In response to the recent events occurring in Libya, the United States government has imposed a series of sanctions and other restrictions on transactions involving the government of Libya. Notably, on February 25, 2011, President Obama signed Executive Order 13566 “Blocking Property and Prohibiting Certain Transactions Related to Libya” (the “EO”). The EO blocks the property and interests in property of the government of Libya, including its “agencies, instrumentalities, and controlled entities,” and the Central Bank of Libya. The EO also blocks the property and interests in property of Colonel Muammar Qadhafi and his immediate family, certain senior officials of the government of Libya and others involved in the “commission of human rights abuses related to political repression in Libya.” Such property interests cannot be “transferred, paid, exported, withdrawn, or otherwise dealt in pursuant to the order.” Companies currently in possession of blocked property may be subject to the reporting and recordkeeping requirements of the Treasury Department’s Office of Foreign Assets Control (“OFAC”).
Most notably, the EO makes clear that the blocking provisions prohibit the payment of funds to or the receipt of funds or services from the government of Libya or any entity owned or controlled by the government of Libya. The EO also prohibits purchasing, selling or trading any goods in which the government of Libya may have an interest. The EO therefore effectively bars any unlicensed payment to the government of Libya in the form of taxes, import or export duties, payment of utilities, commissions, registration fees, or any other governmental fees while the sanctions are in effect. The receipt of banking services from banks owned or controlled by the government of Libya is also prohibited. (OFAC’s General License No. 1, which was issued concurrently with the EO, permits transactions with financial institutions owned or controlled by the government of Libya that are “organized under the laws of a country other than Libya.”)
The EO makes no exception for U.S. companies already engaged in trade-related transactions with Libya. However, OFAC is currently accepting emergency applications for specific licenses to meet the needs of companies on a case-by-case basis.
At the moment, the United States has yet to reinstitute the level of economic sanctions against Libya that were in place until 2004, which sanctions included a total ban on direct import and export trade. However, companies should still seek guidance before engaging in trade-related transactions with Libya, as many of the country’s industries are state-controlled, particularly in the energy sector. Furthermore, companies already doing business in Libya may require specific OFAC authorization prior to engaging in transactions with or involving the government of Libya.
If you would like to discuss developments in these areas or be kept up to date on further amendments to economic sanctions and export controls pertaining to Libya, please contact any of the Baker Botts lawyers listed above.