As industry sees an increase in parties invoking force majeure clauses (see 2002140027) due to the COVID-19 pandemic response measures, courts will more closely review force majeure disputes to determine whether companies are simply trying to escape a difficult economic situation, commercial litigation lawyers said. Before invoking the clause, parties should make sure compliance with their contracts is impossible due to the pandemic. “The courts … are going to be very astute to look for people trying to use COVID-19 as a force majeure excuse where actually the contract was just not economic for them anyway,” Sean Upson, a lawyer with U.K.-based Stewarts law firm, said during an April 9 webinar.
The U.S. is restricting exports of certain personal protective equipment due to the COVID-19 pandemic, the Federal Emergency Management Agency said in a notice scheduled for Federal Register publication on April 10. The restrictions, which took effect April 7 and will last 120 days after publication, apply to certain respirators, masks and gloves, FEMA said.
The U.S. should expand the scope of humanitarian license exceptions for exports to Iran and add staffing within the Treasury Department to speed up the licensing process, members of the European Leadership Network and The Iran Project said April 6. The statement, signed by 25 former U.S. and European government officials, also said the U.S. needs to do more to assure companies, banks and organizations they will not be targeted for exporting humanitarian items to Iran. The letter follows similar calls by U.S. lawmakers, who said sanctions are hindering life-saving exports to Iran (see 2004010019).
Technology and semiconductor trade groups are objecting to increased export restrictions under consideration by the Trump administration, saying the controls could lead to industry uncertainty with significant impacts on semiconductor companies. In an April 6 letter to Commerce Secretary Wilbur Ross, the groups urged the administration to request industry input before finalizing the rule, which reportedly includes three measures to tighten restrictions on China’s ability to obtain advanced U.S. technology (see 2004020012).
The Federal Aviation Administration does not independently vet civil aircraft registrations, which could lead to a host of sanctions related risks, according to a March report from the Government Accountability Office. In at least one case, the FAA allowed a sanctioned Venezuelan drug trafficker to obtain a dealer certificate, which gave his front company access to blocked planes for more than a year, the GAO said. FAA officials said they do not have the required authorities to address sanctions issues, but the GAO pointed to a lack of coordination between FAA and the Treasury's Office of Foreign Assets Control and a flawed FAA registration system.
The European Union will officially waive customs duties and value-added taxes on medical equipment imports from non-EU countries, the European Commission said April 3. The measure, signaled in a March 30 customs guidance (see 2003310030), was approved by the commission to help combat the COVID-19 pandemic after requests from member states. Import duties and VATs will be lifted for six months for masks, protective equipment, testing kits, ventilators and other medical equipment, the commission said, adding that the measure will take effect retroactively from Jan. 30. The EU may consider an extension after six months.
Companies involved in sanctions compliance should closely communicate with regulators during the COVID-19 pandemic and carefully document compliance procedures during work-from-home operations, according to Nicole Sayegh Succar, a trade lawyer with Crowell & Moring. Those steps could minimize scrutiny and potential sanctions penalties after the pandemic subsides, Succar said during an April 2 webinar hosted by the law firm.
Expectations for sanctions compliance are increasing amid the COVID-19 pandemic as both U.S. and United Kingdom agencies continue sanctions enforcement, trade lawyers said. The U.S. Treasury Department Office of Foreign Assets Control and the U.K. Office of Financial Sanctions Implementation continue to issue sanctions, pursue enforcement and expect heightened due diligence from industry, the lawyers said, “You've got OFAC doing its continuing expansion of U.S. sanctions and … you've got increasing pressure from even the U.K.,” said David Wolff, a trade lawyer with Crowell & Moring, speaking during an April 2 webinar hosted by the law firm. “The regulatory expectations, if anything, are getting worse.”
The U.S. may consider lifting sanctions on countries significantly impacted by the COVID-19 pandemic, Secretary of State Mike Pompeo said. While Pompeo said the U.S. provides exemptions for exports of humanitarian goods, he suggested the Trump administration will review its sanctions regimes. “Would we ever rethink it? Of course,” Pompeo said during a March 31 press conference. “We’re constantly trying to make sure we have our policies right.”
The European Union will suspend certain import duties and customs penalties, and is “strongly” encouraging traders to only apply for “essential customs declarations,” due to the COVID-19 pandemic, the European Commission said in a March 30 guidance. In the guidance, the EU presented measures intended to ease burdens for European customs agents, postal operators and couriers, who are “struggling to cope” with trade operations, especially the large number of imported e-commerce goods. The measures also ease time pressures on customs officials and industry by extending deadlines for approving customs declarations.