Power of the Pen: Did Chairman Corker’s Letter End US Arms Sales to Saudi Arabia?

On June 26, Senator Corker, Chairman of the Senate Foreign Relations Committee (SFRC), informed Secretary Tillerson that, in light of the current diplomatic stalemate between Saudi Arabia, the United Arab Emirates, and Qatar, the SFRC would not “provide any further clearances during the informal review period on sales of lethal military equipment” to the six members of the Cooperation Council for the Arab States of the Gulf, or GCC — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Chairman Corker indicated that this policy would remain in place until the SFRC has “a better understand of the path to resolve the current dispute and reunify the GCC.” Of course, many have urged the United States to halt arms sales to Saudi Arabia for other reasons, in particular Saudi Arabia’s failure to comply with basic principles of international humanitarian law that have resulted in excessive civilian casualties in Saudi Arabia’s ongoing armed conflict in Yemen.

Does Chairman Corker’s letter signal an end to arms sales to Saudi Arabia and other GCC countries for the foreseeable future? Not necessarily.

Under Section 36 of the Arms Export Control Act (AECA), Congress generally must be notified at least 30 calendar days before the Executive Branch can take the final steps to finalize foreign arms sales above certain dollar value thresholds.   The notification periods differ slightly for sales to NATO member countries, Japan, Australia, South Korea, Israel, and New Zealand. Continue Reading

Sanctions Round-Up

Sanctions, sanctions, and more sanctions– everyone’s favorite tool of foreign policy sure has been making a lot of news lately.  Here’s a round-up of the latest sanctions analysis here at the International Compliance Blog:

  • Cuba: Peter summarized President Trump’s new Cuba policy here and here, while Alexis addressed potential fallout in Congress.
  • North Korea: More North Korea sanctions are making their way through Congress.
  • Burma: Alexis summarized the official removal of the Burmese Sanctions Regulations from the Code of Federal Regulations, capping years of improved relations between the United States and Burma, political reform in Burma, and gradual sanctions relief.

Back to the Future on “Extraterritorial” Sanctions on Russian Pipelines?

Earlier this month, after the Senate overwhelmingly passed a bill that would authorize (and in some cases mandate) sanctions on foreign energy firms that participated in certain Russian energy projects, the Governments of Germany and Austria issued a joint statement that they “cannot accept a threat of extraterritorial sanctions, illegal under international laws, against European companies that participate in developing European energy supplies.”

The debate over the legitimacy and legality of U.S. “extraterritorial” sanctions has raged on and off for decades – and the use of extraterritorial sanctions on non-U.S. companies involved in Russian energy projects is itself a controversial topic that dates back to the Cold War.  While it is fair to characterize some of the sanctions in the Senate’s Russia bill as “extraterritorial,” they are not of the same type that generated controversy in an earlier episode involving Soviet pipelines – and at least some of the sanctions in the Russia bill appear to provide the Executive Branch with the discretion that would be required to responsibly implement the sanctions and assuage some concerns.  Still, it is not surprising that Europe would react strongly to these sanctions – particularly if they provide little to no implementation or enforcement flexibility.

U.S. sanctions generally prohibit U.S. persons (United States citizens and lawful permanent residents, entities organized under United States law, and others physically located in the United States) from engaging in transactions with designated persons or countries.  When the U.S. imposes so-called “extraterritorial” or “secondary” sanctions, however, it purports to extend its jurisdiction, or at least the power of its law indirectly, to non-U.S. firms.  The U.S. extraterritorial sanctions that have generated the most controversy in recent decades have directly prohibited foreign subsidiaries of U.S. companies from engaging in certain types of activity, or have indirectly targeted non-U.S. firms that are not U.S.-owned by trying to restrict their access to the U.S. market.  Continue Reading

Steptoe Cyberlaw Podcast – Russia Sanctions

On June 19, 2017, Anthony Rapa was featured on Steptoe’s Cyberlaw Podcast  to discuss the Senate’s adoption of tough Russia sanctions last week.  While there has been a lot of emphasis on the fact that this bill would codify the Obama administration’s Russia sanctions into law, Anthony explains how tough the bill could be on investors in Russia’s energy sector, including European and other third-country firms.  The passing of this bill shifts pressure to the House, where the Republican majority has been more reluctant to support harsher Russia policies.   

For more information, please visit Steptoe’s Cyberlaw Podcast on the Steptoe Cyberblog.

What Can We Say About The Trump Administration’s First Russia Sanctions?

The Treasury Department’s Office of Foreign Assets Control (OFAC) today designated 38 individuals and entities in order to “reinforce[] existing sanctions on Russia.”  This announcement came while President Trump was meeting the President of Ukraine in the White House.  These were the first new sanctions under the Trump Administration related to the conflict in Ukraine and could provide some insight about where Russia sanctions may be heading under this Administration.  OFAC has sanctioned Russian individuals and entities since January 20th, but for other reasons, such as for activity related to North Korea.

This may be the first concrete signal that the Trump Administration intends to adhere to a tough line on Russia’s involvement in Ukraine.  Continue Reading

New Cuba Policy May Not Significantly Impact Many Sectors

President Trump announced, on June 16, 2017, that, “effective immediately, I am canceling the last administration’s completely one-sided deal with Cuba.” However, with two primary exceptions, the Presidential Memorandum setting out the new policy may leave in place most of the steps to ease the embargo that the Obama Administration and previous administrations had taken. First, the new policy will prohibit, with broad sector-specific exceptions, “direct financial transactions” with a certain list of entities linked to the Cuban military, intelligence, and security services, to be published by the US Department of State in the near future. Second, the new policy will re-impose some, but not all, of the limitations on “people-to-people” travel. While these two new restrictions could be substantial, their specific scope and impact will not be known until the US Departments of the Treasury, State, and Commerce publish the list and regulations required by the Presidential Memorandum.

For more information, please see our advisory.

OFAC Removes Burmese Sanctions Regulations

On June 16, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced that it removed the Burmese Sanctions Regulations (“BSR”) from the Code of Federal Regulations.  This removal is the culmination of actions taken by the Obama Administration in October 2016 to terminate the national emergency with respect to Myanmar (EO 13742) and other Myanmar-related Executive Orders, which triggered the lifting of all US economic and financial sanctions against Myanmar.

The Obama administration terminated the national emergency based on findings that Myanmar has made substantial advances in democracy promotion, including November 2015 elections that brought the opposition National League for Democracy to power, the creation of a civilian-led government, the release of political prisoners, and the greater recognition of human rights and fundamental freedoms such as free association and peaceful assembly. Continue Reading

Cuba Policy Changes Will Complicate New Business But Grandfather Existing Deals

In a much-anticipated speech on Cuba policy today, President Trump announced that, “effective immediately, I am canceling the last administration’s completely one-sided deal with Cuba.”

That pronouncement notwithstanding, it appears that the Trump Administration’s new policy on Cuba (as set out in a Presidential Memorandum) will leave intact most of the changes made by the Obama Administration and previous administrations, with one important new limitation: a prohibition on certain dealings with a specific list of military-linked entities that will be published by the U.S. Department of State in the near future.  Additionally, the new policy will require so-called “people-to-people” travel to be conducted under the auspices of a sponsoring organization, a requirement that the Obama Administration had lifted.

The new policy also:

  • Maintains the U.S. Embassy in Havana;
  • States that any future liberalization of U.S. trade restrictions on Cuba will be dependent on significant domestic reform in Cuba;
  • Reaffirms the U.S. ban on tourism to Cuba;
  • Calls on OFAC to audit travel to Cuba to ensure that travelers are in compliance with applicable restrictions; and
  • Declines to reinstate the “Wet Foot, Dry Foot” immigration policy, which the Obama Administration had terminated.

Continue Reading

Congress Flexes Sanctions Muscles: Bills Target Iran, Russia, and Others

This month, Congress is considering an array of new sanctions-related legislation, and, in recent days, bipartisan support has grown for a bill that would potentially direct significant measures against Russia and Iran. Congress has also debated bills proposing new sanctions against North Korea, Hamas, Hezbollah, and both chambers have put forth multiple bills that would further relax trade relations with Cuba. This advisory will explain the political and economic implications of this activity for domestic and foreign businesses and financial institutions.

For more information, please see our advisory.

Alleged Human Trafficking Victims Seek Supreme Court Review of Alien Tort Statute Standards

As many commentators anticipated after the Fifth Circuit’s January 3, 2017 decision in Adhikari v. Kellogg Brown & Root, Inc., No. 1520225 (5th Cir. Jan. 3, 2017), the Adhikari plaintiffs are seeking Supreme Court review of the Fifth Circuit’s decision. The January 2017 decision held that claims asserted against a US defense contractor for alleged human trafficking and related injuries in Nepal, Jordan, and Iraq were not cognizable under the Alien Tort Statute (ATS). The Fifth Circuit, applying the US Supreme Court’s 2013 decision in Kiobel v. Royal Dutch Petroleum Co., held that the presumption against extraterritorial application of a statute bars claims under the ATS for injuries occurring abroad.

The Supreme Court in Kiobel concluded that the ATS could create jurisdiction over violations of “the law of nations or a treaty of the United States” occurring overseas only when claims “touch and concern the territory of the United States . . . with sufficient force to displace the presumption against extraterritorial application.” The plaintiffs in Adhikari alleged that although the injuries occurred outside the United States, Kiobel’s “touch and concern” language permitted their claims because the complaint alleged that trafficking was conducted by agents of KBR’s US operations, KBR paid the agent from US banks, KBR employees in the US were aware of the trafficking scheme, and that KBR’s contract was issued and directed from the United States, supported the US military, and performed on a US military base in Iraq. As we noted previously, here, the Adhikari court, however, held that the “focus” of the ATS is “conduct that violates international law.” Because the alleged conduct in violation of international law occurred in Nepal, Jordan, and Iraq, the claims did not “touch and concern” the US and were, therefore, barred under Kiobel. Continue Reading