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Client Alert – Iran and Cuba Sanctions Update

Iran: New Primary and Secondary Sanctions on Iron, Steel, Aluminum and Copper Sectors

In keeping with the Trump Administration’s maximum pressure campaign on Iran, the U.S. imposed new primary and secondary sanctions targeting Iran’s iron, steel, aluminum and copper sectors on May 8, 2019 pursuant to Executive Order 13871. The stated aim of the new sanctions is to deny the Iranian government revenue from the export of products from the iron, steel, aluminum and copper sectors that could be used to provide funding and support for the proliferation of weapons of mass destruction, terrorist groups and networks, campaigns of regional aggression, and military expansion. These new sanctions are extremely broad and contain prohibitions that apply to U.S. as well as non-U.S. persons.

The Executive Order applies to activities by both U.S. and non-U.S. persons and it authorizes the Secretary of Treasury to add the following persons to the Office of Foreign Assets Control’s (OFAC) Specially Designated Nationals (SDN) List and to block their property in the U.S.:

  1. a person operating in the iron, steel, aluminum, or copper sector of Iran or a person that owns, controls, or operates an entity that is part of the iron, steel, aluminum, or copper sector of Iran;
  2. a person that knowingly engaged, on or after May 8, 2019, in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminum or copper sectors of Iran;
  3. a person that knowingly engaged, on or after May 8, 2019, in a significant transaction for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran;
  4. a person that materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of any person whose property and interests in property are blocked pursuant to the Executive Order; or
  5. a person owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the Executive Order.

Executive Order 13871 also contains measures to penalize foreign financial institutions for conducting or facilitating transactions related to Iran’s iron, steel, aluminum and copper sectors.

As a result, both U.S. and non-U.S. persons will have to take care to avoid running afoul of the restrictions on doing business with any new persons added to the SDN List pursuant to this Executive Order. Moreover, any person operating in or doing business with the iron, steel, aluminum or copper sector of Iran must assess whether its activities may place it in danger of being added to the SDN List itself and having its U.S. assets frozen.

OFAC has provided a 90-day wind-down period (i.e. until August 6, 2019) for persons engaged in pre-existing transactions that could be sanctionable under the Executive Order. If you conduct any business involving iron, steel, aluminum or copper that directly or indirectly involves Iran, it would be prudent to use this 90-day window to assess your potential exposure and explore options to wind-down your activities.

Cuba: Lawsuits by U.S. Nationals against U.S. and Non-U.S. Persons Trafficking in Confiscated Property Now Allowed

Effective May 2, 2019, the Trump Administration announced that it will not continue the waiver against lawsuits under Title III of the Cuban Liberty and Democratic Solidarity Act of 1996, also known as the Helms-Burton Act. As a result, U.S. nationals may now sue any person who “traffics in confiscated property,” which means that U.S. nationals, including individual citizens and companies, with title to a claim on Cuban confiscated property may now bring claims in U.S. federal court against individuals and entities that derive economic benefit from property that was expropriated by the Cuban government since 1959. Thus, for example, the German owner of a factory operating on land that was previously expropriated by the Cuban government may now be sued in U.S. court by the Cuban expat former owners of that land.

In addition, National Security Advisor John Bolton has stated that the U.S. government will be taking steps to implement Title IV of the Helms-Burton Act, which mandates the denial of visas to and the exclusion from the United States of foreign nationals who the Secretary of State determines to be trafficking in confiscated property. This includes officers and controlling shareholders of an entity that traffics in confiscated property, including their spouses and children. Therefore, in keeping with the example from above, the officers and owner of the German factory operating in Cuba, and their families, could now be barred from entering the United States.

If you have any questions about any of the above information, or wish to discuss a particular matter, please feel free to speak with any member of our International Business Practice by calling us at 412-297-4900 or visiting https://www.cohenlaw.com/practices/international-business. To receive future client alerts, please send an e-mail to bulletins@cohenlaw.com.

This information is accurate at the time of distribution and is subject to changes made by the administration. We will provide updates as they occur.

Copyright © 2019 by Cohen & Grigsby, P.C.

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