European companies that refused to trade with Iran after the US pulled out of the nuclear deal could face legal action.

European companies doing business with Iran could face legal problems if they terminate their contracts with Iranian banks or firms solely out of concerns about possible US sanctions, the Associated Press reports.

Following the US withdrawal from the nuclear deal in 2018, the administration of former President Donald Trump imposed a series of sanctions aimed at preventing companies from doing business with Iran.

To protect European interests and help Iran's economy, the EU has introduced a blocking law protecting EU companies. However, many large companies that also do business in the United States have chosen to break contracts with Iran to avoid falling under US sanctions.