United States: The United States, United Nations And European Union Impose Strict Sanctions On Libyan Regime

Introduction

In February 2011, unrest erupted in many Libyan cities, challenging the leadership and regime of Col. Muammar el-Qadhafi. As the regime's response to the protests has turned increasingly violent, the international community has become alarmed about the human rights violations occurring in Libya. This memorandum summarizes recent sanctions-related actions taken by the United States, the United Nations and the European Union ¹ to address this situation.

United States

On the evening of Friday, February 25, 2011, President Obama issued an Executive Order freezing the assets of individuals and entities determined to be responsible for human rights abuses in Libya.

The Executive Order blocks all property (and interests in property) of the Government of Libya (and its agencies, instrumentalities, and controlled entities) and the Central Bank of Libya, and the property (and interests in property) of the following individuals and entities:

1 Muammar Qadhafi and four of his children (Ayesha Qadhafi, Khamis Qadhafi, Mutassim Qadhafi and Saif Al-Islam Qadhafi)

2 Any person ² determined by the Secretary of the Treasury, in consultation with the Secretary of State:

a. To be a senior official of the Libyan government b. To be a child of Muammar Qadhafi;

c. To be responsible for, or complicit in, or responsible for ordering, controlling or otherwise directing, or to have participated in, the commission of human rights abuses related to political repression in Libya;

d. To have materially assisted, sponsored, or provided financial, material, logistical, or technical support for, or goods or services in support of (1) the activities described in (c) above or (2) any person whose property and interests in property are blocked pursuant to this Order;

(i) Notably, the Order explicitly prohibits donations to blocked persons by persons subject to the U.S.'s jurisdiction of food, clothing and medicine intended to relieve human suffering.

e. To be owned or controlled by, or to have acted or purported to act for or on behalf of, any person whose property and interests in property are blocked pursuant to this order; or

f. To be a spouse or dependent child of any person whose property and interests in property are blocked pursuant to this order.

These restrictions apply to the property of the designated individuals and entities that is located in the United States, or that subsequently comes within the United States, or that is within the possession or control of any United States person (including any foreign branches, but not foreign-organized subsidiaries, of such person).

The Order mandates that any such property or interest is blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in. In effect, the Order prohibits, absent a new license issued by the Treasury Department's Office of Foreign Assets Control ("OFAC"),³ virtually any transaction between a United States person and a person whose property is blocked by, or pursuant to, the Order. Specifically delineated prohibited actions include:

1 The contribution or provision of funds to or for the benefit of anyone whose property is blocked;

2 The receipt of any contribution or provision of funds, goods or services from any such person;

3 Transactions that evade or avoid, or attempt to evade or avoid, the restrictions; or

4 Conspiracies formed to violate the restrictions.

The Executive Order exempts from its purview transactions for the conduct of the official business of the Federal Government, and actions otherwise provided for by statutes, or by regulations, orders, directives or licenses issued pursuant to (i.e., after) the Order. Actions taken pursuant to pre-February 25 contracts, licenses, or permits are not exempted from the Order's prohibitions.

The Executive Order provides that no prior notice is required before blocking any of the targeted property and that the Secretary of the Treasury is authorized to determine when circumstances no longer warrant the blocking of property.

In a letter to Congress describing the Executive Order, President Obama also noted that the Secretary of State is suspending all existing licenses and other approvals for the export of defense articles and services to Libya.⁴

United Nations

On February 26, 2011,⁵ the United Nations Security Council adopted Resolution 1970, which freezes certain targeted assets, restricts the travel of certain individuals associated with the Libyan government, prohibits the sale of weapons to Libya⁶ and refers the situation in Libya to the International Criminal Court.⁷

Resolution 1970 also establishes a Committee of the Security Council (consisting of all of the members of the Council) ("the Committee") that will monitor implementation of the Resolution's prohibitions, establish implementation guidelines, report to the Security Council, and encourage dialogue between the Committee and interested member states. The Committee is responsible for designating the individuals subject to the Resolution's travel ban and asset freeze. Individuals are to be subject to these restrictions if the Committee determines that they are (1) involved in or complicit in ordering, controlling or otherwise directing the commission of serious human rights abuses against persons in Libya,⁸ or (2) are acting for or on behalf of or at the direction of such individuals or entities.

Below is additional information about the Resolution's specific provisions:

1 Asset Freeze: The Resolution mandates that member states freeze without delay all funds, other financial assets, and economic resources which are in their territories and are owned or controlled, directly or indirectly, by Muammar Qadhafi, by five designated children of Muammar Qadhafi (Aisha Qadhafi, Hannibal Qadhafi, Khamis Qadhafi, Mutassim Qadhafi, and Saif al-Islam Qadhafi), or by other individuals designated by the Committee.

a. This freeze also applies to assets owned or controlled, directly or indirectly, by individuals or entities acting on behalf of or at the direction of the individuals named above, or by entities owned or controlled by the individuals named above.

b. The frozen accounts may generate interest and other earnings, but these earnings are also to be frozen.

c. The Resolution also calls on member states to ensure that any funds, financial assets, or economic resources are prevented from being made available by their nationals (or by any individuals or entities within their territories) to or for the benefit of Muammar Qadhafi, his five designated children, and other individuals designated by the Committee.

d. The frozen assets shall, at a later stage, be made available to and for the benefit of the people of Libya.

e. The following are exempt from the asset freeze:

(i) Funds determined by member states to be necessary for basic expenses and other assets/resources determined by a State (after notification to the Committee and no negative decision within five days);

(ii) Funds necessary for extraordinary expenses (if approved by the Committee);

(iii) Funds subject to lien or judgment, as long as they are not for the benefit of a designated entity or person; and

(iv) Funds required to make payments due under contracts entered into prior to the listing of such person or entity (if States notify the Committee 10 working days prior to such authorization).

2 Travel Ban: Resolution 1970 mandates that all member states take the necessary measures to prevent entry into or transit through their territories of 16 designated individuals, including Muammar Qadhafi and his children and close advisers.

a. The Resolution contains the following exemptions from the travel ban:

(i) States do not have to refuse to admit nationals of their country;

(ii) It exempts travel that the Committee determines is justified on grounds of humanitarian need (including religious obligation);

(iii) It exempts entry necessary to fulfill judicial process;

(iv) It exempts travel that the Committee (or a State, if it notifies the Committee within 48 hours) determines would further peace and national reconciliation in Libya and regional stability.

b. Resolution 1970 encourages member states to strongly discourage their nationals from travelling to Libya to participate in activities on behalf of Libyan authorities that could reasonably contribute to the violation of human rights.

3 Arms Embargo: Resolution 1970 mandates that all member states prevent the supply, sale or transfer to Libya of arms and related materials.

a. The targeted conduct includes the direct or indirect supply, sale or transfer of the relevant materials from or through member states' territories or by their nationals or using their flag vessels or aircraft.

b. The targeted materials include weapons and ammunition, military vehicles and equipment, paramilitary equipment, and spare parts for the aforementioned.

c. The Resolution also prohibits technical assistance, training, financial or other assistance related to military activities, or the provision, maintenance or use of any arms and related material, as well as the provision of armed mercenary personnel.

d. The following are exempt from this embargo:

(i) Non-lethal military equipment intended solely for humanitarian or protective use (as approved in advance by the Committee) and related technical assistance or training;

(ii) Protective clothing temporarily exported to Libya by United Nations personnel, representatives of the media and humanitarian and development works and associated personnel, for their personal use; and

(iii) Other materials or provisions of assistance approved in advance by the Committee.

e. The Resolution mandates that all member states shall also prohibit the procurement of arms and related materials from Libya by their nationals, or using their flagged vessels or aircraft.

f. Enforcement: The Resolution calls upon states to inspect all cargo in their territory bound to or from Libya, and mandates that all member states seize and dispose of items found if the supply, sale, transfer or export of those items is prohibited by the above provisions. Member states are also required to submit written reports to the Committee describing any such searches, and any resulting seizures and/or disposals.

4 Referral to the ICC: The Resolution refers the situation in Libya to the Prosecutor of the International Criminal Court.

European Union

On February 28, 2011, the Council of the European Union ("EU") adopted a decision that implements UN Security Council Resolution 1970 and adds additional restrictive measures against those responsible for the violent crackdown on the civilian population in Libya.

This decision will be published in the Official Journal of the European Union in the coming days. The following description of the EU's action is based on an EU press release about the decision.⁹

1 Implementing the UN Security Council Resolution: Following the UN's action, the Council of the European Union:

a. Banned the supply to Libya of arms, ammunition and related material;

b. Instituted a visa ban on 16 persons (including Muammar Qadhafi, members of his family closely associated with the regime, and other persons responsible for the violent crackdown on the civilian population since February 15th); and

c. Froze the assets of Muammar Qadhafi and five members of his family.

2 Additional Measures: In addition to following the UN's lead, the EU also:

a. Instituted a visa ban on an additional 10 individuals; and

b. Froze the assets of an additional 20 individuals responsible for the crackdown on the civilian population.

As a result of these developments, we urge our clients to assess the impact of these various economic sanctions regimes on their business activities.

Footnotes

1 In addition to the actions described herein, other individual states have also introduced sanctions and other measures with respect to Libya. For example, the British government has blocked nearly $1.5 billion in Libyan bank notes from leaving Britain and British Prime Minister David Cameron is working with allies to impose a military no-fly zone over Libya. See, e.g. Henry Chu, Libya: European Union Slaps Weapons Embargo on Moammar Kadafi's Government, LOS ANGELES TIMES, Feb. 28, 2011, available at http://latimesblogs.latimes.com/babylonbeyond/2011/02/libya-european-union-slaps-weapons-embargo-on-moammar-kadafis-government.htm . Likewise, on February 27, Canada announced a series of sanctions against the Libyan government that included an arms embargo, a travel ban on Col. Qadhafi and 15 of his associates, and a freeze on Col. Qadhafi's assets. See Tobi Cohen Canadians Flee Libya as Sanctions Announced, VANCOUVER SUN, Feb. 28, 2011, available at http://www.vancouversun.com/news/ Canada+Libyan+sanctions+came+just+time+prevent+Gadhafi+withdrawl+ reports/4360451/story.html.

2 The Order defines "person" to mean an individual or an entity, and defines "entity" to include a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization.

3 To date, OFAC has issued two such licenses subsequent to the Order. General License No. 1 authorizes transactions with financial institutions owned or controlled by the Government of Libya that are organized under the laws of a country other than Libya. General License No. 2 authorizes, under certain limited circumstances, the provision of goods and services in the U.S. to (1) the Libyan diplomatic missions to the U.S. and the U.N. and (2) the employees of the Libyan diplomatic missions to the U.S. and U.N. Both licenses are available at: http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/OFAC-Recent-Actions.aspx.

4 Letter from President Obama to the Speaker of the House of Representatives and the President of the Senate (Feb. 25, 2011), http://www.whitehouse.gov/the-press-office/2011/02/25/letter-president-regarding-libya-sanctions. These are licenses for Munitions List items and related services issued under the Arms Export Control Act and the International Traffic in Arms Regulations.

5 Even before the Security Council passed Resolution 1970, the United Nations Human Rights Council had unanimously called for (1) Libya to be suspended from that body and (2) a probe into violations of internationally-recognized human rights in Libya. See UN Rights Council Recommends Libya Exclusion, AL ARABIYA, Feb. 25, 2011, available at http://www.alarabiya.net/save_print.php?print=1&cont_id=139238.

6 The Resolution refers to Libya as "the Libyan Arab Jamahiriya."

7 Resolution 1970 also calls on member states to facilitate and support the return of humanitarian agencies to Libya and to make available humanitarian and related assistance. It mandates that member states report to the Committee about the steps they've taken to implement the Resolution. In addition, the final paragraphs of the Resolution record the Security Council's commitment to actively monitor the situation in Libya, to continuously review the Libyan authorities' actions, and to strengthen, modify, suspend or lift the Resolution's measures, as may be needed at any time in light of the Libyan authorities' actions.

8 Par. 22 of the Resolution provides that this includes individuals involved in or complicit in planning, commanding, ordering or conducting attacks, in violation of international law, including aerial bombardments, on civilian populations and facilities.

9 Press Release, Council of the European Union, Libya: EU Imposes Arms Embargo and Targeted Sanctions, (Feb. 28, 2011), http://www.eeas.europa.eu/libya/index_en.htm.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.