Saudi Arabia, Bahrain, and the United Arab Emirates have imposed a boycott on Qatar, allegedly because of remarks that appeared on the Qatar News Agency’s website where Qatar emir Sheikh Tamim bin Hamad Al Thani called Iran an “Islamic power” and said Qatar has “good” relations with Israel. Qatar claims that the Sheikh never said this and that the QNA website was hacked. U.S. intelligence officials have said that this was likely the work of Russian hackers, who were hoping to create a rift among the United States and its Middle Eastern allies.
To implement the boycott, the Port of Fujairah, in the United Arab Emirates, has just banned from the port all maritime traffic coming from or headed to Qatar. A natural question is whether Part 760 of the Export Administration Regulations, the so-called Anti-Boycott Rules, will have an impact on whether U.S persons can comply with this aspect of the boycott against Qatar. Many people think that those rules just cover the Arab League boycott against Israel, but in fact the Anti-Boycott Rules never even mention that boycott or any other specific boycott. By their terms, these rules apply to any “unsanctioned foreign boycott.” The term “unsanctioned foreign boycott, is, oddly, never defined. Even so, it can be safely concluded that the boycott against U.S. ally Qatar is one of those “unsanctioned foreign boycotts.”
That being said, consider the following scenario. A customer in Fujairah, UAE, wants to purchase $2 million worth of fidget spinners from a U.S. company. The purchase order contains the following clause:
The shipping terms for the purchased goods are DDP Port of Fujairah (INCOTERMS 2010). The good may not be shipped on a Qatari-flagged vessel or on a vessel that visited, or is destined to visit, Qatar.
Would accepting the order violate the Anti-Boycott Rules?
The Anti-Boycott rules do provide some limited exceptions to permit compliance with shipping instructions of boycotting countries. Section 760.3(b)(1)(i) permits a U.S. person to comply with a prohibition of shipping the goods on a Qatari-flagged vessel. In addition, section 760.3(b)(2)(i) permits a U.S. person to agree not to ship the goods through Qatar. However, the exceptions only apply to requirements for “shipping goods to the boycotting country.” Any restrictions on where the ship calls after that shipment is complete and the goods are delivered to Fujairah would be a violation of the rules.
It is impossible to predict at this point the full implementation of the boycott of Qatar and the extent to which commercial documents will contain provisions that seek to enforce compliance with the boycott. But U.S. companies need to be alert to such requests because the Anti-Boycott Rules are not restricted to the Arab League boycott against Israel.