In a stunning ruling issued on July 15, 2014, the U.S. Court of Appeals for the D.C. Circuit held that review by the Committee on Foreign Investment in the United States (“CFIUS”) and the subsequent unwinding of the investment deprived the foreign investor of due process under the 5th Amendment to the U.S. Constitution. Ralls Corp. v. Comm. on Foreign Investment in the United States, No. 12-cv-01513 (D.C. Cir. Jul. 15, 2014) (a copy of the opinion is here). If upheld, the ruling may require fundamental changes in how CFIUS conducts its reviews and may enhance foreign investors’ ability to influence or challenge the outcome of a review.
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What’s New Out There? Highlights from the Federal Register
Amended SDN Designations Under New Sanctions Programs
On May 23, the U.S. Department of Treasury, Office of Foreign Assets Control (“OFAC”) published additional identifying information for persons whose property has been blocked for their activities related to the conflict in the Central African Republic. See 79 Fed. Reg. 29,842 (May 23, 2014). On May 12, President Obama issued an Executive Order that authorizes the blocking of all property in the United States of persons for activities including actions that threaten the peace or stability of the Central African Republic, actions or policies that undermine transitional institutions or democratic institutions, targeting women for acts of violence, the recruitment of child soldiers, and other human rights abuses. See Exec. Order 13,667 (May 12, 2014). The Executive Order provides authority for persons to be added to OFAC’s Specially Designated National (“SDN”) List. Once a person is added to that list, that person’s property under U.S. jurisdiction is blocked, and U.S. persons are prohibited from transacting with that person. The Central African Republic sanctions are the most recent example of sanctions programs targeting human rights violators, and a discussion of previous sanctions can be found in our Global Trade Blog.Continue Reading What’s New Out There? Highlights from the Federal Register
A Peek Around the Curtain: A “Reverse” False Claims Act Settlement for Avoiding Customs Charges
On November 14, 2013, the U.S. Department of Justice announced a False Claims Act settlement with Basco Manufacturing Company, a maker of shower enclosures, for $1.1 million related to misstatements on U.S. Customs and Border Protection (CBP) entry forms. The alleged misstatements were intended to allow the company to avoid antidumping duties (ADD) and countervailing duties (CVD) on aluminum extrusions used in its products that were actually from China, but transshipped through Malaysia in an attempt to avoid the duties. The settlement against Basco does not resolve the entire matter, as Basco was one company of many involved in an alleged conspiracy to conceal the Chinese origin of the aluminum extrusions at issue. Aspects of the settlement highlight certain risks posed by the False Claims Act that compound general U.S. enforcement of trade laws, and a reminder that diversion for inbound products to the United States may be a significant compliance issue of which companies should be aware.
Continue Reading A Peek Around the Curtain: A “Reverse” False Claims Act Settlement for Avoiding Customs Charges