Sanctions are a foreign policy instrument implemented to bring about a change in behaviour or policy. Sanctions can be imposed on individual countries, non-state actors (such as terrorist groups), businesses and individuals.
The UN and the EU are the two most important international institutions deciding on the imposition or lifting of sanctions. Decisions in the UN and the EU also largely determine which sanctions Norway implements. The US has also introduced several additional sanctions against countries and actors more extensively than the UN and the EU.
All decisions on sanctions against states, persons and entities adopted by the UN Security Council are binding international law, and Norway and all UN member states must therefore implement these decisions. In addition, the EU also adopts its own sanctions. As a general rule, Norway mirrors the EU’s sanctions regime.
Therefore, there are often at least three different sanction regimes (UN, EU and US) companies must adhere to. The sanction regimes are to some extent overlapping. For example, when the restrictive measures against Russia were introduced in 2014, the US imposed stricter sanctions than the EU in certain areas. The recent softening of the Iran sanctions shows this challenge even more as the US, for historical and political reasons, with few exceptions continues to impose sanctions for its own nationals and companies' activities against Iran.
Norway currently has sanctions against 18 states and non-state actors.
In order for UN and EU sanctions to also apply in Norway, they must be implemented into Norwegian law through changes in regulations proposed by the Ministry of Foreign Affairs. Sanctions apply to Norwegian territory, on board any aircraft or vessel under Norwegian jurisdiction, to all Norwegian nationals wherever they are located, to any legal person, entity and body established or established under Norwegian law, and to all legal persons, entities and bodies with regard to the business activities they do in whole or in part in Norway.
The Norwegian authorities do not have instructional authority over private companies, but in general, the companies are required to obtain necessary permits, and they are encouraged to exercise particular caution in disputed areas. Norwegian authorities generally do not take a position on unresolved maritime boundary issues that do not apply to Norwegian waters.
THE UNITED STATES
The United States has about 25 different sanction regimes against states and non-state actors. The Office of Foreign Assets Control (OFAC) in the US Department of the Treasury is responsible for implementing and enforcing the US regulations.
On the OFAC website there is a searchable database for individuals and entities on US sanction lists. It is available here.
On April 6, 2018, OFAC adopted several amendments to the sanction regulations against Russia. Members are made particularly aware of the listing of additional Russian persons and companies, so-called Specially Designated Nationals (SDN) and Blocked Persons. More information here.
According to OFAC's website “All assets subject to U.S. jurisdiction of the designated individuals and entities, and of any other entities blocked by operation of law as a result of their ownership by a sanctioned party, are frozen, and U.S. persons are generally prohibited from dealing with them. Additionally, non-U.S. persons could face sanctions for knowingly facilitating significant transactions for or on behalf of the individuals or entities blocked today."
The EU adopts and implements its own sanctions. An overview of EU measures may be read here
As a result of the nuclear agreement between the so-called P5+1 countries and Iran the summer of 2015, Iran got significant international sanctions relief in January 2016. The US however, with few exceptions, maintains its general trade embargo on its own companies and citizens (primary sanctions), but has lifted most sanctions aimed at non-American people and companies operating in Iran.
Companies considering trade with Iran must undertake a thorough due diligence, including the following aspects:
Are "US persons" involved in the transaction?
Does the transaction involve products originally from the US or with US content?
Are Iranian counterparts, or other actors, still listed on UN / EU / US sanction lists?
Is the product / goods / service itself subject to restrictions or does it require an export license?
Can the company document the due diligence process?
Does your company have existing banking or contract restrictions that restrict possible trade with Iran?
Does the company have a close dialogue with the bank and insurance company to ensure that they are prepared to support the trading transaction?
Does the company have a plan on how to handle third-party claims in Iran if these are still listed?
Export control means that some goods, technologies and services cannot be exported from Norway without a license issued by the Ministry of Foreign Affairs. This applies to defense material ("List I") and also to civilian goods, technology and services with potential military use (dual use) described in List II.
Further trade restrictions
In addition to legally binding international sanctions, there exists various forms of boycotts and recommendations from individual countries and/or groups of countries not to trade with selected countries. In this context, the following may be of particular interest to Norwegian shipping companies:
Contested area between Cyprus and Turkey.
This area was further regulated in November 2019 through EU regulation. Further on, the Norwegian authorities' request to exercise particular caution applies in this area.
As Norway does not recognize Morocco's annexation of Western Sahara, Norway has an "advisory policy" regarding commercial activity in this area. It is not a legally binding prohibition and therefore the Norwegian authorities cannot carry out any sanctions against companies choosing to enter Western Sahara. It is more a call for corporate social responsibility, and companies that choose to ignore this are at considerable risk of reputation.
The Arab League's boycott of Israel
The Arab League, consisting of 22 Arab and African countries, has had an official boycott of Israel since 1948. The boycott has three levels, aimed at national and international activities with Israel. There are wide variations in how the league's member states enforce the boycott. Some countries (Egypt and Jordan) have formally ended their boycott, while other countries only enforce certain parts. It also shows that although many countries maintain an official boycott on paper, and the symbolic value is large, the boycott is only occasionally enforced.