Sorry if this has been solved/answered elsewhere in the negative (ie I'm wrong about this, which is possible, it's never happened before, though ), but:
As I understand the screenshots, you're playing as the Torians and you've got a trade route with the Yor.
You want to tell other races not to trade with the Yor. The GalCiv3 wiki says Embargo Third Party means: Embargo a third party's civilization, refusing the establishment of trade routes and severing existing routes.
Sounds to me like you're trying to ruin the Yor, or at least control them. Does the game refuse you the right to do that because of the diplomatic hit that you'd get from the Yor?