March 7, 2011
The United States, and the entire world, continues to be outraged by the appalling violence against the Libyan people. The United States is helping to lead an international effort to deter further violence, put in place unprecedented sanctions to hold the Qadhafi government accountable, and support the aspirations of the Libyan people.
President Obama made the remarks above during a joint appearance with Mexican President Felipe Calderon on March 3, 2011. The “unprecedented sanctions” mentioned by the President have been implemented on a number of fronts in the U.S., and have been mirrored in parallel actions by other nations and the European Union. This Client Alert updates the latest on the rapidly developing Libya situation, and supplements our initial Libya sanctions alert, available here.
Export Suspensions:
State/DDTC/ITAR: On February 26, 2011, the State Department Directorate of Defense Trade Controls suspended all Libyan transactions covered by licenses issued under the Arms Export Control Act, and the International Traffic in Arms Regulations (22 C.F.R. 120-130)(ITAR).
Commerce/BIS/EAR: On March 3, 2011, the Commerce Department’s Bureau of Industry and Security suspended export and re-export authority for licenses issued under the authority of the Export Administration Regulations (15 C.F.R. 730-774). The BIS website announced that license authority for Libyan exports has “been suspended indefinitely and . . . (n)o further shipments may be made against licenses for exports or re-exports to Libya by any person.”
OFAC General Licenses:
General License 1A: The Treasury Department’s Office of Foreign Assets Control updated the original general license issued for Libyan financial transactions pursuant to Executive Order 13566. On March 4, 2011, over the signature of OFAC Director Adam Szubin, the updated General License 1A, Authorizing Transactions Related to Third-Country Libyan-Owned or Controlled Banks, now allows for “transactions involving banks that are owned or controlled by the Government of Libya and organized under the laws of a country other than Libya are authorized, provided the transactions do not otherwise involve the Government of Libya or any person whose property and interests in property are blocked.” All financial transactions are allowed, so long as they do not involve the Government of Libya, or any person whose property or property interests are blocked.
General License 2: Issued on March 1, 2011, General License 2, Libyan Diplomatic Missions in the United States, authorizes the “provision of goods or services in the United States to the diplomatic missions of the Government of Libya to the United States and the United Nations and payment for such goods or services.” Though diplomatic mission transactions are permitted, a note to General License 2 prescribes that specific licenses are required for U.S. institutions to operate accounts for, or extend credit to, Libyan diplomatic missions to the United States and the United Nations.
Non-U.S. Actions: United Nations Security Council Resolution 1970, which passed on February 26, 2011 by a 15-0 vote, calls on member states to institute an arms embargo against Libya, and to freeze assets of the Qadhafi family. Canada, the United Kingdom, and the European Union have each taken actions to implement the Security Council resolution. Canada went beyond the resolution by imposing an asset freeze on, and a prohibition of financial transactions with, the Government of Libya, and the Libyan Central Bank. The Council of the European Union also extended the reach of the Security Council resolution by instituting a ban on trade in equipment that might be used for internal repression. Finally, Switzerland acted to block the assets of 29 Libyan individuals, including those of the Qadhafi family, and persons associated with Libyan-connected industries and investment funds.
Summary: Regarding U.S. actions, none of the license suspensions or OFAC General Licenses issued under Executive Order 13566 have yet been published in the Federal Register. The time lag reflects that Federal Register notices sometimes do not keep pace when situations change rapidly, as is the case with Libya. Therefore, businesses should review the websites of OFAC, BIS, DDTC, Customs and Border Protection, and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to stay abreast of the latest developments.
Gibson, Dunn & Crutcher’s lawyers are available to assist with any questions you may have regarding these issues. For further information, please contact the Gibson Dunn lawyer with whom you work or any of the following:
Judith A. Lee – Washington, D.C. (202-887-3591, [email protected])
Daniel J. Plaine – Washington, D.C. (202-955-8286, [email protected])
Marcellus A. McRae – Los Angeles (213-229-7675, [email protected])
John J. Sullivan – Washington, D.C. (202-955-8565, [email protected])
Andrea Farr – Washington, D.C. (202-955-8680, [email protected])
Alan Platt – Washington, D.C. (202-887-3660, [email protected])
© 2011 Gibson, Dunn & Crutcher LLP
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