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Libya Sanctions Update: European Council Further Unwinds Sanctions; U.S. Office of Foreign Assets Control Issues Amended General License

September 28, 2011

 

There were new developments today in both Europe and the United States, as both jurisdictions continue to modify their economic sanctions concerning Libya. Our Alert dated September 19, 2011, previously described the actions taken by the United Nations in Security Council Resolution 2009 (2011) of September 16, 2011, and by the United States to ease the sanctions in response to the fall of the Qadhafi regime.

European Union

Through Council Decision 2011/625/CSFP and Implementing Regulation (EU) No. 941/2011, both adopted on September 22, 2011, and Implementing Regulation (EU) No. 965/2011, adopted on September 28, 2011, together with two other recent Implementing Regulations adopted by the European Council, the EU has aligned with the United States in unwinding its economic sanctions measures.

Effective September 23, 2011, the Libyan National Oil Company (LNOC) and Zueitina Oil Company are no longer listed as entities on the EU sanctioned parties lists. Implementing Regulations adopted on September 1 and September 15, 2011, previously delisted numerous other entities, including various subsidiaries of the LNOC. In addition, the Central Bank of Libya, the Libyan Arab Foreign Bank, the Libyan Investment Authority, the Libyan Africa Investment Portfolio, and entities owned or controlled by any of them will no longer be subject to the EU sanctions, except that assets of those entities that were frozen as of September 16, 2011, must remain frozen. Assets that remain frozen may be released on a case-by-case basis as permitted by the United Nations resolutions imposing sanctions measures concerning Libya.

UNSCR Resolution 2009 provides for the unconditional delisting of NOC and Zueitina, and for a substantial removal of sanctions targeting other entities on a going-forward basis. The most recent Council actions implement this mandate. It is important to note that, as in the United States, numerous persons and entities (most notably, those associated with the Qaddafi family and former regime) remain on EU sanctioned parties lists.

OFAC General License 8A

Also today, OFAC issued General License No. 8A, which fully supersedes General License 8 issued on September 19, 2008. The evident intent of the restated license is to clarify the scope of the freeze on assets that remains in place, consistent with UNSCR 2009.

General License No. 8 provided that “all property and interests in property” of blocked persons would remain blocked except as otherwise provided or authorized (including through General License No. 7A). General License No. 8A more specifically provides that “[a]ll funds, including cash, securities, bank accounts, and investment accounts, and precious metals” remain blocked. The new language is consistent with the language of UNSCR 2009, which refers to “funds, other financial assets and economic resources.” More importantly, however, it removes a potentially large barrier to resuming economic activity involving Libya. The term “property and interests in property” is defined very broadly in the Libyan Sanctions Regulations[1]. As made clear in a note to General License No. 8A, the revised license is intended to remove any doubt that transactions are authorized involving contracts in which the Government of Libya (including its state-owned enterprises) had an interest that was previously blocked. Otherwise, General License No. 8A makes no substantive change to General License No. 8.

A very minor difference between the U.S. and EU sanctions is that General License No. 8A continues the asset freeze with respect to assets that were blocked as of September 19, 2011, while the EU Implementing Regulation continues the freeze with respect to assets that were blocked as of September 16, 2011 (the date of UNSCR 2009). In all material respects, however, the sanctions regulations in both jurisdictions are consistent in application and in implementation of the United Nations mandates.

[1] 31 CFR §570.309. The term extends, among other things, to “contracts of any nature whatsoever, and any other property, real, personal, or fixed, tangible or intangible, or interest or interests therein, present, future, or contingent.”