Sanction: “the Existence of a Close Connection” and “the Prevalence of the Benefits of Giving Effect to a Sanction” Requisites

Document Type : Research Article

Authors

Esmat Golshani ¹

Seyed Mahdi Hosseini Modarres ²

¹ Assistant Professor, Department of Law, Imam Sadegh University, Tehran, Iran.

² Assistant Professor, Faculty of Law, Shahid Beheshti University, Tehran, Iran.

10.22096/law.2022.131873.1726

Abstract

Once, between parties to a contract, a dispute arising out of sanctions imposed by a third country is raised before the dispute resolution authority, the authority can apply the sanctions to the contract and obligation of the parties thereto as “overriding mandatory rules” only if three significant requisites are fulfilled: “application worthiness of the sanction”, “close connection between the disputed contract and enacting state” and “prevalence of the benefit of a decision to give effect to a sanction over a decision to disregarding it”. The lack of each of the requisites will preclude the application of the sanctions enacted by a third country. This research will provide an answer to this question: concerning a sanction enacted by third countries, what the nature and the criteria to fulfill “the existence of a close connection” and “ prevalence of the benefit of giving effect to a sanction” requisites are.
The criteria to ascertain the “close connection” are: “to assimilate the sanction of governing law into foreign law”, “to apply the law of sanctioning state in case of no choice of the law by the parties”, “performance of the contract in the sanctioning state”, and “the connection of the contracting parties with sanctioning state through domicile or nationality. In over-territorial sanctions, in particular, “close connection” requisite will be ascertained if the over-territorial legislative jurisdiction of the sanctioning state is accepted based on the accepted standards and criteria in public international law.

Keywords

Sanction imposed by a third country

over-territorial sanctions

close connection requisite

prevalence of the benefit of a decision to give effect to a sanction

overriding mandatory rules

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