by Robert Ward | Aug 25, 2018 | Russia
The Department of State’s Bureau of International Security and Nonproliferation issued a public notice on August 24, 2018 regarding the specifics of the Russia Nerve Agent sanctions (please see my post of August 9, 2018). The Department advised the notice is scheduled to be published in the Federal Register on 08/27/2018 and is available online at https://federalregister.gov/d/2018-18503.
The specifics, which are to be applied for at least one year until further notice, include:
1. Foreign Assistance: Termination of assistance to Russia under the Foreign
Assistance Act of 1961, except for urgent humanitarian assistance and food or other
agricultural commodities or products.
2. Arms Sales: Termination of
(a) sales to Russia under the Arms Export Control Act of
any defense articles, defense services, or design and construction services, and
(b) licenses for the export to Russia of any item on the United States Munitions List, but
waived on a case-by-case basis with respect to the issuance of licenses in support of government
space cooperation and commercial space launches.
3. Arms Sales Financing: Termination of all foreign military financing for Russia under
the Arms Export Control Act.
4. Denial of United States Government Credit or Other Financial Assistance: Denial to
Russia of any credit, credit guarantees, or other financial assistance by any
department, agency, or instrumentality of the United States Government, including
the Export-Import Bank of the United States.
5. Exports of National Security-Sensitive Goods and Technology: Prohibition on the
export to Russia of any goods or technology on that part of the control list established
under Section 2404(c)(1) of the Appendix to Title 50.
The Department is waiving these sanctions in the interests of national security with
respect to the following on a case-by-case basis (meeting all the terms of the below
noted license exception will permit one to move forward):
LICENSE EXCEPTIONS: Exports and reexports of goods or technology eligible
under License Exceptions GOV, ENC, RPL, BAG, TMP, TSU, APR, CIV, and AVS.
SAFETY OF FLIGHT: Exports and reexports of goods or technology pursuant to
new licenses necessary for the safety of flight of civil fixed-wing passenger aviation.
DEEMED EXPORTS/REEXPORTS: Exports and re-exports of goods or technology
pursuant to new licenses for deemed exports and reexports to Russian nationals.
WHOLLY-OWNED U.S. SUBSIDIARIES: Exports and reexports of goods or
technology pursuant to new licenses for exports and reexports to wholly-owned U.S.
subsidiaries in Russia.
SPACE FLIGHT: Exports and reexports of goods or technology pursuant to new
licenses in support of government space cooperation and commercial space launches.
COMMERCIAL END-USERS: Exports and reexports of goods or technology
pursuant to new licenses for commercial end-users civil end-uses in Russia.
SOEs/SFEs: Exports and reexports of goods or technology pursuant to new licenses
for Russian state-owned or state-funded enterprises though subject to a “presumption
of denial” policy.
by Robert Ward | Aug 16, 2018 | EU
On August 7th, the European Commission Delegated Regulation (EU) 2018/1100 (1) entered into force. Please see: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018XC0807(01)&from=EN. This Regulation amends the Annex to Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of extra-territorial application of legislation adopted by a third country. In this case, the specific concern as spelled out in my blog post of May 22nd is the U.S. decision to withdraw from the Iranian Nuclear Deal this past May 8, 2018.
The basic principle of the Blocking Statute is that EU operators shall not:
- comply with the listed extra-territorial legislation, or any decision, ruling or award (Article 5, paragraph 1); and
- fail to inform the European Commission within 30 days of any events arising from listed extra-territorial legislation or actions that affect, directly or indirectly, their economic or financial interests (Article 2, paragraph 1);
The reporting obligation applies to EU directors, managers and other persons with management responsibilities and such reports can be made either directly to the EC or through the competent authorities of the Member States.
The Blocking Statute:
— Nullifies the effect in the EU of any foreign decision, including court rulings or arbitration awards, based on the listed extra-territorial legislation or the acts and provisions adopted pursuant to them (Article 4);
— Allows EU operators to recover damages arising from the application of the listed extra-territorial legislation from the natural or legal persons or entities causing them (Article 6); and
— Allows EU operators to request an authorization to comply with the listed extra-territorial legislation, if not doing so would cause serious harm to their interests or the interests of the EU (Article 5, paragraph 2).
by Robert Ward | Aug 10, 2018 | Uncategorized, Iran
The Trump Administration issued Executive Order 13846 on August 6, 2018 right at the start of the first wind-down period for U.S. persons to begin ceasing business with Iran. The key parts of the Order impose blocking sanctions relating to support for the Government of Iran’s purchase or acquisition of U.S. bank notes or precious metals; certain Iranian persons; and Iran’s energy, shipping, and shipbuilding sectors and port operators.
These new sanctions come in two wind-down phases; one starting August 7, 2018; the other starting November 5, 2018. The Order provides specifically for the Secretary of the Treasury to require U.S. persons to block (including to refuse to transfer, pay, export, withdraw, or otherwise deal in) all property and interests in property that are in, come within or that come within the possession or control of any U.S. person of such designated person. Please note these are designations referred to as secondary sanctions. The U.S. Government can impose these latter sanctions even against parties located outside Iran in instances where the following occurs.
“(i) on or after August 7, 2018, the person has
materially assisted, sponsored, or provided financial,
material, or technological support for, or goods or
services in support of, the purchase or acquisition of
U.S. bank notes or precious metals by the Government
of Iran;
(ii) on or after November 5, 2018, the person has
materially assisted, sponsored, or provided financial,
material, or technological support for, or goods or
services in support of, the National Iranian Oil
Company (NIOC), Naftiran Intertrade Company (NICO),
or the Central Bank of Iran;
(iii) on or after November 5, 2018, the person has
materially assisted, sponsored, or provided financial,
material, or technological support for, or goods or
services to or in support of:
(A) any Iranian person included on the list of
Specially Designated Nationals and Blocked
Persons maintained by the Office of Foreign
Assets Control (SDN List) . . . ; or
(B) any other person included on the SDN List
whose property and interests in property are
blocked pursuant to subsection (a) of this
section or Executive Order 13599 . . . ; or
(iv) pursuant to authority delegated by the
President and in accordance with the terms of such
delegation, sanctions shall be imposed on such person
pursuant to section 1244(c)(1)(A) of IFCA* because the
person:
(A) is part of the energy, shipping, or
shipbuilding sectors of Iran;
(B) operates a port in Iran; or
(C) knowingly provides significant financial,
material, technological, or other support to, or
goods or services in support of any activity or
transaction on behalf of a person determined
under section 1244(c)(2)(A) of IFCA to be a
part of the energy, shipping, or shipbuilding
sectors of Iran; a person determined under
section 1244(c)(2)(B) of IFCA to operate a port
in Iran; or an Iranian person included on the
SDN List (other than a person described in
section 1244(c)(3) of IFCA).”
*ICFA=Iran Freedom and Counter-Proliferation Act of 2012
by Robert Ward | Aug 9, 2018 | Russia
The Department of State just issued this press release on new Russia sanctions:
Following the use of a “Novichok” nerve agent in an attempt to assassinate UK citizen Sergei Skripal and his daughter Yulia Skripal, the United States, on August 6, 2018, determined under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act) that the Government of the Russian Federation has used chemical or biological weapons in violation of international law or has used lethal chemical or biological weapons against its own nationals.
Following a 15-day Congressional notification period, these sanctions will take effect upon publication of a notice in the Federal Register, expected on or around August 22, 2018.”
The immediate impact of these new sanctions is that any attempt by a U.S. company to obtain an export license on certain items implicating national security concerns will be denied. Attempts to prove such items will be used for legitimate purposes, with safeguards to protect U.S. national security, will represent a very tough burden of proof. Sample items include gas turbine engines, electronics, integrated circuits as well as testing and calibration equipment.
The CBW Act will require the imposition of tougher sanctions to be imposed in three months if Russia fails to take corrective measures. To avoid such sanctions, the U.S. Government would have to find that Russia is:
- no longer using chemical or biological weapons;
- providing reliable reassurances that it will not use them in the future; and
- allowing international inspectors to ensure compliance.
It is unlikely such findings will be forthcoming in the short three months to come.
