FINANCE LITIGATION UPDATE – JULY 2022 6 the European Commission, and its observation that this was not a route Telekom had taken in this case. We may see some divergence amongst national courts, when making their assessment of proportionality, as to how much weight they place on whether EU operators have first sought authorisation before seeking to terminate a contract. This case is also notable because of the suggestion that the services provided by Telekom are "essential" to Bank Melli's internal and external communication in Germany. The CJEU was not asked to consider any arguments in relation to Bank Melli's fundamental rights and so it remains to be seen whether these are considered by national courts Pending clear decisions from national courts within the EU, there remains a risk that the EU Blocking Regulation (and any subsequent UK legislation) may require the continuation of contractual arrangements in breach of US secondary sanctions unless a party seeks and is granted prior authorisation from the European Commission. Application of the EU Blocking Regulation in the UK The EU Blocking Regulation has been retained in UK law post-Brexit by The Protecting against the Effects of the Extraterritorial Application of Third Country Legislation (Amendment) (EU Exit) Regulations 2020. These regulations amended the EU Blocking Regulation and the related Implementing Regulation (Commission Implementing Regulation (EU) 2018/1101) to take account of the UK's departure from the EU. The retained EU regulations and the domestic implementing legislation, as amended, together form the UK Blocking Regulations. The ultimate power to apply and interpret the UK Blocking Regulations now lies with the UK courts. While not bound by the CJEU's decision in this case, the UK courts may have regard to it. In this regard, it is worth noting that the CJEU decided that a proportionality assessment was required by reference to the EU Charter of Fundamental Rights, Article 16 (freedom to conduct business) and Article 52 (the principle of proportionality). However, the UK decided not to incorporate the Charter into UK law when the UK left the EU. There is no express equivalent to Article 16 of the Charter in the European Convention on Human Rights (the "ECHR", to which the UK remains a party), even though the European Court of Human Rights has recognised elements of the right in the ECHR, in particular, in the freedom to enjoy the right to property (Article 1 of Protocol 1 to the ECHR) and freedom of expression (Article 10 of the ECHR, freedom of 'commercial' expression). It is therefore uncertain whether UK courts will interpret the UK Blocking Regulation in the same way as the CJEU has now interpreted the EU Blocking Regulation. More to come Finally, following the AG's expressed hope that the EU legislature would "ponder and consider" the implications of the EU Blocking Regulation, we expect the European Commission to publish a proposed revision of the legislation in the second quarter of 2022. Having at long last obtained some clarity from the CJEU on the EU Blocking Regulation, the ground may be about to shift beneath the feet of EU businesses. Sue Millar, Stephen Ashley, Harriet Campbell and Alexander Goodman
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