A Practical Guide to International Sanctions Law and Lore: Mamas, Don't Let Your Children Grow Up to Be Sanctions Lawyers
Culvahouse, Arthur B., Jr., Houston Journal of International Law
The subtitle of my remarks, "Mamas, don't let your children grow up to be sanctions lawyers," should not be interpreted as conveying a lack of professional gratitude or appreciation. To the contrary, the law and lore of economic sanctions has been a part of my private practice experience since 1979, when U.S. economic sanctions were first imposed against the government of Iran, (1) at a time when literally hundreds of U.S. companies were transacting business in or with Iran. (2) It has been my privilege to work with many fine lawyers and business people over the past thirty years on sanctions matters--including not a few in this room.
What I do hope to impress upon you is that compliance with (and interpretation of) U.S. economic sanctions laws and regulations is uniquely fraught with reputational and legal risk. Even if all of one's interactions with Cuba, Iran, and the Sudan are expressly permitted by the relevant Treasury Department regulations or by Treasury Department licenses, one nonetheless can be subject to criticism by well-organized and influential interest groups and be subpoenaed to testify before hostile Congressional Committees, to the consternation of shareholders and boards of directors.
Second, this area of the law is very much rules--based rather than principles-based, (3) and there are important differences among the several sanctions programs. (4) The U.S. government's interpretations of the sanctions generally do not establish binding precedents (5) and can shift rapidly with the political winds. (6) Also, well-crafted arguments that a particular transaction is not prohibited by the sanctions can be negated overnight by publication of an amendment to the Treasury Department's regulations without further notice or comment. (7)
Third, the penalties for sanctions violations have increased dramatically: Civil penalties are $250,000 per violation, or twice the value of the transactions; and criminal penalties are $1 million per violation and/or twenty years imprisonment. (8) The Treasury Department's Office of Foreign Assets Control and the Department of Justice have been very aggressive in bringing enforcement actions in the past two years. (9)
Finally, especially in the civil enforcement arena, courts give great deference to the executive branch's interpretation of its economic sanctions regulations because of its underlying national security and foreign policy purposes. (10) As one of my law partners says, the government wins all ties and starts out with as many strokes as it wants.
Since 1794, the U.S. government has issued economic sanctions against nations and persons taking actions and pursuing policies deemed harmful to the interests of the United States. (11) Until the past century, economic sanctions were issued in wartime or as a response to hostilities. (12) More recently, economic sanctions have become entrenched foreign policy tools, utilized in cases of nations and persons supporting terrorism, proliferating weapons of mass destruction, violating human rights, and trafficking drugs. (13)
Contrary to the belief of many in the client community, economic sanctions are not an invention of U.S. government bureaucrats. (14) The first recorded use of economic sanctions was in 432 B.C., when officials in Athens denied traders from the state of Megara access to Athens' harbor and its marketplace. (15)
I suspect that even in 400 B.C. the question was raised whether economic sanctions were effective in achieving the underlying policy goals, that is: Do economic sanctions discourage or change the undesirable conduct or policies of the targeted nation or group? There is no clear answer. A key factor is whether the sanctions are unilateral or multilateral. Unilateral sanctions seem to have very limited influence on the target country's leadership; (16) on the other hand, multi-lateral sanctions, such as the recent round of sanctions targeting Iranian banks and financial institutions, typically have greater impact. …