May Economic Sanctions Alaska Bar Association International Law Section May 2011

2 Outline – Trade Sanctions Legal Background What are Trade Sanctions EU vs. US Approach Country Sanctions Programs Targeted Sanctions US Iranian Transactions Regulations (ITR) Questions Working as an International Lawyer

May What Are Trade Sanctions Legal restrictions on transacting business and dealing with certain countries, regimes, entities and individuals Generally intended to exert economic pressure in furtherance of a foreign policy or political goal – e.g. diminish funds available for terrorism, WMD, etc.

May Trade Sanctions Three Major Sets of Laws 1. US Sanctions 2. EU Sanctions 3. US regulations prohibiting US Persons engaging in Iranian transactions or “facilitating” Iranian, Cuban, Sudanese or Libyan transactions

May Sanctions Regimes EU vs. US Historically, the EU enacted few sanctions programs Those enacted were highly targeted or “smart” sanctions EU / UK – primarily restricted persons / entities only Iran a new exception / also Cote d’Ivoire The US uses targeted sanctions but also uses broad sanctions that target entire activities or entire countries US – Cuba, Iran, Sudan, Myanmar, N. Korea, Syria Libya sanctions targeted but in effect the entire country due to Libyan govt influence in the private sector Finance, Defense, Oil and Gas sectors are frequent targets of sanctions Conflict diamonds and rare earths also targeted

May Why are Sanctions a Concern? US, UK, EU all have Sanctions and they are expanding by the month (or more frequently) Maximum criminal penalties for willful violations of ITR were raised to $1,000,000 per violation for both companies and individuals; Prison terms up to 20 years (assuming jurisdiction) Recent ITR Fines: In 2009, Lloyds TSB (a UK bank) US$350 million December 2009, Credit Suisse – US$536 million May 2010, ABN Amro – US$500 million August, 2010, Barclays, plc – US$298 million

May Sanctions – Iran – US Sanctions Both US and EU Sanctions Under US Sanctions (effective 01 July 2010) the following are sanctionable acts: Investment in the upstream in Iran Sale of goods or technology or providing technical expertise that facilitates Iran’s domestic production of refined petroleum products Sale of refined petroleum products (Gasoline, Diesel/Gasoil, Aviation Fuel, Jet Fuel, Fuel Oil, Bunker Fuel) Providing goods or technology to enhance import of refined petroleum products - pipelines and ships Financing, insuring or underwriting transactions in above areas Any banking transactions (US) or limits on transactions (EU)

May Sanctions – Iran – US Sanctions Sanctions for Violation of US Iran Sanctions Laws (President chooses 3 or more): 1. Deny Export – Import Bank Finance 2. Deny export licenses 3. Deny loans from US banks > $10 million in 12 months 4. Barred from US Government Contracts 5. Restrict imports to the US 6. Prohibit foreign exchange (no USD) 7. Prohibit US bank transfers 8. Blocking of property in US jurisdiction Plus civil and criminal penalties if US jurisdiction

May Sanctions – Iran – EU Sanctions EU Sanctions Prohibit (as of 27 October 2010) Sale supply or transfer of Oil and Gas Equipment and Technology to Iran or Iranian Persons (anywhere) Provide Technical Assistance re Oil and Gas Equipment Financing or providing credit for exploration or production of oil and gas, refining fuels, or LNG Restrictions on the transfer of funds to Iran Restrictions on shipping services to Iran including bunkering or ship supply services Supplying goods for internal suppression Criminal penalties for violation

May Other Sanctioned Countries Myanmar (Burma) US sanctions on investments and financial services by US persons US persons can be involved in sales Sale of some US products (with license) EU sanctions on designated persons Cuba Near complete US ban (50 years) EU blocking legislation (also Canada and Mexico) Some loosening to allow certain tour groups in 2011

May Other Sanctioned Countries Sudan Restricted parties by many countries (no trade) Near complete ban for US origin goods US persons prohibited in N. Sudan and all of Sudan in the energy sector Syria Complete ban on US origin goods imported to Syria Including laptops and smart phones No ban on Syrian exports to US US Persons can participate Recent Tightening due to violence (US on May 3, EU on May 10)

May Other Sanctioned Countries Libya New as of 25 February 2011 for US, 3 March for EU Broad US ban on dealing with Qadhafi or any Libyan government entity Broadening EU ban on identified Designated Persons Includes the National Oil Corporation (NOC) and subsidiaries EU an exemption for Designated Persons registered in EU North Korea US ban on products to and from N. Korea Sanctions will likely tighten

May Other Sanctioned Countries Belarus Tightened in January 2011 after December elections Numerous named parties by both EU / US US bans import of oil in which named parties have an interest EU ban tightened on 22 March 2011 Cote d’Ivoire (Ivory Coast) US ban on small number of designated persons EU / UK designation of multiple individuals and entities including major ports (most lifted after overthrow)

May Countries with targeted sanctions Belarus (Belorussia) Balkans D. Rep of Congo Egypt* Eritrea* Haiti* Iraq Ivory Coast (Cote d’Ivoire) Blue is activity in 2011 Lebanon Liberia Republic of Guinea* Moldolva* Montenegro Serbia Somalia Tunisia* Zimbabwe *UK / EU only

May Iranian Transactions Regulations (ITR) Prohibit US persons from working on or “facilitating” trade with Iran US Persons are: US Citizens Green card holders Companies organized under US law Persons physically in the US (including branches) Employed by a US company

May Iranian Transactions Regulations (ITR) US Persons cannot Be involved in Iran, Cuba, Sudan, or Libya (w/ govt’ parties) transactions Offer any opinion Delegate work US persons can: Receive general information Offer compliance advice Humanitarian work (with license) Register rights to Intellectual Property

May Arab League Boycott and US Blocking Legislation Primary Boycott – Country A does not want imports from or exports to Country B (Similar to US Iran sanctions) Secondary Boycott - Country A bans xyz corporation for trading with Country B Tertiary Boycott – Country A bans abc corporation for trading with xyz corporation that trades with Country B Boycott language cannot be passed to US counterparties

May Arab League Boycott and US Blocking Legislation Arab League Boycott of Israel Primary, Secondary and Tertiary Boycott US allows primary boycott but has blocking legislation for secondary and tertiary boycotts Applies to US corporations and individuals who are contracting parties o US companies and controlled foreign affiliates in US commerce (US Commerce Dept.) o US taxpayers and controlled group (US Treasury)

May Arab League Boycott and US Blocking Legislation Primary source countries for boycott language: Lebanon Libya Qatar Saudi Arabia Syria United Arab Emirates Kuwait Yemen

May Additional source countries Algeria Bangladesh Mauritania Oman Sudan Tunisia Bahrain Indonesia Iran Iraq Malaysia Nigeria Pakistan

May Trade Sanctions Questions?

May What I Have Learned Working as an International Lawyer It is easier to move from a common law to a civil law jurisdiction than vice versa The Dollar is still king in international commerce New York (and English) law are popular The US Legal system is remarkably stable and just Corruption and bribery are part of business as usual in many places Force Majeure is an important clause and usually not due to weather You know more than you think you know Alaska lawyers are well suited

May International Law Today What’s Hot Anti-Bribery and Corruption (US FCPA, UK Anti-Bribery Act, EU enforcement) Anti-Money Laundering Export Control Compliance (US, EU, and beyond) Trade Sanctions Human Rights Laws (Alien Tort Claims Statute)