By Cedric Ryngaert and Tom Ruys
The United States have recently enacted legislation sanctioning persons involved in the construction of the Nord Stream 2 (NS2) pipeline, which will transport gas from Russia to Germany through the Baltic Sea and is central to the EU’s energy policy (see here). (Non-US) persons involved in the construction of the Nord Stream 2 pipeline are subject to US sanctions under the Countering America’s Adversaries Through Sanctions Act, the Protecting Europe’s Energy Security Act, and the Protecting Europe’s Energy Security Clarification Act. These sanctions are aimed at putting pressure on persons to withdraw from the NS2 project, and ultimately to scuttle it. In August 2020, things came to a head after three US senators sent a letter to a German port-operating company supporting the NS2 project. The senators warned that the port, the company and its officers exposed themselves to ‘crushing legal and economic sanctions’ by the US.
The German and EU political and business community were more or less united in opposing the US gambit. German foreign minister Heiko Maas stated that the US disregarded Europe’s sovereign right to decide where and from whom to obtain its energy, whereas the Bundesverband der Deutschen Industrie was of the view that the US sanctions were in violation of international law. Also the European Commission considered the NS-2 sanctions to be contrary to international law. However, in an opinion drafted in September 2020, the Bundestag’s Wissenschaftliche Dienste (WD) argued that international law hardly imposes any limits on these US sanctions, even if they can be criticized on political grounds.
In a series of two posts, we review the arguments underpinning the WD’s opinion. In this first post, we argue that a number of US Nordstream sanctions are in tension with customary international law. In the second post, we will argue that they are also in tension with the law of the World Trade Organization (WTO) and the 1954 bilateral Treaty of Friendship Commerce and Navigation (FCN) between Germany and the United States.
In order to assess the international lawfulness of US sanctions, it is important, up front, to properly understand what precise sanctions the US may in fact impose. In the case of Nord Stream 2, these sanctions consist of visa restrictions, exclusion from the US economic system (licenses, loans, public procurement, banking transactions), and the blocking of property. Undeniably, such sanctions have an adverse economic impact on the persons involved in the NS2 project, but that does not necessarily make them unlawful. As we argue in this recent publication, for the purpose of applying the principles of jurisdiction, one should make a distinction between access restrictions and sanctions going beyond access restrictions, such as fines, imprisonment, and confiscation of assets. Only the latter, more onerous measures are subject to the law of jurisdiction, whereas the former fall within the full sovereignty of States. Barring conventional obligations, foreign persons have no right of access to US territory or the US economic system under international law. Most US Nord Stream 2 sanctions are access restrictions – entry bans and economic exclusions – and are accordingly not subject to the constraining norms of the law of jurisdiction. In this respect, the WD is correct to point out that general international law does not guarantee a right to economic cooperation nor an individual human right to enter a foreign State’s territory.
However, the blocking of property, a third sanction under the NS2 sanctions regime, appears to go beyond a mere access restriction. While US blocking or freezing of foreign persons’ property (e.g., funds in a bank account) is a lawful exercise of enforcement jurisdiction as these measures are limited to US territory, they may raise concerns under the law of prescriptive jurisdiction. Indeed, the underlying economic transactions that are proscribed by US law – foreign persons’ involvement in a pipeline built outside the US – have only a very limited connection to the United States. The US has no territorial or personal link to the construction of NS2, thereby precluding reliance on the territoriality or nationality principle. Possibly, the US may rely on the security principle, by arguing that the construction of the pipeline poses a security threat to the US. However, as Gött has also argued in a post on Verfassungsblog, it is unclear how Europeanenergy security can ever be an essential security interest of the US. Also, even assuming that the construction of NS2 strengthens the Russian Federation, it is unclear to what extent it poses an actual security threat to the US, let alone to what extent German firms supporting the construction pose a threat to the US. The WD, however, suggest that the US invocation of its national security is governed by political discretion and cannot be reviewed. Such a view cannot be accepted, however, as it would allow any State to invoke the security principle to justify the most outrageous jurisdictional assertions, stretching the security principle to breaking point. Allowing security interests to be entirely self-judging would make a mockery of the global ordering role of the principles of jurisdiction, including the security principle. It also flies in the face of earlier assertions by the ICJ that the State is ‘not the sole judge’ to verify whether a ‘state of necessity’ exists (see Gabcikovo-Nagymaros, para. 51 ff), as well as case-law related to conventional ‘security exceptions’ – a point to which we return below. To prevent the security principle from becoming self-judging and thereby meaningless, it is key that States and the EU protest outrageous invocations of the principle. Such protests may constitute relevant State practice and opinio juris which may render particular invocations of the security principle unlawful under customary international law. There is even an argument that any invocation of the security principle outside the criminal law is unacceptable (see the post by Tietje and Valentin on Verfassungsblog). To their credit, the WD point out that the community of States’ legal reactions to the sanctions policy of economic superpowers like the US can indeed contribute to the clarification of the permissibility of extraterritorial sanctions legislation. In our next post, we will discuss the compatibility of the US sanctions regime with WTO law and the German-US FCN.