International Sanctions

EUROPEAN UNION

 The principal sanctions are as follows:

 1. RUSSIA

 Background

On 6 March 2014, the member States of the European Union strongly condemned the unprovoked violation of Ukrainian sovereignty and territorial integrity by Russia and called on the Russian Federation to immediately withdraw its armed forces from the country. It was stated that any additional Russian action to destabilize the situation in Ukraine would have additional and far-reaching consequences for relations in a wide range of economic areas.

Given the seriousness of the situation, on 31 July 2014 the Council of the European Union adopted restrictive measures in response to Russia’s actions destabilising the situation in Ukraine. They consisted of trade measures (a ban on the export of dual-use items, goods and technology listed in the Common Military List, and goods and technology for the exploration and production of oil) and financial measures (limiting access to the European Union’s primary and secondary capital markets for five major Russian financial institutions).

On 30 August 2014 the European Council condemned the increasing influx of fighters and weapons from the territory of Russia into Eastern Ukraine and the aggression of the Russian armed forces on Ukrainian territory.

On 8 September 2014 the Council of the European Union adopted further restrictive measures in response to Russia’s actions destabilising the situation in Ukraine.

On 19 March 2015 the European Council agreed that the duration of the restrictive measures should be clearly linked to the full implementation of the Minsk agreements signed on 5 September 2014 to end the conflict in eastern Ukraine. The agreement was signed by Ukraine, the Russian Federation, the People’s Republic of Donetsk and the People’s Republic of Lugansk.

On 22 June 2015 the Council of the European Union renewed these restrictive measures for a further six (6) months to allow the Council to assess the implementation of the Minsk agreements.

On 21 December 2015, the Council of the European Union found that the Minsk agreements would not be fully implemented by 31 December 2015 and extended the restrictive measures for a further six (6) months to allow the Council to further evaluate the implementation of the Minsk agreements.

In March 2016 the Foreign Affairs Council of the European Union agreed on five guiding principles for EU-Russia relations:

 

  1. The implementation of the Minsk Agreement as a key condition for any substantial change in the European Union’s position towards Russia.

 

  1. Strengthening relations with the European Union’s eastern partners and other neighbours, in particular in Central Asia.

 

  1. Strengthening the European Union’s resilience (e.g. energy security, hybrid threats, strategic communication).

 

  1. Need for targeted engagement with Russia on issues of concern to the European Union.

 

  1. Need for personal contacts and support to Russian civil society.

 

Extension of economic sanctions against Russia

On 27 June 2019 the Council of the European Union extended the economic sanctions targeted at specific sectors of the Russian economy until 31 January 2020. These sanctions are laid down in Council Regulation (EU) 833/2014 of 31 July 2014 concerning restrictive measures caused by actions of Russia destabilising the situation in Ukraine (“Regulation 833/2014“). This Regulation imposes the following restrictive measures:

Trade Sanctions:

 According to Article 2.1 of Regulation 833/2014, a ban on exports of dual-use items, either for military use or for military end-users in Russia is imposed as follows:

It is prohibited to sell, supply, transfer or export, directly or indirectly, dual-use items and technology, whether or not originating in the Union, to any natural or legal person, entity or body in Russia or for use in Russia, if the items are or may be intended, in their entirety or in part, for military use or for military end-users.

 In cases where the end-user is the Russian military, any dual-use item or technology it acquires shall be considered as military“.

In addition, Article 2.1 bis adds the following:

It is prohibited to sell, supply, transfer or export, directly or indirectly, the dual-use items and technology listed in Annex I to Regulation (EC) No 428/2009, whether or not originating in the Union, to natural or legal persons, entities or bodies in Russia listed in Annex IV to this Regulation”.

Finally, paragraph 2 of the above-mentioned Article 2.1 bis prohibits “the provision of technical assistance, brokering services or other services related to products and technology referred to in paragraph 1 (Article 2.2 bis (b)), as well as “the provision of financing or financial assistance, (…) including in particular grants, loans and export credit insurance, for any sale, supply, transfer or export of such products and technology” (Article 2.2 bis (b)).

  • Article 3 of Regulation 833/2014 also restricts Russia’s access to certain products and technology for the purpose of exploration and production of oil.
  • Finally, Article 4 of the above-mentioned Regulation 833/2014 provides for further prohibitions in relation to products and technology listed in the Common Military List.

Financial sanctions:

Article 5 of Regulation 833/2014 imposes certain financial sanctions limiting access to the primary and secondary capital markets of the European Union for five (5) major Russian financial institutions, with majority State ownership, and their subsidiaries, also with majority State ownership, established outside the EU, as well as for three (3) major Russian energy companies and three (3) defence companies.

2. UKRAINE

Background

On 6 March 2014 the Member States of the European Union strongly condemned the unprovoked violation of Ukrainian sovereignty and territorial integrity by Russia. At its meeting on 20 and 21 March 2014, the European Council strongly condemned the illegal annexation of Crimea by the Russian Federation and stressed that it would not recognise it. The European Council considered that certain economic, trade and financial restrictions in relation to Crimea should be proposed for rapid implementation.

On 27 March 2014 the United Nations General Assembly adopted Resolution 68/262 on the territorial integrity of Ukraine, affirming its commitment to the sovereignty, political independence, unity and territorial integrity of Ukraine within its internationally recognised borders, stressing the invalidity of the referendum held in Crimea on 16 March and urging all States not to recognise any alteration of the status of Crimea.

On 23 June 2014 the Council of the European Union considered that the import of goods originating in Crimea or Sevastopol into the European Union should be prohibited with the exception of goods originating in Crimea or Sevastopol that had been granted a certificate of origin by the Ukrainian government. On 30 July 2014 the Council of the European Union adopted additional measures to restrict trade and investment in the Crimea.

On 18 December 2014 the Council further restricted investment in Crimea. Thus, trade in goods and technology for use in certain sectors in Crimea was restricted. Services in the sectors of transport, telecommunications, energy or exploration, production of oil, gas and mineral resources, as well as services related to tourist activities in the Crimea, including the maritime sector, were also prohibited.

On 19 March 2015 the European Council concluded that it does not recognise and continues to condemn Russia’s illegal annexation of Crimea and that it will remain committed to the full implementation of its non-recognition policy.

Restrictive measures were renewed on 19 June 2015, 17 June 2016 and 19 June 2017.

This regime of restrictive measures is part of a broader Community policy of non-recognition of the illegal annexation of Crimea and Sevastopol.

Extension of sanctions on Ukraine (limited to the territory of Crimea and Sevastopol)

On 20 June 2019 the Council of the European Union extended restrictive measures in response to Russia’s illegal annexation of Crimea and Sevastopol until 23 June 2020. These sanctions are regulated in Council Regulation (EU) 692/2014 of 23 June 2014 on restrictions on imports into the Union of goods originating in the Crimea or Sevastopol in response to the illegal annexation of Crimea and Sevastopol (Regulation 692/2014).

Under this Regulation, the following restrictive measures are imposed:

Trade sanctions:

Article 2 prohibits “the import into the European Union of goods originating in Crimea or Sebastopol’ and ‘the provision, directly or indirectly, of financing or financial assistance, insurance and reinsurance related to the import of the goods” (Article 2 (b)).

Article 2 (d) also does not permit “the provision of tourist services directly connected with tourist activities in the Crimea and Sevastopol (…) and, in particular, it is prohibited for any ship offering cruise services to enter or call at any port in the Crimean peninsula listed in Annex III” to Regulation No 692/2014.

Finally, Article 2b prohibits the export of certain goods and technologies to companies in Crimea or for use in Crimea in the transport, telecommunications and energy sectors and in connection with the prospection, exploration and production of oil, gas and mineral resources. Nor may technical assistance, brokerage, construction or engineering services related to infrastructure be provided in these sectors (Article 2c).

Financial sanctions:

Article 2a prohibits investment in Crimea and Sevastopol region in particular:

Acquiring any new property or extending any existing interest in real estate situated in Crimea or Sevastopol.

Acquiring any new ownership of real estate or extending any participation in ownership or control of an entity situated in Crimea or Sevastopol, including the total acquisition of such an entity and the acquisition of shares and securities of a participating nature in such an entity.

 III. To grant or be part of any arrangement to grant any loan or credit or otherwise provide financing, including equity, to an entity in the Crimea or Sevastopol or with the stated intention of financing such an entity.

To set up any joint venture in Crimea or Sebastopol or with an entity in the Crimea or Sebastopol.”

 

Extension of individual sanctions against certain natural and legal persons on account of the situation in Ukraine

To date, 170 individuals and 44 entities have been subject to property freezing and travel ban measures for acts that undermine the territorial integrity, sovereignty and independence of Ukraine, adopted under the following legislation:

 

  1. Council Regulation (EU) 208/2014 of 5 March 2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine.

 

  1. Council Regulation (EU) 269/2014 of 17 March 2014 concerning restrictive measures against actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (“Regulation 269/2014”).

 

  1. Council Decision 2014/145/CFSP of 17 March 2014 concerning restrictive measures against actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.

 

These measures have been last extended in September 2019 until 15 March 2020. Specifically, the following extensions have been agreed during the year 2019:

 

(a) On 4 March 2019 the Council of the European Union has issued the Implementing Regulation (EU) 2019/352 of 4 March 2019 implementing Regulation (EU) 208/2014 on restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine, published in the Official Journal of the European Union on 5 March 2019, which extends until 6 March 2020 the freezing of assets against twelve (12) persons held liable for misappropriation of Ukrainian public funds or abuse of power causing loss to Ukrainian public funds. Only one (1) person has been exempted from the extension of the restrictive measures. The decision is based on the annual review of the measures.

(b) On 15 March 2019 the Council of the European Union issued Implementing Regulations 2019/408 and 2019/409, implementing Regulation (EU) 269/2014 on restrictive measures against actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.

The above-mentioned Implementing Regulations add the names of eight (8) officials of Russian nationality to the list of persons and entities in Annex I of Regulation 269/2014 on which travel restrictions and the freezing of their assets are imposed.

The validity of the restrictive measures provided for by Regulation 269/2014 is also extended until 15 September 2019.

(c) On 11 September 2019, the Council of the European Union issued Implementing Regulation (EU) 2019/1403 of 12 September 2019 implementing Regulation (EU) 269/2014 concerning restrictive measures against actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, published in the Official Journal of the European Union on 12 September 2019. The said Implementing Regulation extends the restrictive measures in respect of actions adversely affecting or threatening the territorial integrity, sovereignty and independence of Ukraine for another six (6) months until 15 March 2020. Furthermore, the information regarding 21 persons and 19 entities listed in Annex I to Regulation 269/2014 and on whom travel restrictions and the freezing of their assets are imposed, is amended.

 

 3. VENEZUELA

 Background

 On 13 November 2017 the Council of the European Union adopted restrictive measures in view of the continuing deterioration of democracy, the rule of law and human rights in Venezuela. The current regulatory framework therefore imposes certain restrictive measures, such as travel restrictions and freezing of assets, which may be imposed on those responsible for serious violations or abuses of human rights or for the repression of civil society and democratic opposition, as well as those whose actions, policies or activities otherwise undermine democracy or the rule of law in Venezuela.

These restrictive measures are intended to encourage a credible and meaningful process that can lead to a peaceful negotiated solution. They may be reversed depending on developments in the country, including the holding of credible and meaningful negotiations, respect for democratic institutions, the adoption of a full electoral timetable and the release of all political prisoners.

 Current legal framework and developments 2019

The European Union’s sanctions against Venezuela are configured through certain restrictive measures imposed by the following rules:

 

  1. Regulation (EU) 2017/2063 concerning restrictive measures in view of the situation in Venezuela.

 

  1. Decision (CFSP) 2017/2074 concerning restrictive measures in view of the situation in Venezuela

 

The measures included in these regulations include the following:

  • Embargo on arms and equipment for internal repression
  • Travel ban and freezing of assets for 25 individuals, included in Annex I of Regulation 2017/2063, who hold official positions and are responsible for violations of human rights or undermining democracy and the rule of law in Venezuela.

 On 11 November 2019, the Council of the European Union issued Council Regulation (EU) 2019/1889 of 11 November 2019 amending Regulation (EU) 2017/2063 on restrictive measures in view of the situation in Venezuela, and Council Decision (CFSP) 2019/1893 of 11 November 2019 amending Decision (CFSP) 2017/2074 concerning restrictive measures in view of the situation in Venezuela, published in the Official Journal of the European Union on 12 November 2019.

By means of this regulation, the restrictive measures imposed by the above-mentioned Regulation 2017/2063 and Decision 2017/2074 are extended for one year, until 14 November 2020.

Furthermore, it amends the information concerning 8 persons listed in Annex I to Regulation 2017/2074 and on whom travel restrictions are imposed as well as the freezing of their assets.

4. TURKEY

 Background

On 14 October 2019 the EU Member States reaffirmed their full solidarity with the Republic of Cyprus and agreed that a new framework of restrictive measures should be established against natural and legal persons responsible for or involved in unauthorised oil drilling activities in the Eastern Mediterranean. In line with this, the Council established a new framework of restrictive measures on 11 November 2019.

This framework allows the EU to impose specific restrictive measures, including an asset freeze and a travel ban against certain natural persons or entities responsible for, involved in, or providing assistance to drilling activities not authorised by the Republic of Cyprus, in its territorial sea or in its exclusive economic zone or on its continental shelf.

This includes, in cases where the exclusive economic zone or the continental shelf has not been delimited in accordance with international law with a State that has an opposite coast, activities that may endanger or impede the conclusion of a delimitation agreement.

Current legal framework and developments 2019

The Council of the European Union has adopted Council Regulation (EU) 2019/1890 of 11 November 2019 concerning restrictive measures in respect of unauthorised drilling activities by Turkey in the Eastern Mediterranean (Regulation 2019/1980).

Regulation 2019/1980 allows for restrictive measures (freezing of funds and prohibition of entry into and transit through the territory of the European Union) to be imposed on certain natural and legal persons listed in its Annex I, as provided for in Article 2(1):

“All funds and economic resources belonging to, owned, held or controlled by any natural or legal person, entity or body listed in Annex I shall be frozen.

In addition, Regulation 2019/1980, in Article 1(d) and (g) defines the terms ‘economic resources’ and ‘funds’ respectively:

“(d) “economic resources” means assets of every kind, whether tangible or intangible, movable or immovable, which are not funds but can be used to obtain funds, goods or services)

 (e) “funds” means financial assets and benefits of every kind, including but not limited to those listed below:

i. cash, cheques, claims on money, drafts, money orders and other payment instruments

ii. deposits in financial institutions or other entities, account balances, debts and debt obligations,

iii. publicly and privately traded securities and debt instruments, such as stocks and shares, certificates representing securities, bonds and notes, promissory notes, warrants, unsecured obligations and derivative contracts,

iv. interest, dividends or other income earned or generated by assets

v. loans, rights of set-off, guarantees, payment guarantees or other financial commitments,

vi. letters of credit, bills of lading and sales slips, and

 vii. documents attesting to an interest in funds or financial resources.”

 

The persons who may be included in Annex I are those described in Article 2.3 of Regulation 2019/1980:

 Annex I shall include those natural and legal persons, entities and bodies that the Council, in accordance with Articles 1(1) and 2(1) of Decision (CFSP) 2019/1894, deems appropriate:

 1. Persons responsible for carrying out, including through planning, preparation, participation, direction or assistance, drilling activities related to the exploration and production of hydrocarbons, or the extraction of hydrocarbons resulting therefrom, or involved in such activities, which have not been authorised by the Republic of Cyprus, within its territorial waters or its exclusive economic zone or on its continental shelf; shall include, in cases where the exclusive economic zone or the continental shelf has not been delimited in accordance with international law in respect of a State whose coast is opposite, those activities which may endanger or obstruct the possibilities of reaching a delimitation agreement;

2. involved in the financial, technical or material support of drilling activities relating to the exploration and production of hydrocarbons, or the extraction of hydrocarbons resulting from such activities, referred to in point (a);

3. associated with the natural or legal persons, entities or bodies referred to in points (a) and (b)”.

It should be noted that no person has yet been included in the above-mentioned Annex I.

 5. NICARAGUA

 Background

At the European Council of 21 January 2019, EU Member States condemned the silencing of political opponents, independent media and civil society, as well as the use of anti-terrorism laws to suppress dissenting opinions in the Republic of Nicaragua.

In view of the continuing violations of human rights and civil liberties in the Republic of Nicaragua, as well as to contribute to a peaceful and negotiated solution to the current crisis, the Council established a new framework of restrictive measures on 14 October 2019.

This framework allows the European Union to impose targeted restrictive measures, including a travel ban and a freeze of assets, against persons, entities or bodies responsible for serious violations of human rights and undermining democracy and the rule of law in the Republic of Nicaragua, as well as against persons associated with them.

Exceptions to the restrictive measures, including the delivery of humanitarian aid, are possible.

Current legal framework and developments 2019

On 14 October last, Council Regulation (EU) 2019/1716 of 14 October 2019 concerning restrictive measures in view of the situation in Nicaragua and Council Decision (CFSP) 2019/1720 of 14 October 2019 concerning restrictive measures in view of the situation in Nicaragua were adopted. This new legal framework imposes restrictive measures on the natural and legal persons listed in Annex I thereto, who are deemed to be responsible for violations of human rights and repression of civil society in Nicaragua, as provided for in Article 2(3) of Regulation 2019/1716:

“Annex I shall include natural or legal persons, entities and bodies to whom the Council has indicated, in accordance with Articles 1(1) and 2(1) of Decision (CFSP) 2019/1720, that

-are responsible for serious violations of human rights or for the repression of civil society and democratic opposition in Nicaragua

undermine democracy and the rule of law in Nicaragua;

are associated with the natural or legal persons, entities or bodies referred to in points (a) and (b)”.

 

The same Article 2(1) and (2) provides for the freezing of funds of the persons listed in Annex I:

 

“All funds and economic resources belonging to, owned, held or controlled by any natural or legal person, entity or body listed in Annex I shall be frozen.

 No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of the natural or legal persons, entities or bodies listed in Annex I’.

 As in the case of the recent sanctions against Turkey imposed by the aforementioned Regulation 2019/1980, no persons or entities have yet been included in Annex I to Regulation 2019/1716.

 

6. DEMOCRATIC REPUBLIC OF THE CONGO

Background

 On 7 April 1993 the European Union decided to impose an arms embargo on Zaire (now the Democratic Republic of Congo, ‘DRC’).

On 28 July 2003 the United Nations Security Council adopted Resolution 1493 (2003) imposing an arms embargo against the DRC.

On 18 April 2005, the UN Security Council adopted Resolution 1596 (2005), which also imposes specific restrictive measures. On 21 December 2005, the United Nations Security Council adopted Resolution 1649 (2005) extending restrictive measures to political and military leaders of foreign armed groups operating in the DRC who impede the disarmament and voluntary repatriation or resettlement of combatants belonging to such groups, as well as to the political and military leaders of Congolese militias receiving support from outside the DRC and, in particular, those operating in Ituri, who are preventing their combatants from participating in the DDR processes.

On 31 July 2006 the United Nations Security Council adopted Resolution 1698 (2006) extending restrictive measures to political and military leaders recruiting or using children in armed conflict in violation of applicable international law, and to individuals committing serious violations of international law involving the targeting of children in situations of armed conflict, including killing and maiming, sexual violence, abduction and forced displacement.

On 17 October 2016 the European Union expressed its deep concern at the political situation in the DRC. It strongly condemned the acts of extreme violence that took place on 19 and 20 September 2016 in Kinshasa and noted that these acts further exacerbated the stalemate in the country by not convening the presidential elections before the constitutional deadline of 20 December 2016. The EU stressed that, in order to create a climate conducive to dialogue and the holding of elections, the Government of the DRC must make a clear commitment to ensuring respect for human rights and the rule of law and to ending all use of the judicial system as a political instrument. It also called on all the parties concerned to reject the use of violence. The European Union has taken specific measures against those responsible for serious human rights violations, those who promote violence and those who seek to obstruct a consensual and peaceful solution to the crisis that respects the aspirations of the people of the DRC to elect their representatives.

There are exceptions to the restrictive measures, such as the delivery of humanitarian aid.

 

Current legal framework and developments 2019

On 9 December 2019, the Council of the European Union has adopted Implementing Regulation (EU) 2019/2101 of 9 December 2019 implementing Article 9 of Regulation (EC) 1183/2005 imposing certain specific restrictive measures directed against persons acting in violation of the arms embargo with regard to the Democratic Republic of the Congo, published in the Official Journal of the European Union on 10 December 2019. The above-mentioned Implementing Regulation maintains the individual restrictive measures against certain persons and entities in the DRC.

Annex I to Regulation 1183/2005 is amended and two (2) persons previously sanctioned are removed from it.

It is recalled that Regulation 1183/2005 freezes the funds and economic resources of the persons listed in its Annex I (Article 2(1) of Regulation 1183/2005) and prohibits the provision of “technical assistance or brokering services related to goods and technology listed in the Common Military List of the European Union, or related to the provision, manufacture, maintenance and use of goods included in that list, to any non-governmental entity or person operating in the territory of the DRC” (Article 1a(a)).

 

7. EGYPT:

Background

 On 21 February 2011 the Council of the European Union declared its readiness to support a peaceful and orderly transition to civilian and democratic government in Egypt based on the rule of law, with full respect for human rights and fundamental freedoms, and to support efforts to create an economy that enhances social cohesion and promotes growth. In addition, restrictive measures were imposed against persons identified as responsible for misappropriating Egyptian state funds and who are therefore depriving the Egyptian people of the benefits of sustainable development of their economy and society, as well as undermining the development of democracy in the country. The aim of the measures is to recover the assets diverted from Egypt.

Current legal framework and developments 2019

 On 21 March 2019, the Council of the European Union issued Council Implementing Regulation (EU) 2019/459 of 21 March 2019 implementing Regulation (EU) 270/2011 concerning restrictive measures against certain persons, entities and bodies in view of the situation in Egypt, and Council Decision (CFSP) 2019/468 of 21 March 2019 amending Decision 2011/172/CFSP concerning restrictive measures against certain persons, entities and bodies in view of the situation in Egypt, published in the Official Journal of the European Union on 22 March 2019. That Decision extends the restrictive measures provided for by Regulation 270/2011 until 22 March 2020 and freezes all funds and economic resources of the persons listed in Annex I thereto. These include former Egyptian President Mohamed Hosni Elsayed Mubarak and several of his family members.

A further extension of these sanctions is also foreseen.

 

UNITED STATES

 The principal sanctions are as follows:

 

  1. CUBA/ HELMS-BURTON LAW: ACT III

 U.S. government sanctions against Cuba have been imposed through presidential/executive orders based on various laws whose purpose is to protect the United States against countries and powers considered “enemies” of the country. The legislative branch has joined this purpose and its most important example is the “Cuban Liberty and Democratic Solidarity (Freedom) Act of 1996″, also known as the “Helms-Burton Act”.

The aforementioned Title III is the most notorious due to the latest events of this year. Its application had been suspended since the entry into force of the Helms-Burton Act in 1996, a suspension that has been left without effect by the United States Government since May 1, 2019, and which therefore determines the full applicability of Title III.

This notoriety of Title III is mainly due to the content of its section 302, which establishes that “any person who, three months after the enactment of this law and thereafter, traffics in property confiscated by the Cuban government as of January 1, 1959, shall be liable to any United States citizen who demands compensation for that property.

 Regarding this section 302, the following different aspects should be highlighted.

 Subjective scope/active legitimation

The action established in Title III allows individuals or legal entities of United States nationality who have owned property or assets that have been nationalized, expropriated or confiscated by the Cuban Government since 1959 to take action against persons who “traffic” – a concept defined below – in these “confiscated” properties or assets, as they are called.

They have active standing to bring a lawsuit under Title III:

 

(a) U.S. citizens who had their claim certified by the Foreign Claims Settlement Commission (“FCSC”)

 

(b) U.S. citizens who became U.S. citizens after the last certification period by the FCSC; or

 

(c) Those who inherit certified claims.

Those who may have done so but did not certify their claim within the FCSC period, or those who requested to certify their claim but whose request was denied by the FCSC, do not have standing.

It is important to note here that potential claimants need not have been citizens or entities of the United States at the time the seizure or nationalization of their property occurred, but simply have become “United States national” after that time or have heirs who are.

Objective scope; Meaning of the terms “traffic” and “confiscated property

Traffic

The meaning of the term “trafficking” is set forth in Section 4 “Definitions“, subsection 13, so that, for purposes of Title III, someone is considered to be “trafficking” in confiscated property when, knowingly and intentionally, and without the authorization of a “United States national” who has made a claim to that property:

(i) “Sells, transfers, distributes, shares, exchanges, manages or otherwise disposes of confiscated property or buys, leases, receives, owns, controls, manages, uses or otherwise acquires a confiscated property or has an interest in it;

 (ii) Engages in a business activity in which he uses or otherwise benefits from confiscated property; or

 (iii) Promotes or directs traffic (described in (i) or (ii)) conducted by another person or participates in or otherwise benefits from such traffic (described in (i) or (ii)) through another person”.

 The term “trafficking” does not include:

 (i) “The sending of international telecommunication signals to Cuba;

 ii) The trading or holding of publicly traded or held securities, unless such trading is by or with a person whom the Secretary of the Treasury has determined to be a specially designated national;

 iii) The transaction and use of property which is related to lawful travel to Cuba, to the extent that such transaction and use of property is necessary for the conduct of such travel or;

iv) The transaction and use of property by a person who is a Cuban citizen and a resident of Cuba and is not an official of the Cuban government or the governing political party of Cuba”.

 Confiscated property

Subparagraph 4 of the aforementioned section 4Definitions” means “confiscation”:

  • “Nationalization, expropriation or other appropriation of property or control thereof by the Cuban Government on or after January 1, 1959:without the return of the property or the payment of adequate and effective compensation; or without the claim to such property having been resolved in accordance with an international claims settlement agreement; the repudiation, omission or failure by the Cuban Government on or after January 1, 1959, to pay a debt of any enterprise that has been nationalized, expropriated or otherwise taken over by the Cuban Government; A debt attributable to property nationalized, expropriated or otherwise taken over by the Cuban Government; or a debt incurred by the Cuban government to settle or liquidate a claim to confiscated property.”

On the other hand, subsection 12 of section 4Definitions” defines the term “property” as follows

  • “Property” means all property (including any patents, copyrights, trademarks and any other form of intellectual property), whether real or personal, or a combination thereof, and with respect to such property, any right, title or other interest, present, future or contingent, including any leasing interest.
  •  For the purposes of title III of this Law, the term “property” does not include any immovable property used for residential purposes unless, on the date this Law is enacted
  •  A national of the United States has a claim to the property and that claim has been certified under title V of the International Claims Settlement Act of 1949; or
  •  Such property is occupied by an official of the Cuban government or the governing political party in Cuba”.

 Compensation

Under the aforementioned section 302, compensation for the confiscated property that motivates the action may be demanded “in an amount equal to the greater of the following:

i. The assessment submitted to the claimant by the FCSC, subject to the International Claims Settlement Act of 1949, plus interest;

ii. The value determined pursuant to Section 303 of this Act, plus interest;

iii.  The fair market value of that property, determined by the greater of the current market value of the property or the sum of the value of the property when it was seized, plus interest”.

 

In addition, “the reasonable legal costs and fees of the plaintiffs’ lawyers” must be added.

Section 302 also provides for aggravated liability, in the sense of higher compensation, in the following cases:

i. “The claim was certified by the FCSC; or

ii. If the claimant notifies a:

iii. The person against whom a claim is made, or

 iv. A person who is to be joined as a defendant in the proceeding at least 30 days before the commencement of the action or the joining of such person as a defendant, as the case may be, and if at the end of such period of 30 days from the date of service, such person deals in the confiscated property that is the subject of the claim”.

 

As for the compensation due in these cases, it is the sum of:

“Three (3) times the amount of the “traffic” liability.

 Costs and attorney’s fees”

 

Time limit for submitting a lawsuit:

 

Section 305 states that:

 

“An action under Section 302 may not be brought more than two (2) years after the traffic that gave rise to the action has ceased”.

 

 

  • Complaints submitted to date

Since Title III went into effect, twenty (20) lawsuits have been filed in the United States District Courts against more than forty (40) defendants, some of whom are involved in more than one proceeding.

Among the defendants are eight (8) travel-related websites, five (5) cruise lines, five (5) companies operated by the Government of the Republic of Cuba, two (2) hotel companies, two (2) airlines, and one (1) bank.

Among the claims are important companies in the tourism sector such as Meliá, Iberostar, Expedia, Booking, Cruceros Carnival Corporation, Trivago, Barceló and the bank Societé Générale.

To date, there are fifty-one (51) plaintiffs, including the plaintiffs named in the class actions. The exact number of plaintiffs is impossible to determine because the five (5) class actions filed represent numerous anonymous plaintiffs whose numbers may far exceed the few plaintiffs named as representatives of other similarly situated class action litigants.

Current and potential plaintiffs include individuals, small businesses, and large international entities. In the twenty (20) lawsuits already filed, the plaintiffs are seeking damages ranging from two hundred and eighty (280) to seven hundred and ninety-two (792) million dollars.

With interest, the approximate present value of all certified claims is eight and a half (8.5) billion dollars. It should be noted that, for the nearly six thousand (6,000) certified claims, the amounts are very different: from only one (1) dollar to multi-million dollar claims of approximately two hundred and sixty-seven (267) million dollars.  In any case, Title III requires that a property must have a value of fifty thousand (50,000) dollars when it was expropriated by the Republic of Cuba, which limits recoverable certified claims to only nine hundred and thirteen (913).

Some of the claims filed so far also include uncertified claims (five (5) of which have been filed as class actions). It is estimated, however, that the number of uncertified claims may be as high as 200,000, each of which may become the basis for a Title III claim.

 

  1. PROTECTION OF THE EUROPEAN UNION: “ANTIDOTE” LEGISLATION

The European Union has protected itself against the extraterritorial scope of the sanctions imposed by the United States. To this end, Regulation (EC) No. 2271/96 of 22 November 1996 on protection against the effects of the extraterritorial application of legislation adopted by a third country and actions based thereon or resulting therefrom, adopted by the Council of the European Union on 22 November 1996, known as the “antidote regulations”, provides the following in reference to the application of the Helms-Burton Act:

  1. a) The obligation to notify the European Commission of all situations in which the economic or financial interests of the latter are affected, directly or indirectly, by laws with extraterritorial effect.

(b) The prohibition of recognition or enforcement of judgments of courts and decisions of administrative authorities located outside the European Union.

(c) The right to seek full redress against those who have sued them in the United States.

This “antidote rule” thus provides protection against the effects of the extraterritorial application of such provisions (and against actions based on or arising from them) to persons defined as “EU operators” and engaged in international trade, capital movement or commercial activities between the EU and third countries.

3. CHINA

 Background

 

The trade war between the United States and China began on 8 March 2018, following the imposition by President Donald Trump, without prior consultation with the US Congress, of the first tariff on steel and aluminium, which amounts to 25% in the case of steel imports and 10% in the case of aluminium.

 

On April 3 of said year, the United States published a list of 1,300 Chinese goods, affecting the mechanical, electrical equipment or chemical sectors, with such imports reaching 500,000 million USD, whose importation would be subject to a 25% tariff. The Chinese government responded the next day by imposing a 25% tariff on 100 products from the US, including soya beans and cars.

 

On 11 July that year, a new 10% tariff was imposed on products imported from China worth USD 200 billion.

 

On 27 August 2018, China filed a complaint with the WTO against the United States for the various tariffs imposed.

 

The agreement reached in Buenos Aires on 1 December 2018, following the G-20 meeting, postponed further action for 90 days. On its part, China committed to make tariff concessions and promises to purchase more goods from the United States. It also set a deadline of March 1, 2019 to reach a trade agreement.

 

On May 10, 2019, breaking the truce initiated in December, the import tariff on more than 5,000 Chinese products was increased by 15%.Five (5) days later the country was declared a national emergency, prohibiting the country’s companies from using telecommunication equipment from Chinese companies, arguing that spying was taking place with those companies. In addition, the commercialization of products from the Huawei company was paralyzed.

 

On June 30, 2019, after the G-20 meeting in Osaka, the talks were re-established and paralyzed in May, allowing U.S. companies to trade with Huawei and deciding not to impose new tariffs.

 

On August 2, 2019, the United States imposed new tariffs of 10% on Chinese imports valued at US$300 billion. The Chinese response came 3 days later with the depreciation of the Yuan to its 2008 level, causing the world’s stock markets to fall.

 

  • Current situation / Agreement

 

On 15 January 2020, China and the United States signed a new trade agreement which includes the following commitments made by China:

 

  1. China is to buy an additional $200 billion worth of American goods and services by 2021 (which includes $52.4 billion of energy exports, $32 billion of agricultural commodities, $77.7 billion of manufactured goods and $37.9 billion of services).

 

  1. China commits to certain changes in its agricultural policy (including certain heath standards, licensing, inspection and registration rules).

 

  1. China also pledges to further protect US intellectual property rights:

 

  • The agreement adds several provisions to protect confidential information considered to be trade secrets and patents.

 

  • China will no longer require American companies to transfer valuable technology and trade secrets, including when these companies apply for certain licenses or government approvals.

 

  • China will not “support or direct” acquisitions and investments by Chinese companies of foreign technology in “industries targeted by its industrial plans that create distortion.”

 4. RUSSIA

Sanctions against Russia for the alleged poisoning of former Russian intelligence agent Sergei Skripal

On August 8, 2018, Russia was sanctioned for the attempted murder of former Russian spy Sergei Skripal and his daughter Yulia, with the use of the substance Novichok.

Trade sanctions:

The export of dual-use items and technology from the United States to Russia was sanctioned, requiring in turn, within 90 days of the issuance of Executive Order (“EO”) 13849, to ensure that no chemical or biological weapons are being used.

By not doing so, the United States again sanctioned Russia for the Skripal case through EO 13883, of 1 August 2019.

Financial sanctions:

This E.O. obliged international financial institutions to oppose, in accordance with section 701 of the International Financial Institutions Act, the extension of any loan or financial assistance to certain Russian companies or organisations.

In addition, U.S. banking institutions were prohibited from extending loans or credits to the Russian Government, except for loans or credits for the purchase of food or other agricultural products.

Sanctions against Russian banks for their operations with the Venezuelan state oil company PDVSA

On March 11, 2019 OFAC added Evrofinance Mosnarbank to the List of Specially Designated Nationals (“SDN List“), blocking all properties and interests owned by this entity and requiring reporting on their status. It has also blocked those of any entity that is 50% owned, directly or indirectly, by this entity, and that is in the United States or owned or controlled by U.S. persons.

OFAC argues that the Moscow-based bank is jointly owned by Russian and Venezuelan state enterprises. Therefore, they qualify it as a financial institution that has supported, materially or financially, PdVSA, a Venezuelan company that was also included in the SDN List on January 28, 2019.

Venezuela’s participation was made through the Venezuelan National Development Fund (FONDEN), acquiring a 49% stake in Evrofinance.

The aforementioned SDN List includes individuals, groups and entities, such as terrorists and drug traffickers. Collectively, such individuals and companies are referred to as “Specially Designated Nationals” or “SDNs“. Their assets are frozen and US Persons are generally prohibited from dealing with them.

Sanctions against six (6) persons of Russian nationality for attempting to influence the 2018 US elections

On September 12, 2018, E.O. 13848 was issued, which freezes the assets of any person or entity if it is deemed that he or she has “directly or indirectly participated in, sponsored, concealed, or aided and abetted foreign interference in an election in the United States.

On September 30, 2019, the first sanctions under this E.O. 13848 were imposed on Russian actors who tried to influence the 2018 elections in the United States. This E.O. increases the sanctions on a person previously included on the SDN List, targeting four entities owned by him. Seven individuals associated with the Internet Research Agency (a Russian company) are also included on the SDN List.

The above-mentioned Internet Research Agency was already included in the SDN List in accordance with E.O. 13694 of 15 March 2018.

 

5. VENEZUELA

Background

On March 8, 2015, the first sanctions against Venezuela were imposed by the Government of Barack Obama, through Executive Order 13692, which resulted in the freezing of assets and bank accounts of seven (7) high ranking officials of the Government of Venezuela.

Such sanctions increased in 2018 with the arrival of Donald Trump to the Presidency, with the publication by the OFAC of six (6) E.O., referring to different high officials of the Government of Venezuela and to the trade of certain companies linked to the Government of Venezuela, highlighting the state oil company PdVSA.

Legal framework and developments 2019

In 2019, EO 13857 of 25 January 2019 and EO 13884 of 5 August 2019 will come into force, seeking to block the revenues of PdVSA.

Specifically, E.O 13884 significantly broadens the objective scope of the sanctions in that it also freezes assets of persons other than US Persons, provided that the Treasury Department considers that they have assisted the Government of Venezuela in any way.

 

6. TURKEY

On 11 December 2019, a U.S. Senate Committee backed a bill to impose sanctions on Turkey for its acquisition of a new Russian-made S-400 missile system. This bill is expected to be voted on in the U.S. Senate soon.

Previously, in October 2019, the US had announced sanctions because of the Turkish offensive in northeast Syria, occupying territories previously garrisoned by Kurdish and US troops. These measures were to be imposed on the Ministries of National Defence and Energy and Natural Resources of the Turkish government, as well as on the Ministers of National Defence, Energy and Natural Resources and the Interior. Furthermore, any foreign financial institution, i.e. other than US Person, facilitating any significant financial transaction for or on behalf of the sanctioned persons was also designated as subject to sanctions. However, on 24 October 2019, the US announced that the latter sanctions were being lifted after Turkey announced the cessation of its military operations in the region and the beginning of a ceasefire.

 

7. NICARAGUA

On November 7, 2019 OFAC has made an update of the SDN List, including the following individuals: Three (3) senior officials of the Government of Nicaragua who have been linked to “human rights abuses, electoral fraud and corruption”.

On December 12, 2019 OFAC also updated the SDN List to include the son of Daniel Ortega, President of Nicaragua, and “two companies he controls, used for money laundering by the Ortega Regime”.

Pursuant to EO 13851, the properties of these individuals and any property owned, directly or indirectly, by such individuals that are 50% or more owned in the United States or controlled or owned by US Persons are blocked and must be reported to OFAC.