On February 11, 2020, Judge Stanton of the U.S. District Court for the Southern District of New York denied Dresser-Rand Company’s (Dresser Rand) motion for summary judgment in a suit to collect on a promissory note issued by Petróleos de Venezuela, S.A. (PdVSA). The Court’s decision turned on a finding that payment by PdVSA was legally impossible under U.S. sanctions. That finding was based on incomplete briefing by the parties and appears seriously flawed given the licenses and guidance provided by the Department of Treasury’s Office of Foreign Assets Control (OFAC). We discuss the decision and the U.S. sanctions regime as applied to the promissory note below.
Brexit has happened. The UK is no longer an EU Member State. What does that mean for competition law in the UK?
Has Anything Changed?
In the short term, nothing will change. Until the end of the transition period set out in the UK Withdrawal Agreement, the rights and obligations of EU law continue to apply just as they did before. That transition period is due to end on 31 December 2020, unless both sides agree to an extension. So far, the UK Government has refused to consider a possible extension and has even sought to legislate against one. Continue Reading UK Competition Law After Brexit – Plus Ça Change…
Brexit has happened. The United Kingdom is no longer part of the European Union or the European Economic Area. But in the short term, nothing really changes. The UK has entered a transition period during which it remains bound by EU rules and trade policy.
Until the end of the transition period, which is set out in the UK Withdrawal Agreement, the rights and obligations of EU law continue to apply in the UK largely as they did before, although the UK will be outside the EU’s decision making institutions. The transition period is due to end on 31 December 2020, unless both sides agree to an extension. So far, the UK Government has refused to consider a possible extension and the UK Parliament has even legislated to prohibit the Government from agreeing one. Parliament can of course undo the prohibition but, at this point, an extension looks unlikely. Under the Withdrawal Agreement any extension must be agreed with the EU by June 2020. Continue Reading Brexit: No Change Until end-2020; Uncertainty Thereafter
On January 13, 2020, the U.S. Department of the Treasury (“Treasury”) released final regulations (the “Final Regulations”) implementing the updates to the foreign investment review process of the Committee on Foreign Investment in the United States (“CFIUS”) contained in the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”). The Final Regulations, effective February 13, 2020, largely track the September 2019 proposed regulations (the “Proposed Regulations”) to implement FIRRMA’s expansion of CFIUS’s jurisdiction. FIRRMA in turn codified existing CFIUS practice as it has evolved in recent years, particularly with respect to a focus on U.S. businesses involving critical technologies, critical infrastructure, and sensitive personal data, and added a limited mandatory filing regime. The Final Regulations continue this incremental path by incorporating revisions to address issues arising from public comments on the Proposed Regulations and the sunset of the CFIUS pilot program rules (the “Pilot Program”).
The Final Regulations apply to all transactions entered into (binding agreement signed, public offer launched, proxies solicited, or options exercised) after February 13, 2020. An interim rule defining an entity’s “principal place of business” is concurrently effective and open for comment until February 18, 2020. Treasury further delayed implementation of the filing fees called for by FIRRMA, which will be separately addressed in a future rulemaking. Treasury also indicated that future rules will narrow the scope of the critical technologies filing requirements.
Please click here to read the full alert memorandum.
Update: On January 16, 2020, OFAC announced a 90-day wind-down period for persons engaged in transactions that could be sanctioned under Executive Order 13902 with respect to the construction, mining, manufacturing, and textiles sectors of the Iranian economy. Parties should wind down any sanctionable dealings in those sectors before April 9, 2020. Consistent with previous wind-down periods, OFAC noted that parties entering into new business during this period may be sanctioned. Continue Reading Iran Secondary Sanctions Expanded to Cover Construction, Mining, Manufacturing, and Textiles Sectors
Regulation 2017/2321, which introduced a new methodology for calculation of normal value in trade defence cases (“New Methodology”), entered into force on December 20, 2017 (see here). Two years on, a review of the Commission’s implementation practice provides useful insight into questions of evidentiary burden, practical application, and selection of representative third country.
On the evening of December 9, 2019, a U.S. congressional conference committee released the compromise version of the National Defense Authorization Act for Fiscal Year 2020 (“NDAA 2020” or “Defense Bill”). NDAA 2020, which will be voted upon without further amendment and is virtually certain to be enacted into law, contains provisions that would authorize new secondary sanctions relating to the Nord Stream 2 and TurkStream projects, Syria, and North Korea. Continue Reading Compromise U.S. Defense Bill Provides for New Secondary Sanctions Against Russia, Syria, and North Korea
Today, the U.S. Department of Commerce published for comment proposed regulations that would create sweeping authority to oversee, and potentially require the removal of, purchases of foreign telecommunications and IT technology linked to “foreign adversaries” by persons in the United States and U.S. companies overseas. The draft regulations on “Securing the Information and Communications Technology and Services Supply Chain” are open for comment for thirty days.
The Proposed Regulations create a process for national security reviews of purchases of information and communications technology and services within U.S. jurisdiction. Commerce will be able to initiate a review of any transaction connected to a foreign person occurring after May 15, 2019, including agreements signed prior to that date that are still being performed.
If Commerce concludes, after interagency consultation, that an ICTS transaction with links to a “foreign adversary” poses an “undue risk” to U.S. critical infrastructure or the U.S. digital economy or an “unacceptable risk” to U.S. national security or U.S. persons, it will be empowered take a range of actions to address any concerns, including prohibiting or unwinding the transaction or imposing mitigation measures. There is no process for pre-clearance or advisory opinions contemplated; U.S. buyers will be subject to after-the-fact remedies at Commerce’s discretion.
To read more, click here.
The U.S. Department of Commerce’s Bureau of Industry and Security has issued a rule, effective immediately, lowering the permissible level of de minimis U.S.-origin content in goods to be exported to Cuba. Items manufactured outside the United States now may have no more than 10% U.S.-origin content (reduced from 25%) if they are to be exported to Cuba without violating U.S. export controls. The rule also restricts leasing of aircraft and vessels subject to U.S. export controls (which, because of the de minimis rule, includes a majority of commercial aircraft) to Cuban entities. These changes reverse liberalizations implemented in 2015 when Cuba was removed from the state sponsors of terrorism list. The rule also restricts the availability of license exceptions for the export of certain telecommunications equipment and donations of items for scientific, cultural, and similar purposes to Cuban government entities.
In announcing the new rule, the Trump Administration linked the changes to Cuba’s repressive activities and support of the Maduro regime in Venezuela. This action continues the pattern of relatively modest reversals by the Trump Administration of the relatively modest liberalization measures introduced by the Obama Administration.
On October 23, 2019, the Trump Administration rescinded the designation of Turkish officials and ministries. The Executive Order remains in force, and so authority to re-impose sanctions remains.
On October 14, President Trump issued Executive Order 13894, styled “Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria.” Under this order, OFAC designated the Turkish Ministry of Energy and Natural Resources, the Turkish Ministry of Defense, and the Ministers of the Interior, Energy and Natural Resources, and Defense for blocking sanctions. This prohibits not only transactions with the relevant ministries and ministers (including in their official capacities) but any state-owned enterprise in which a 50% or greater interest held through those ministries. OFAC also issued three general licenses providing a 30-day wind-down period for existing contracts with the sanctioned ministries or entities and permitting official U.S. government functions and certain international organization activities to continue, and OFAC has indicated that it is prepared to issue specific or general licenses to ensure that Turkey is still able to meet its energy needs. Continue Reading US Imposes Sanctions Against Turkish Ministries, Officials