Yes, but you are pay for it, so you can make you own rules on the server. We kick cheaters and Base rapers and so on, for me it is almost the same. If there is in the control panel an option to prevent entering players from specific country's then it is normal and legal
I wonder...
Assume I have a pub. I write a note: "Take off your shoes inside". That would be a rule.
Same case, a note: "We call police in case of freud or misbehaviour." That would be a policy.
Same case, and a note: "We do not serve Serbians." Even if that's because they speak my language slowly, that's still racism and that should not be legal.
Unless it's not a public pub, but a private local with invitations only. Than you might not give invitations to Serbians should you choose so.
At least that's the way I see it.
Although my pragmatism sais Jo will not succeed, I hope I'm wrong. It's not the pragmatics who make the difference after all. Go Jo!