REFORMING US SECONDARY SANCTIONS: WHAT’S WRONG THAT CAN BE RIGHTED?

On 22nd July, Arent Fox published an article in which members of its Export Controls & Economic Sanctions team published analysis in WorldECR that identified problems with the application of secondary sanctions.  It explains that US secondary sanctions are the sanctions that the US can apply to wholly non-US actors in wholly non-US transactions of which the US administration disapproves.  Numerous statutory and executive orders provide authority for imposing secondary sanctions for transactions involving multiple countries, primarily Iran, Russia, North Korea and Venezuela, and involving a wide range of activities, including violating human rights.  It has a number of headings and topics –

  • the triggers for secondary sanctions are unclear: what is a ‘significant transaction’?;
  • there’s no one to ask. Non-US persons who are not subject to US jurisdictions cannot apply to OFAC for a licence;
  • secondary sanctions are imposed in a discriminatory fashion;
  • it is not merely a question of doing business with Iran or doing business with the US: an entity on the SDN List will have problems doing business in its own country, due to risk-averse positions taken by banks and other companies;
  • there often is no warning;
  • getting off the SDN list is very difficult and takes time and resources;
  • secondary sanctions do not usually trigger standard force majeure clauses in contracts and agreements; and
  • secondary sanctions commercially favour the non-compliant: the companies who step in are those that do not care about US foreign policy or the US market.

https://gallery.mailchimp.com/31e15e5fee7b5a6208b646806/files/30693a7c-d1c1-46d7-9814-b0051f95ceb5/WorldECR_Arent_Fox_20190717.pdf

 

This blog is primarily for my own use, to keep informed and up to date. However, if you would like to say thank you (and perhaps help me get a new, better laptop when I am away…) you can “buy me a coffee” at https://www.buymeacoffee.com/KoIvM842y

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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