This paper demonstrates that, under modern international law, the imposition of economic sanctions is only admissible as a measure of collective security under the authority of the United Nations (UN) Security Council (multilateral) or as countermeasure when a state is either directly affected by illegal acts by another state, or acts in the defence of vital security interests under the “security exceptions” of the General Agreement on Tariffs and Trade (GATT) (unilateral). In all other cases, unilateral sanctions, and in particular their extraterritorial enforcement, are a violation of the norms of national sovereignty and non-interference in the internal affairs of other states. Against this background, the paper analyzes the notion of coercion in the context of the UN Charter, undertakes a structural comparison between multilateral and unilateral sanctions regimes, and analyzes the political use of unilateral sanctions as a major challenge to the international rule of law.