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“Laws That Were Written Like Drinking Songs”:Unilateral U.S. Economic Sanctions and

International Law

Robert Clifton BurnsPowell Goldstein LLP

2008 Penn Journal of International Law SymposiumFebruary 29, 2008

2

The Megarian Decree

Then Pericles, the Olympian in his wrathThundered, hurled lightning, threw Hellas into confusionPassed laws that were written like drinking songsDecreeing the Megarians shall not be on our land, in our market. . . .Then the Megarians, since they were starving little by little, begged the Lacedaemonians to have the decreeArising from the three strumpets withdrawn.But we were unwilling, though they asked us many times.Then came the clash of the shields.Someone will say it was not right. But say, then, what was.Come, if a Lacedaemonian sailed out in a boatAnd denounced and confiscated a Seriphian puppyWould you have sat still?

--Aristophanes, The Acharnians

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“Sanctions”

Import/Export bans

Asset Blocking

Not: blockades

Not: denial of foreign aid.

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Grounds

Originally, in connection with military action or anticipated military action (Trading with the Enemy Act)

Post WWII/Cold-War: National Security

Post Cold-War: Human Rights/Regime Change

21st Century: Corruption and Cronyism (Rami Maklouf in Syria)

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Unilateral

Unilateral Sanctions Unlikely To Be Effective

Economic impact lessened by trade with non-participating countries

Diversion of U.S. goods to sanctioned country through non-participating countries.

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Bootstrapping

In order to increase effectiveness of unilateral sanctions, U.S. policymakers try to bootstrap the sanctions

Foreign National Extradition and Prosecutions

Secondary Boycotts

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International Law

Bootstrapping may have international law consequences

Foreign National Extradition and Prosecutions – Extraterritorial application

Secondary Boycotts – GATT, GATS

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Foreign National Prosecutions

AVIATION SERVICES INTERNATIONAL

Dutch Company, no offices or reps in the U.S.

Purchased U.S. aviation parts and legally imported them into the Netherlands

Legally exported parts from Netherlands to Iran

Criminal complaint filed in August 2007 alleged violations of IEEPA

SEDs identified Netherlands and not Iran as the destination; complaint charged violation of 18 U.S.C. § 1001

Placed on Denied Persons List by BIS

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Foreign National Prosecutions

Domestic Law: Extraterritorial Effect of IEEPA is clear:

50 U.S.C. § 1702

(a)(1) At the times and to the extent specified in section 1701 of this title, the President may, under such regulations as he may prescribe, by means of instructions, licenses, or otherwise—

(B) investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States.

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Foreign National Prosecutions

International Law: Jurisdiction to Prescribe

Restatement of Foreign Relations Law § 402

Territorial Principle § 402(1)(a): Some states, including U.S., use this to assert jurisdiction over goods originating in that state. Could justify denial of export privileges?

Effects Principle § 402(1)(c): Conduct outside territory that has or is intended to have “substantial” effect within territory. Does this cover the 18 U.S.C. § 1001 charge?

Protective Principle: § 402(3): foreign national extraterritorial conduct “directed against the security of the state or against a limited class of other state interests

Espionage, counterfeiting, falsification of official documents

“Directed against” versus simply having an effect.

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Foreign National Prosecutions

International Law: Extradition

U.S.-Netherlands Extradition Treaty

3. Extradition shall be granted in respect of an extraditable offense committed outside the territory of the Requesting State if:

a. The courts of the Requested State would be competent to exercise jurisdiction in similar circumstances, or

b. The person sought is a national of the Requesting State.

Permits a Dutch court to deny extradition by saying that, due to principles of international law, it would not be competent to exercise jurisdiction over a U.S. citizen who exported Dutch Goods from the United States.

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Secondary Boycotts

Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 (“Helms-Burton”) None of the sugar quota could be allocated to net importer of sugar

without a certification of no imports of Cuban sugar -- §110(c)

Denial of loans or credit facilities for transactions involving “confiscated” property -- § 103

Claims by U.S. citizens against companies “trafficking” in “confiscated” property -- § 301

Denial of visas to officers and directors of companies trafficking in confiscated property -- § 401

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Secondary Boycotts

EU WTO Complaint Against “Helms-Burton” Sugar quota provisions violate GATT Article XI (Quantitative

Restrictions)

Denial of loans or credit facilities for transactions involving “confiscated” property violates GATS Article XI (no restrictions on payments and transfers)

Claims by U.S. citizens against companies “trafficking” in “confiscated” property violate Articles II (MFN) and XVII (National Treatment) of GATS

Denial of visas to officers and directors of companies trafficking in confiscated property also violate paragraphs 3 and 4 of the GATS Annex on the Movement of Natural Persons

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Secondary Boycotts

Iran Sanctions Act President must impose at least two of the following sanctions on

foreign companies that make an investment of $20 million or more in the Iranian energy sector:

Denial of Ex-Im loans

Denial of export licenses (Article XI, GATT)

Prohibition of U.S. Bank Loans in excess of $10 million

Prohibition on selling government bonds or serving as repository of government funds (Article III, Agreement on GP)

Prohibition on government procurement (Article III, Agreement on GP)

Restrictions on import (Article XI, GATT)

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Secondary Boycotts

National Security Exception

Article XXI GATT

Article XIV bis GATS

Permit “action which it considers necessary for the protection of its essential security interests:

relating to the supply of services as carried out directly or indirectly for the purpose of provisioning a military establishment;

relating to fissionable and fusionable materials or the materials from which they are derived;

taken in time of war or other emergency in international relations.”

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