About Maya Lester QC

Maya Lester QC has a wide ranging practice in public law, European law, competition law, international law, human rights & civil liberties. She has a particular expertise in sanctions. As the most recent (2016) Chambers & Partners directory put it, she "owns the world of sanctions". She spent 2011-12 in New York at Columbia Law School lecturing and writing on sanctions. She represents and advises hundreds of companies and individuals before the European and English courts and has acted in most of the leading cases, including Kadi, Tay Za, Central Bank of Iran, NITC and IRISL.

OFAC adds Burmese military figures & entities to Global Magnitsky sanctions list

US Treasury Building.jpgToday, OFAC has sanctioned 4 Burmese military and Border Guard Police commanders and 2 Burmese military units for their involvement in “ethnic cleansing in Burma’s Rakhine State and other widespread human rights abuses in Burma’s Kachin and Shan States”.

Burmese military commanders Aung Kyaw Zaw, Khin Maung Soe, Khin Hlaing, and Border Guard Police commander Thura San Lwin, along with the 33rd Light Infantry Division of the Burmese Army and the 99th Light Infantry Division of the Burmese Army, were designated pursuant to Executive Order 13818 (Global Magnitsky). As a result, all the listed persons are now subject to a US asset freeze and, where applicable, a US travel ban. See OFAC Notice and Treasury press release.

Aung Kyaw Zaw, Khin Maung Soe and Thura San Lwin are also subject to sanctions in the EU and Canada.

DC Circuit dismisses Fares due process appeals

District of Columbia Court of Appeals.jpgThe US Court of Appeals for the DC Circuit has dismissed the appeals of Abdul Mohamed Waked Fares, Mohamed Abdo Waked Darwich (Mr Fares’ son), and Grupo Wisa SA (Mr Fares’ company), all of whom claimed that their designations in May 2016 as Specially Designated Narcotics Traffickers (under the US Kingpin Act) had violated their due process rights because OFAC had not disclosed all the underlying evidence against them.

The appeal court upheld the lower court judgment that OFAC had satisfied due process requirements by serving the appellants with two unclassified summaries (rather than disclosing evidence containing evidence that OFAC said would compromise ongoing criminal investigations). The court said the appellants’ submission that OFAC had to choose between disclosing all the evidence and delisting them presented “no tenable claim” and ran “counter to precedent”. See judgment here.

Russia’s En+ OFAC plan

ENn+.pngEn+ Group has presented its proposal to OFAC to release it from the US sanctions which were imposed on 6 April 2018.

Oleg Deripaska has agreed to reduce his current stake in En+ Group to below 45% (currently around 66%), principally through the transfer of shares to Russian bank VTB. VTB will sell the shares into the market, but during the period it has control of those shares, their voting rights will be controlled by two US citizens appointed by En+ Group. OFAC has yet to decide on whether to approve the plan.

UN & US terrorist designations

Terrorist.jpgLast week (9 August), the UN Security Council added Adnan Abou Walid al-Sahraoui to its ISIL (Da’esh) and Al-Qaida sanctions list. He will now be subject to a UN asset freeze, travel ban and arms embargo. See UN press release and narrative summary for listing. The EU implemented this UN listing yesterday, see Commission Implementing Regulation (EU) 2018/1138. UK OFSI Notice here.

Earlier this week (13 August), the US State Department designated Qassim Abdullah Ali Ahmed as a Specially Designated Global Terrorist (SDGT) under Section 1(b) of Executive Order 13224 (asset freeze). According to the Department of State press release, “[Mr Ahmed] is an Iran-based leader of al-Ashtar Brigades (AAB), a U.S.-designated Foreign Terrorist Organization (FTO) and SDGT that seeks to overthrow the Bahraini government. [Mr Ahmed] has recruited terrorists in Bahrain, facilitated training on weapons and explosives for AAB members, and supplied AAB members with funding, weapons, and explosives to carry out attacks.” OFAC Notice here.

US puts chemical/biological weapons sanctions on Russia

US-Russia.jpgFollowing the use of a Novichok nerve agent on Sergei and Yulia Skripal, the US has determined under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 that “the Russian government has used chemical or biological weapons in violation of international law or has used lethal chemical or biological weapons against its own nationals” – see Department of State press release. Consequently, after a 15-day Congressional notification period, mandatory sanctions under the Act will come into effect upon publication of a notice in the US Federal Register (expected on or around 22 August 2018).

The sanctions will impose (inter alia) a presumption of denial for all national security sensitive goods or technologies that are controlled by the US Commerce Department pursuant to the Export Administration Regulations. Those goods are currently subject to a licence (case-by-case licence determination), but all such licence applications will be presumptively denied once the sanctions come into effect.

The US will be making a number of carve-outs to the Act’s mandatory sanctions, including:

  • A waiver for the provision of foreign assistance to Russia and the Russian people;
  • A waiver of sanctions with respect to space flight activities (NB: the US is currently engaged with Russia in a number of space flight actions); and
  • A licence being available for national security sensitive goods or technologies used for the safety of commercial passenger aviation.

If the Russian government fails to meet a set of criteria within 90 days, then the US will have to consider whether a second round of sanctions should be imposed. The criteria: (i) that Russia is no longer using chemical or biological weapons in violation of international law or against its own nationals; (ii) that Russia has provided reliable assurances that it will not in the future engage in any such activities; and (iii) that Russia is willing to allow on-site inspections by UN observers or other similar internationally recognised bodies.

Updated EU Blocking Statute: authorisation criteria & guidance

EU2.jpgThe updated EU Blocking Statute came into force today (7 August 2018), see Commission Delegated Regulation (EU) 2018/1100 amending Council Regulation (EC) No 2271/96.

The Blocking Statute allows EU operators to recover damages arising from the extra-territorial sanctions within its scope from the persons causing them and nullifies the effect in the EU of any foreign court rulings based on them. It also forbids EU persons from complying with those sanctions, unless exceptionally authorised to do so by the European Commission in case non-compliance seriously damages their interests or the interests of the Union. The criteria for applying for an authorisation are contained in Commission Implementing Regulation (EU) 2018/1101. A template is available for authorisation applications. The Commission has stated that the “possibility to apply for an authorisation is foreseen as an exception in [the EU Blocking Statute], which does not create an individual right for the applicant to obtain an authorisation”. The Commission has published a Guidance Note.

Updated EU Blocking Statute in force tomorrow

EU6The European Commission announced today that the updated EU Blocking Statute (see previous blog) will enter into force on 7 August 2018 (tomorrow), in response to the re-imposition of US sanctions on Iran. They have also issued a document explaining its effect (EU Commission Q&As) which states that:

  1. The Blocking Statute aims at countering the effects of US sanctions on EU economic operators engaging in lawful activity with third countries.
  2. It applies with regard to specific legislation listed in its Annex. It forbids EU residents and companies from complying with the listed legislation unless they are exceptionally authorised to do so by the Commission, allows EU operators to recover damages arising from that legislation from the persons or entities causing them, and nullifies the effect in the EU of any foreign court rulings based on it.
  3. EU operators should inform the European Commission – within 30 days since they obtain the information – of any events arising from listed extra-territorial legislation that would affect their economic or financial interests.
  4. EU operators can recover “any damages, including legal costs, caused by the application of the laws specified in its Annex or by actions based thereon or resulting therefrom” from “the natural or legal person or any other entity causing the damages or from any person acting on its behalf or intermediary”. The action can be brought before the courts of the Member States and the recovery can take the form of seizure and sale of the assets of the person causing the damage, its representatives or intermediaries.
  5. Implementation of the Blocking Statute, including deciding on effective, proportionate and dissuasive penalties for possible breaches is the competence of Member States. It is also for Member States to enforce those penalties.
  6. The European Commission gathers information from EU operators on possible cases of application of the listed extra-territorial legislation, liaises with national authorities from EU Member states concerning such cases in their jurisdiction and receives notification from and shares information with Member States on measures taken under the Blocking Statute and other relevant aspects.
  7. The Commission can also, in exceptional cases, authorise an EU operator to fully or partially comply with the listed extra-territorial legislation if non-compliance would seriously jeopardise the interests of the operator or of the European Union. The Implementing Regulation containing the criteria on the basis of which the Commission will assess such requests for authorisation will also be published tomorrow.

New Russian sanctions Bill introduced to US Senate

US Congress Building 1Last week (2 August), the Defending American Security from Kremlin Aggression Act of 2018 was introduced to the US Senate. The Bill aims to increase economic, political, and diplomatic pressure on the Russian Federation in response to “Russia’s continued interference in [US] elections, malign influence in Syria, aggression in Crimea, and other activities”. Its key elements include:

  • New sanctions on political figures, oligarchs, family members and other persons that facilitate illicit and corrupt activities on behalf of Vladimir Putin.
  • A sanction on transactions related to investment in energy projects supported by Russian state-owned or parastatal entities.
  • A prohibition on and sanctions with respect to transactions relating to new sovereign debt of the Russian Federation.
  • Sectoral sanctions on any person in the Russian Federation that has the capacity or ability to support or facilitate malicious cyber activities.
  • A requirement for the US Secretary of State to submit a determination of whether the Russian Federation meets the criteria for designation as a State Sponsor of Terrorism.
  • A prohibition on licenses for US persons to engage in activities relating to certain projects to produce oil in Russia.
  • Reinforcement for the State Department Office of Sanctions Coordination.
  • A report on the net worth and assets of Vladimir Putin.
  • Making interfering in US elections a ground of inadmissibility under immigration law.
  • Provisions expediting the transfer of excess defence articles to NATO countries to reduce some NATO countries’ dependence on Russian military equipment.
  • Provisions aimed at pressuring the Russian government to halt its obstruction of international efforts to investigate chemical weapons attacks, as well as punish the Russian government for chemical weapons production and use.

It is not certain if the legislation will pass the Senate and the House of Representatives in its current form. However, the Senate has passed similar measures against Russia with overwhelming support.