The European Commission (EC) will reactivate the “blocking statue” that bans companies and courts within the European Union (EU) bloc to abide by the U.S. sanctions on Iran.

The blocking statute was designed in 1996 to defend EU countries from the US trade embargo on Cuba. As Euro News explains, “The measure prevents firms from complying with non-EU sanctions laws and stops foreign court judgments based on these laws from being effective in the EU. It also asks EU member countries to impose sanctions on companies who comply with the US rules.”

Jean Claude Juncker, the Commission’s president said on Thursday that the institution he is currently chairing has “obligations to protect European companies” from Washington’s sanctions.

“The American sanctions will not be without effect. So we have the duty, the Commission and the European Union to do what we can do to protect our European businesses,” Juncker said in a statement.

The E.U. is aiming to save the Iran nuclear deal and the blockade statue is seen as one way to do so. “As long as the Iranians respect their commitments, the EU will of course stick to the agreement of which it was an architect – an agreement that was unanimously ratified by the United Nations Security Council and which is essential for preserving peace in the region and the world,” said Juncker.

The European Parliament and EU Council still have a two-month deadline for objections against these procedures before they take effect. This period can be shorter if both institutions indicate the absence of any objection before the deadline expires.

In early May, President Donald Trump announced the U.S abandoned the Iran treaty, saying the Obama-era deal has some flaws to handle Iran’s capability of launching a ballistic missile.

Several European giant firms such as the German insurance company Allianz and French energy giant Total have announced their withdrawal from Iran.

German Chancellor Angela Merkel remained cautious when asked whether the E.U. would give compensation to European small and medium-sized firms doing business in Iran.

How powerful is the E.U effort to block new sanctions from Washington?

The E.U. has committed to staying in the Iran nuclear deal despite the U.S. withdrawal. According to Ali Vaez, of the International Crisis Group, the E.U. blocking statute could ensure that Iran will stick to the agreement. However, the E.U. will need to guarantee that Tehran can keep exporting oil to them and maintain Iran’s access to SWIFT, an international bank messaging system.

Europe may have to deal with several challenges, including threatening to apply tariffs on American imports if the Trump administration imposes secondary sanctions on European firms doing business with Iran, or slapping “blocking legislation” of the kind introduced in 1996 to block its companies from Cuba-related sanctions.

The E.U is planning to use Euros instead of the U.S dollar for oil trading with Iran to avoid possible new sanctions from the Trump administration. Iranian oil’s main buyers are Spain, Turkey, Italy, France, Greece, and Poland.

Amos Hochstein, a former member of the Obama administration cast doubt over whether the E.U. would be brave enough to challenge the U.S sanctions.

“In my wildest dreams, I can’t imagine Europe doing it,” he said.

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