In recent years, sanctions have become one of the issues of greatest concern for parties entering into international transactions. As a result, detailed contractual clauses designed to manage sanctions risks have become commonplace. The October 2018 judgment of the High Court in Mamancochet Mining v. Aegis Managing Agency[1] (the “Judgment”) has highlighted certain pitfalls in the standard wording of some sanctions clauses, and should be heeded by any party seeking to contractually protect itself from sanctions risks by, for example, making its performance under the contract conditional upon the non-occurrence of certain sanctions events, or tying a termination event to sanctions. The Judgment also casts some light on the interpretation of the EU Blocking Regulation[2] and suggests exercising contractual rights (even ones designed to ensure compliance with U.S. sanctions) does not breach the Blocking Regulation. Continue Reading Interpreting Sanctions Clauses and the EU Blocking Regulation: The High Court of England Weighs In

On September 25, OFAC designated four additional Venezuelan officials as “Specially Designated Nationals” (“SDNs”), blocking all of their assets and prohibiting any transaction in which they have an interest within U.S. jurisdiction. The new designations target important former and current officials in the Venezuelan government who have supported President Nicolas Maduro, whom OFAC designated on July 31, 2017. The newly designated officials include: Cilia Adela Flores de Maduro, the current First Lady and former Attorney General under Hugo Chavez; Delcy Eloina Rodriguez Gomez, the Executive Vice President and former President of the National Constituent Assembly (“ANC”); Jorge Jesus Rodriguez Gomez, the Minister of Popular Power for Communication and Information; and Vladimir Padrino Lopez, the Sectoral Vice President of Political Sovereignty, Security, and Peace. In addition, OFAC also designated a network supporting Diosdado Cabello Rondon’s “key front man,” Rafael Alfredo Sarria. Continue Reading OFAC Sanctions Additional Venezuelan Officials

On August 8, 2018, the U.S. Department of State announced in a press release that in reaction to the use of the nerve agent “Novichok” in the attempted assassination of UK citizens Sergei and Yulia Skripal, the United States would introduce sanctions on the Russian Government under the Chemical and Biological Weapons Control and Warfare Elimination act of 1991 (the “CBW Act”).  The State Department announced that the sanctions will take effect on or around August 22, 2018. Continue Reading U.S. State Department Imposes New Sanctions on Russia

On 18 May 2018, the European Commission announced its intention to expand Council Regulation (EC) 2271/96 of 22 November 1996 (the “Blocking Regulation”) in order to discourage European companies from complying with newly re-imposed U.S. Iran-related sanctions. On 6 June 2018, the European Commission adopted a delegated regulation to enact these changes, which will come into force by 6 August 2018 (the date when the first wind-down period for the U.S. secondary sanctions on Iran expires), provided the EU Parliament and Council do not have objections.

This blogpost considers how the Blocking Regulation will work in practice for UK and European companies, in particular in light of the UK’s departure from the European Union (“EU”) in 2019. Continue Reading The Blocking Regulation and Brexit: the Effect of U.S. Sanctions in a Changing Europe

On July 19, 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) confirmed through issuance of two new FAQs that Executive Order 13835 prohibits U.S. persons from attaching and executing judgments against equity collateral securing debt issued by Government of Venezuela state-owned entities, even if both the debt and the security interest pre-date sanctions.  Specifically, Subsection 1(a)(iii) of the Executive Order prohibits “[a]ll transactions related to, provision of financing for, and other dealings in…the sale, transfer, assignment, or pledging as collateral by the Government of Venezuela of any equity interest in any entity in which the Government of Venezuela has a 50 percent or greater ownership interest.”  As we noted in a prior post, this prohibition is not limited to debt incurred or collateral pledged after the date of the Executive Order and so prevents executing on any collateral securing Government of Venezuela debt consisting of equity in state-owned or state-controlled entities absent a license from OFAC. Continue Reading OFAC Confirms U.S. Sanctions Retroactively Prohibit Execution on Equity Collateral Securing Government of Venezuela Debt, Authorizes All Dealings Involving PdVSA 2020 Bonds

On 24 May 2018, the Sanctions and Anti-Money Laundering Act 2018 (the “Act”) received Royal Assent, marking the conclusion of its passage through Parliament and its entry into law. The sanctions powers under the Act are expected to be exercisable following the UK’s withdrawal from the European Union in March 2019 (“Brexit”).[1] This blog post takes a look at the sanctions provisions in the Act and explores how the UK’s sanctions regime might look following Brexit. Continue Reading UK Passes New Sanctions Legislation

Last week, President Trump issued Executive Order 13835, further tightening sanctions on Venezuela.  The Executive Order had three new prohibitions, barring all transactions relating to the following:

  • the purchase of any debt owed to the Government of Venezuela, including accounts receivable;
  • any debt owed to the Government of Venezuela that is pledged as collateral after the effective date of this order, including accounts receivable; and
  • the sale, transfer, assignment, or pledging as collateral by the Government of Venezuela of any equity interest in any entity in which the Government of Venezuela has a 50 percent or greater ownership interest.

Continue Reading Recent Venezuela Executive Order Calls Into Question Enforceability of Security Interests

On May 8, 2018, President Trump announced that the United States will cease its participation in the Joint Comprehensive Plan of Action (the “JCPOA”) and reintroduce nuclear-related sanctions on Iran that were lifted following the implementation of the JCPOA, effectively restoring the 2013 Iranian sanctions program from a U.S. perspective.

The U.S. Department of the Treasury and the U.S. Department of State announced that to implement the President’s decision, they will introduce 90-day and 180-day wind-down periods with sanctions relief consistent to that currently provided by the JCPOA. Following these wind-down periods, U.S. secondary sanctions (i.e., sanctions targeting activity outside U.S. jurisdiction by threatening that those engaged in such activity will themselves be sanctioned by the United States) lifted under the JCPOA will be re-imposed.

In contrast to their responses in 2013, however, key allies are actively opposing U.S. sanctions policy. Although it is likely that the re-imposition of U.S. sanctions will have a significant disruptive effect on international financial transactions with Iran (which, even under the JCPOA, were never completely normalized), the impact and political fallout of secondary sanctions remains to be seen. The legal provisions are the same as those in place prior to the JCPOA, but the outcome may well be different.

Please click here to read the full alert memorandum.