U.S. Sanctions and Export Restrictions against Libya
The situation in Libya remains very fluid and likely will remain so for the near-future. The violence, which began in mid-February, continues to escalate as the Qadhafi-led government and opposition fighters battle for control of various cities throughout much of the country. International condemnation and reaction has been surprisingly swift in the area of placing various economic sanctions and export restrictions on transactions involving Libya.
Troutman Sanders’ Trade Compliance Team offers the following update for general informational purposes. However, given the still evolving situation and the likelihood of further U.S. government response, U.S. companies and exporters are strongly encouraged to work with their legal counsel before proceeding with any business transactions involving officials, persons or entities located within Libya, or which may otherwise be controlled by the Government of Libya.
Treasury – Office of Foreign Assets Control (OFAC)
President Obama on February 25 signed an
Executive Order “Blocking Property and Prohibiting Certain Transactions Related to Libya.” The property and interests in property of the Government of Libya, its agencies, instrumentalities, and controlled
entities, and the Central Bank of Libya, as well as certain individuals listed on an annex to this Executive Order, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in pursuant to the order.
Specifically, it orders all property and interests in property that are in the United States or that come within the United States, and all property that comes into the possession or control of a U.S. person, to be blocked if such property belongs to Muammar Qadhafi and certain relatives, as well as any person determined to be: (1) a senior official of the Government of Libya, (2) a child of Muammar Qadhafi, (3) to be responsible or complicit in the commission of human rights abuses in Libya, (4) to have materially assisted in support of human rights abuses or persons whose property is blocked, (5) owned or controlled by or acting on behalf of any person whose property is blocked, and (6) to be a spouse or dependent of any person whose property is blocked. Blocked property also cannot be transferred, paid, exported, withdrawn or otherwise dealt in.
In addition, property and assets belonging to the Government of Libya, its agencies, instrumentalities, and controlled entities, and the Central Bank of Libya, are blocked and may not be transferred, paid, exported, withdrawn or otherwise dealt in. On March 4, OFAC issued a General License authorizing all transactions involving banks that are owned or controlled by the Government of Libya and organized under the laws of a country other than Libya (i.e. third-country financial institutions), provided the transactions do not otherwise involve the Government of Libya or any person whose property and interests in property are blocked. A separate General License has also been issued allowing very limited authorization for the provision of goods and services in the United States to the diplomatic missions of the Government of Libya to the United States and the United Nations, as well as payment for such goods and services, under certain conditions. And on March 9, a third General License was issued authorizing the provision of certain legal services to or on behalf of the Government of Libya, its agencies, instrumentalities, and controlled entities, including the Central Bank of Libya, or any other person whose property and interests in property are blocked.
OFAC advises proceeding very cautiously in regard to entities in Libya and entities outside that country which may be owned by the Government of Libya. OFAC cautions that to the extent that an entity is 50% or more owned by the Government of Libya it is off limits because it will be considered an entity belonging to the Government of Libya covered by the Executive Order.
Commerce – Bureau of Industry & Security (BIS)
BIS has posted the following notice on its web site:
Libya Licenses Suspended: Effective March 3, 2011, all licenses issued by BIS for exports or reexports to Libya under the authority of the Export Administration Regulations (15 C.F.R. 730-774) as kept in force by the International
Emergency Economic Powers Act have been suspended indefinitely and all persons currently holding active licenses have been so notified. No further shipments may be made against licenses for exports or reexports to Libya by
any person.
State – Directorate of Defense Trade Controls (DDTC)
Troutman Sanders LLP is not aware of any licenses being granted in recent years for the export of defense articles or services to Libya. Nevertheless, DDTC has formally posted the following notice on its web site:
Effective immediately, all export licenses issued pursuant to the authorities of the Arms Export Control Act and the International Traffic in Arms Regulations (22 C.F.R. 120-130) are hereby suspended until further notice. No further exports may be made against them. These actions have been entered into the AES data base and forwarded to U.S. Customs and Border Protection. Additionally, no exemptions may be utilized for exports to Libya. Further guidance related to exports to Libya will be promulgated via a Federal Register Notice.
United Nations – Security Council Resolution 1970
On February 26, 2011, the UN Security Council unanimously voted to impose sanctions against Libya by placing an arms embargo and freezing the assets of Libya’s leaders. It also referred the ongoing violent repression
of civilian demonstrators to the International Criminal Court (ICC). In Resolution 1970, the Council obligated all United Nations Member States to “freeze without delay all funds, other financial assets and economic
resources which are on their territories, which are owned or controlled, directly or indirectly, by the individuals or entities” listed in resolution.
With regard to the embargo, the Resolution states that: “All Member States shall immediately take the necessary measures to prevent the direct or indirect supply, sale or transfer to the Libyan Arab Jamahiriya, from or through their territories or by their nationals, or using their flag vessels or aircraft, of arms and related material of all types, including weapons and ammunition.” The arms embargo also prohibits Libya from exporting all arms and related materiel, and obligates UN Member States to prevent the procurement of such items from Libya by their nationals.
Troutman Sanders LLP Experience with Sanctions Programs and Export Controls
Troutman Sanders LLP Trade Compliance attorneys and advisors regularly counsel clients on transactions involving countries and entities subject to regulatory requirements imposed by the U.S. Government, as well as a host of complex
export control compliance issues. Please feel free to contact any of the individuals listed above for assistance.