THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
THETHE YEAREAR ININ REVIEWREVIEREVIEW AN ANNUAL SURVEY OF INTERNATIONAL LEGAL DEVELOPMENTS AND PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
2016 • VOLUME 50
INTERNATIONAL LEGAL DEVELOPMENTS YEAR IN REVIEW: 2015
Introduction ...... Brooke J. Bowman and Jason Scott Palmer
Business Regulation Constituent Division Customs Law Women’s Interest Network Export Controls and Economic Sanctions Young Lawyers Interest Network (YIN) International Antitrust International M&A and Joint Ventures Tax, Estate, and Individuals International Trade Employment Law Privacy, E-Commerce, and Data Security Immigration and Naturalization International Tax Disputes International Arbitration Public International Law International Criminal Law Anti-Corruption International Family Law Anti-Money Laundering International Litigation International Art and Cultural Heritage Corporate International Environmental and Corporate Social Responsibility Resources Law International Commercial Transactions, International Human Rights Franchising and Distribution International Organizations: The Work of International Intellectual Property the UN 2015 International Procurement National Security Law Sexual Orientation and Gender Identity Finance International Financial Products and Legal Practice Services Transnational Legal Practice International Investment and Development Regional and Comparative Law International Secured Transactions and Africa Insolvency Asia-Pacific International Securities and Capital Canada Markets Europe India Industries Mexico Aerospace and Defense Industries International Energy and Natural Middle East Committee Resources Law Russia/Ukraine International Transportation Law
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PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
THE INTERNATIONAL LAWYER BOARD OF PROFESSIONAL EDITORS MARC I. STEINBERG Editor-in-Chief, SMU Dedman School of Law PATRICIA S. HEARD BEVERLY CARO DUREUS´ Co-Executive Editor Co-Executive Editor SMU Dedman School of Law SMU Dedman School of Law
EXTERNAL ADVISORY BOARD WERNER F. EBKE Chair, University of Heidelberg, Germany MADS ANDENAS ROGER S. CLARK ROBERT LUTZ Institute of Advanced Legal Studies Rutgers University, Camden Southwestern University
RICHARD M. BUXBAUM DON S. DEAMICIS JOHN F. MURPHY University of California National Law Center for Inter-American Villanova University at Berkeley Free Trade
ALBERT CHEN HILARY K. JOSEPHS JOHN E. NOYES Hong Kong University Syracuse University California Western ROBERT RENDELL MARILYN J. KAMAN PATRICK DEL DUCA Squire Patton Boggs Senior Judge, Minnesota Zuber Lawler & Del Duca
SMU FACULTY ADVISORY BOARD Co-Chair Co-Chair Co-Chair CHRISTOPHER H. HANNA NDIVA KOFELE-KALE JOSEPH J. NORTON ANTHONY COLANGELO JOHN LOWE W. KEITH ROBINSON JEFFREY GABA GEORGE MARTINEZ DAVID TAYLOR CHRISTOPHER JENKS DANA NAHLEN* JENIA IONTCHEVA TURNER JEFF KAHN PETER WINSHIP *ADJUNCT FACULTY
CO-GENERAL EDITORS BROOKE J. BOWMAN JASON SCOTT PALMER Stetson University College of Law Stetson University College of Law
THE YEAR IN REVIEW IS EDITED BY THE EDITORIAL BOARD OF THE INTERNATIONAL LAWYER
THE INTERNATIONAL LAW REVIEW ASSOCIATION An Association of The International Lawyer, The Year in Review, and Law and Business Review of the Americas SOUTHERN METHODIST UNIVERSITY DEDMAN SCHOOL OF LAW 2015-2016 STUDENT EDITORIAL BOARD
CORTLAND HOGE President THE INTERNATIONAL LAWYER LAW AND BUSINESS REVIEW OF THE AMERICAS JUSTIN HANNA BRANDT ROESSLER ALYSSA ORTIZ JAMISON JOINER Editor-in-Chief Managing Editor Editor-in-Chief Managing Editor Associate Managing Editors ALYSON ALFORD-GARCIA ZAINAB KHAN MATT STRINGER JULIA DANESHFAR JENNIFER MCCOY CAMILLE WALKER ABBY MUSSER Senior Note & Comment Case Note & Comment Editor Editors Canada Reporter NAFTA Reporter MICHAEL ROUSSEAU BRITTNEY HERSON CLIFTON BEECH ELISE LEGROS WILLIAM DERRICK KYLE KATHERINE MITCHELL CHARLES NORTH BEN SCHWARTZ SYDNIE SHIMKUS WALKER YOUNG
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Latin America Reporter Citations Editors Administrative Managing Editor VIENNA FLORES CORY EDEN ADAM BELL TAYLOR WILLIS Articles Editors WILL ALDRETE MARIO A. LAMAR CHRIS VALENTINE WALTER CARDWELL IV AMY MAHER KAMRAN VORA KATHERINE DEVLIN DIANA MINEVSKI PHILIPS WORAM WILLIAM EILAND ABBY PARMELLY WARREN YOUNG NATALY ELBERG FORREST ROBERTS LIANG YUE KRIS KEARNEY RYAN SEAY LEPING ZHANG NADIA KHALID MICHAEL STEVE MEI ZHANG Staff Editors
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TALIBRA FERGUSON Administrative Assistant
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THE YEAR IN REVIEW THE YEAR IN REVIEW (ISBN PRINT FORMAT: 978-1-62722-827-5 AND ISBN EBOOK FORMAT: 978-1-62722-828-2) is an annual publication of the American Bar Association’s Section of International Law (ABA/SIL) in cooperation with SMU Dedman School of Law. It has a worldwide circulation. It was formerly contained in THE INTERNATIONAL LAWYER (ISSN 0020-7810), a quarterly publication of ABA/SIL which has been published since 1966, and is now published trianually. Preferred Citation: Vol. No. ABA/SIL YIR (n.s.) page no. (year). Publication policy: The objective of THE YEAR IN REVIEW is to publish high quality articles on international subjects that are relevant to each Committee of the ABA/SIL, that inform its readers of significant legal developments that happened during the previous calendar year. Article Submissions: Articles are submitted by the ABA/SIL Committees, and should not exceed 7,000 words (including footnotes). Text and footnotes should be double-spaced. Internal citations and footnotes must conform to the most recent edition of The Bluebook: A Uniform System of Citation (Harvard Law Review Association). The Journal does not accept unsolicited submissions nor does it consider articles that have been or are to be published elsewhere. All articles must be in an electronic Word format, and may only be submitted by ABA/ SIL Committee Editors. They should be forwarded to the ABA/SIL YIR editor for that publication year, as designated on the ABA/SIL website, with a cc to [email protected]. edu, on or before December 1st. Manuscripts undergo peer review, source verification, editing, and citation checks. The editors of THE YEAR IN REVIEW reserve the right to move an accepted manuscript from the committed issue to another publication of the ABA/SIL. Committee Editors and authors must also comply with additional requirements as posted on the ABA/SIL website. Manuscripts are submitted at the sender’s risk. The editors do not return unsolicited material. Material accepted for publication becomes the property of the ABA/SIL, which pays no fee for any manuscript. Subscription Price: Section annual membership dues $ 55.00 (free for law students) include electronic access to THE YEAR IN REVIEW through the ABA/SIL website. Reprint Permissions: Requests to reproduce any portion of this issue should be addressed to Manager, Copyrights and Licensing, American Bar Association, 321 N. Clark Street, Chicago, IL 60610 [phone: 312-988-6102; fax: 312-988-6030; e-mail: [email protected]]. Order Information: THE YEAR IN REVIEW is available in print for section members and nonmembers for $50.00 per copy (plus shipping and handling) from the American Bar Association, ABA Service Center, 321 N. Clark Street, Chicago, IL 60610 [phone: 800-285- 2221; fax: 312-988-5568; e-mail: [email protected]]. Back issues, once available, may be purchased from William S. Hein & Co. Inc., 1285 Main Street, Buffalo, NY 14209-1987 [phone: 800-828-7571; fax: 716-883-8100; e-mail: [email protected]]. Back issues, once available, can be found in electronic format for all your research needs on HeinOnline [http:// heinonline.org/]. For offprints contact [email protected]. Address Changes: Send all address changes to THE YEAR IN REVIEW, American Bar Association, ABA Service Center, 321 N. Clark Street, Chicago, IL 60610. Advertising: Address all advertising orders, contracts and materials to: Manager, ABA Publishing Advertising, 321 N. Clark Street, Chicago, IL 60610 [phone: 312-988-6051; fax: 312-988-6030]. Postal Information: Postage paid at Chicago, Illinois, and additional mailing offices. POSTMASTER: Send all address changes to THE YEAR IN REVIEW, American Bar Association, ABA Service Center, 321 N. Clark Street, Chicago, IL 60610 [phone: 312-988- 5522; fax: 312-988-5568; e-mail: [email protected]]. Copyright 2016 American Bar Association. All rights reserved. Printed in the United States of America. Produced by Joe Christensen, Inc. *Disclaimer: Nothing appearing in this journal necessarily represents the opinions, views or actions of the American Bar Association unless the House of Delegates or the Board of Governors has first approved it. Nothing appearing in this journal necessarily represents the opinion, views, or actions of the Section or its Council unless the Section or its Council has approved it. Visit the ABA Website at www.american.org and the Section of International Law homepage at www.americanbar.org/intlaw.
PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
SECTION OF INTERNATIONAL LAW 2015-2016
Officers: Chair, Lisa J. Savitt Chair-Elect, Sara P. Sandford Vice Chair, Steven M. Richman Revenue Officer, Adam Benjamin Farlow Budget Officer, William B.T. Mock, Jr. Liaison Officer, Dixon F. Miller Membership Officer, Marcos Rios Secretary/Operations Officer, Lelia Mooney Programs Officer, Robert L. Brown Rule of Law Officer, Nancy Stafford Policy Officer, David Schwartz Publications Officer, Patrick Del Duca Diversity Officer, Lisa Ryan Technology Officer, Marcela (Marcy) Stras Communications Officer, Ingrid Busson-Hall Immediate Past Chair, Marcelo E. Bombau Delegate/Member-At-Large, Glenn P. Hendrix Delegate/Member-At-Large, Jeffrey B. Golden Senior Advisor, Michael H. Byowitz ABA Board of Governors Liaison, Herbert B. Dixon, Jr.
Members of the Council: Section Delegate, Glenn P. Hendrix Section Delegate, Jeffrey B. Golden Editor-in-Chief of The International Lawyer, Marc I. Steinberg Editor-in-Chief of the International Law News, Richard L. Field Former Section Chair, Gabrielle M. Buckley Former Section Chair, Barton Legum Former Section Chair, Michael E. Burke Young Lawyer Division Representative, Karthik Nagarajan Law Student Division Representative, Maritza J. Adonis Congressional Liaison, Maximilian Trujillo Non-Governmental Organization Liaison, Renee Dopplick Public International Law Liaison, Jeffrey D. Kovar Private International Law Liaison, Harold S. Burman Alt. Private International Law Liaison, Michael S. Coffee International Trade Law Liaison, John T. Masterson, Jr. Non-U.S. Lawyer Representative, Young-Ik Choi
Council Members-At-Large: Term Expires: Lorraine C. Arkfeld 2016 Hilarie Bass 2016 Deborah Enix-Ross 2016 Peter W. Galbraith 2016 Delissa A. Ridgway 2016 David Scheffer 2016
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Robert A. Stein 2016 Louise Ellen Teitz 2016 Mark Agrast 2017 Ronald J. Bettauer 2017 Robert Carlson 2017 Ronald A. Cass 2017 Sandra McCandless 2017 Ved Nanda 2017 Isabella Bunn 2018 Yee Wah Chin 2018 Eli Whitney Debevoise 2018 Joshua Markus 2018 Cara Lee Neville 2018 Bruce Rashkow 2018
Division Chairs: Africa/Eurasia Division, William P. Johnson Americas/Middle East Division, Susan Brushaber Business Law Division I, Caryl Ben Basat Business Law Division II, Florian Jorg Business Regulation Division, M. Catherine Vernon Constituent Division, Adejok´e Babington-Ashaye Disputes Division, Kenneth Rashbaum Finance Division, Kevin Paul Ray Legal Practice Division, Mattia de Gasparis Collonelli Public International Law Division I, Mikhail Reider-Gordon Public International Law Division II, Melissa Kucinski Tax, Estate & Individuals Division, Joseph Raia
The Year in Review Co-General Editors: Brooke J. Bowman and Jason Scott Palmer
PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW THE YEAR IN REVIEW 2016 • Volume 50
CONTENTS
International Legal Developments Year in Review: 2015 Introduction...... Brooke J. Bowman 1 and Jason Scott Palmer Business Regulation Customs Law ...... Luis Arandia 5 Shane Devins Vince Draa Geoffrey Goodale Patricio La Porta Keith P. Larsen Greg Kanargelidis Daniel L. Kiselbach Matt Nakachi Ruta Riley Marcos Rios Rebecca Rodriquez Neo T. Tran George R. Tuttle, III Mat´ıas Vergara
Export Controls and Economic Sanctions ...... John Boscariol 27 J. Patrick Briscoe Geoffrey Goodale Jahna Hartwig Johnathan Meyer Christopher Stagg Lawrence Ward
International Antitrust ...... Nikiforos Iatrou and 45 Bronwyn Roe, Eds. Paul Schoff Katrina Groshinski Maria Cec´ılia Andrade Rafaela P. de C´alcena Eric White Adam S. Goodman Peter Wang Yizhe Zhang Laurie-Anne Grelier Peter Camesasca Aur´elien Condomines Susanne Zuehlke Vinod Dhall Sonam Mathur
PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
Tal Eyal-Boger Ziv Schwartz Gerardo Calderon-Villegas Vassily Rudomino Ksenia Tarkhova Roman Vedernikov Alla Azmukhanova Heather Irvine Lara Granville Jonathan Tickner Jasvinder Nakhwal William F. Cavanaugh, Jr. Robert P. LoBue Deirdre A. McEvoy Daniel A. Friedman Jake Walter-Warner
International M&A and Joint Ventures ...... Vanesa Balda 69 Marilen Figueroa Jo˜ao Ot´avio Pinheiro Oliv´erio Gordon N. Cameron Laura Fraser Francisco Ugarte Lucille Barale H. Jayesh Aditi Bagri Aaheree Mukherjee Nicolas van Heule Eva Das Frederik de Hosson Elena Cuatrecasas Isabel Gandoy Timur Bondaryev Alex L. Khalarian Joseph J. Basile
International Trade ...... Stephanie Bell 85 Johny Chaklader Sylvia Chen Shane Devins Laura El-Sabaawi Jeffrey Frank Cynthia Galvez Geoffrey Goodale Derick Holt Bernd Janzen Ron Kendler Ying Lin Diane MacDonald Cortney O’Toole Morgan David Sella-Villa Valerie Sorenson Sarah Sprinkle Adam Teslik
PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
Privacy, E-Commerce and Data Security ...... Marco R. Provvidera 103 Volha Samasiuk Richard Peltz-Steele Mayra Cavazos Calvillo Adrian Lucio Furman Renato Opice Blum Matthew Murphy Kyoung Yeon Kim Disputes International Arbitration ...... Manuel Liatowitsch 119 Jeffrey Rosenthal Christopher P. DeNicola Elizabeth M. Hanly Mauricio Becerra de la Roca Donoso Diepiriye Anga James Menz Guido Carducci Medhavi Singh Hanns-Christian Salger Luping Zhang Adam Al-Sarraf Bruno Guandalini Clifford J. Hendel Tamari J. Lagvilava
International Criminal Law ...... Linda Strite Murnane 135
International Family Law ...... Robert G. Spector 141 Melissa A. Kucinski
International Litigation ...... Aaron Marr Page 153 Jonathan I. Blackman Carmine D. Boccuzzi Erin Lawrence Phillip B. Dye, Jr. Matthew D. Slater Howard S. Zelbo Charles A. Patrizia Joseph R. Profaizer Igor V. Timofeyev
Corporate Corporate Social Responsibility ...... Uche Ewelukwa Ofodile 171 Chisara Ezie Nigel Roberts Dr. Corinne Lewis Constance Wagner Claudia Feldkamp Michael Judin
International Commercial Transactions, Franchising & Distribution ...... Sun Chang 187
PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
Hernan Verly
International Intellectual Property Law ...... Caroline Berube 193 Susan Brushaber Amanda Covington Manish Dhingra Robin S. Fahlberg Carolina Keller Jupitz Jennifer Kwon Mrityunjay Kumar Daniel Marugg Bruce A. McDonald David Taylor Sameep Vijayvergiya Uche Ewelukwa Ofodile Ralph Cathcart Michelle Wynne
International Procurement ...... Martin G. Masse 211 Erin Brown Steven D. Tibbets Helene Gogadze Samuel W. Jack
Finance International Financial Products and Services ...... Cillian Bredin 225 Hernan Camarero Alan B. Rabkin Lorcan Tienan Walter Stuber
International Investment and Development ...... Uche Ewelukwa Ofodile 243 Mauricio Becerra de la Roca Qingqing Miao Irina Feofanova Dr. Aboubacara Fall
International Secured Transactions and Insolvency .... Arnold S. Rosenberg 259 Judith Elkin Dr. Gordon Geiser Christian Kohler-Ma ¨
International Securities and Capital Markets ...... Jennifer Y. Poon 273 Dr. Manfred Ketzer Walter Stuber Robert Lando Audrey Kravets Sandeep Parekh Perry Wildes Ayelet Krispin Piyasena Perera Mario Piana Jos´e Carrillo
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Daniel Winterfeldt Trish O’Donnell Jennifer Pence Industries Aerospace and Defense Industries ...... R. Locke Bell 289 Johny Chaklader Donna A. Dulo Priya Iyengar Kevin J. Lombardo Jason M. Silverman
International Energy and Natural Resources Law .... Kristin Drecktrah Paz 307 Mariana Ardizzone Ricardo A. Silva Sara Fraz˜ao Mauricio Becerra de la Roca Donoso Jo˜ao Ot´avio Pinheiro Oliv´erio Jehmal T. Hudson Leonardo Sempertegui Ariel Cohen
International Transportation Law ...... Andrew M. Danas 325 Philip Peng Constituent Division Women’s Interest Network ...... Rong Kohtz 339 Jami Mills Vibbert Sharon M. James
Young Lawyers Interest Network (YIN) ...... Sara Blackwell, Ed. 351 Siena Caruso Jos´e Francisco Mafla Manoj Kumar
Tax, Estate and Individuals Employment Law ...... Theodore Goloff 359
Immigration and Naturalization ...... Kevin J. Fandl, Ed. 373 Melanie Glover Sabrina Damast Alexandria Sodini
International Tax ...... Margriet Lukkien 385 Christie Galinski David Dingfa Liu Aseem Chawla Eugenio Romita Guillermo Villsenor ˜ Jorge Lopez Star Q. Lopez Public International Law Anti-Corruption ...... Leslie A. Benton 403
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Stuart H. Deming Mikhail Reider-Gordon Frank A. Fariello Christina M. Mitropoulos
Anti-Money Laundering ...... Nicole S. Healy 423 Emily N. Christiansen
International Art and Cultural Heritage ...... Patty Gerstenblith 439 Jacqueline Farinella David Bright Kevin Ray
International Environmental and Resources Law ...... Kristen Hite 453 Lynn A. Long Stephanie Altman Derek Campbell David Gravallese Richard A. Horsch David Hunter Erika Lennon Thomas Parker Redick Matt Oakes Erica Lyman Andrew Schatz Baskut Tuncak Giulia Carlini
International Human Rights ...... Noor Ahmad 471 Hon. Del Atwood Jeffrey L. Bleich Prof. Cindy Galway Buys Nicholas J. Leddy
International Organizations: The Work of the UN in 2015 ...... Javier Etcheverry Boneo 487 Elizabeth A. Turchi Renee Dopplick Jehmal Hudson Gabrielle Culmer Poopak Taati
National Security Law ...... James D. Carlson 499 Geoffrey M. Goodale Guy C. Quinlan Sergio L. Suarez
Sexual Orientation and Gender Identity ...... Mark E. Wojcik 517 Legal Practice Transnational Legal Practice ...... Laurel Terry 531
Regional and Comparative Law Africa ...... Diepiriye Anga 545
PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
Lawrence Fubara Anga Rosanna Barsati Elisha Bhugwandeen Susan Bishai Anne Bodley Ineke Brink LaDawn Burnett Kirsty Dean-Mhlongo Michela Cocchi Tamara Dini Adam Dubin D. Porpoise Evans Rudolf Ezeani Peter Finan Elizabeth Fitzgerald Katherine Flannery Sara Fraz˜ao Ganiyou Gassikia Felicia Gordon Jehmal Hudson Joyce Karanja-Ng’ang’a Sarika Karia Ryan P. Kelley James Lord Lumela Lumela Anis Mahfoud Xolani Nyali Nkatha Obungu Nelson Ogbuanya Steve Onwuasoanya Ricardo Silva
Asia Pacific ...... Justin G. Persaud 571 Zack Spencer Genan Zilkha
Canada ...... Angela E. Weaver 577 Erin Brown Melissa N. Burkett Sunita D. Doobay Theodore Goloff George Karayannides Ken MacDonald Martin G. Masse Terri-Lee Oleniuk Taylor Schappert Ellen Snow Clifford Sosnow
Europe ...... Thomas Stanton 595 Laurent De Muyter Angelique Devaux Audrey Kavets Valeria Miller
PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
J¨org Rehder John Richards Andreas Ripken Roselyn Sands
India ...... Aseem Chawla 613 Kavita Mohan Poorvi Chothani Gagan Kumar Amit Kaushik Namrata Patodia Rastogi Sharanya G. Ranga Riya Dutta
Mexico ...... Gil Anav 625 Francisco Garcia Bedoy Uribe Susan Burns Sergio Bustamante Yurixhi Gallardo Martinez Jorge Garcia Peralta Karla Gudino ˜ Y´a˜nezYves Matthew Hansen Yves Hayaux Du Tilly L. Marco Antonio Pe ˜na Barba Juan Pablo Sainz
Middle East Committee ...... Hdeel Abdelhady 639 Sarah A. Oliai Ibrahim Sattout Dania Dib Emma Higham Yasser Shabbir Abdulaziz M. Al Hussan Amgad T. Husein Mahmoud Abdel-Baky Jonathan G. Burns Zachary J. Walker Christian Murad S. Elisa Kim
Russia/Eurasia ...... Maria Grechishkina 655 Natalia Lantonio Timur Bondaryev
PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
International Legal Developments Year in Review: 2015
BROOKE J. BOWMAN AND JASON S. PALMER
This publication, International Legal Developments—Year in Review: 2015, presents a survey of important political and legal developments in international law that occurred during 2015. The volume consists of articles from the various committees of the American Bar Association Section of International Law, whose members live around the world and whose committees monitor and report on a complete range of topics that have arisen in international law over the past year. While not every development in international law may be included in this volume, the omission of any particular development should not be construed as meaning that it was not significant. The Section of International Law committees produce their articles under extremely strict guidelines that limit the number of words that each committee has to roughly 7,000 words, including footnotes. Within these guidelines, committee members contribute portions of articles that describe the most significant developments in their substantive practice area or geographic region. In some cases, non-section members who have particular knowledge or expertise in an area may also be contributing authors. Committee chairs and committee editors solicited the contributing authors for each committee article. The committee editors then had the daunting task of keeping their authors’ collective contributions within our tightly controlled word limits. They made difficult decisions on what to include, what to cut, and what to hope some other committee included. Committee editors are identified in each article. After the committee editors did their work, the Co-General Editors transmitted the articles to an amazing team of Deputy Editors who performed substantive and technical reviews on the articles. Then we, as overall Co-General Editors for this volume, reviewed the articles again before sending them to the diligent student editors at the Dedman School of Law at Southern Methodist University in Dallas, Texas. Both Justin Hanna, the Editor in Chief of The International Lawyer this year, and Brandt Thomas Roessler, the Managing Editor, performed superlatively in their respective roles. They supervised an outstanding editorial team whose individual names you can read in the masthead for this volume. These
* Professor Brooke J. Bowman and Professor Jason S. Palmer teach at Stetson University College of Law in St. Petersburg, Florida. Professor Bowman is Associate Director of the Center for Excellence in Advocacy, and Moot Court Advisor. Professor Palmer is the Coordinator, First Year Research and Writing.
1
PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
2 THE YEAR IN REVIEW
intrepid students checked the sources cited and reviewed each article line-by-line and word-by-word, leaving no portion of the Bluebook unconquered. Professor Beverly Caro Dur´eus, who was invaluable to the publication of this volume, served again this year as the Faculty Executive Editor, and worked closely with the co- General Editors and with the student editors. We also appreciate all of the support received from Patrick Del Duca, the Publications Officer for the ABA Section of International Law, all of the Division Chairs, and the other leaders of the ABA Section of International Law. Because of all the work that goes into producing the Year In Review, the final product that you hold in your hands (or that you are viewing electronically) is a useful and reliable overview of international law events during the year 2015. Readers interested in a particular substantive or geographic area should read not only this year’s summary, but also those from earlier years. We work with an incredibly dedicated team of volunteer Deputy Editors from around the world. The Deputy Editors include a great many law professors who specialize in legal writing, international law, and topics related to foreign and international law. The ABA Section of International Law is extremely fortunate to have such a skilled, dedicated, and generous team of Deputy Editors, many of whom have now served for several years. Here is the list of the Deputy Editors who worked on articles this year, with apologies to anyone omitted from the list. Together with the lists from previous years, we believe that we have the strongest editorial team of any journal in the world. We thank all of our committee editors named in the individual articles and our deputy editors named here for the generous contributions of their time and talent.
Jessica Birt (Charleston Law School, adjunct) Charles Calleros (Sandra Day O’Connor College of Law Arizona State University) Maureen Collins (The John Marshall Law School—Chicago) Sha-Shana Crichton (Howard University School of Law) Melody Daily (University of Missouri School of Law) Steven Feller (San Francisco Law School) J. Scott Garrison (Oakland University) Gabrielle Goodwin (Indiana University Maurer School of Law) Kimberly Holst (Sandra Day O’Connor College of Law Arizona State University) Rosa Kim (Suffolk University Law School) Diane Kraft (University of Kentucky College of Law) Katrina Lee (Michael E. Moritz College of Law, The Ohio State University) Katherine Lopez (University of Toronto Faculty of Law) Hether Macfarlane (University of the Pacific McGeorge School of Law) Sammy Mansour (Michigan State University College of Law) Debby McGregor (IU Robert H. McKinney School of Law) Nancy Millar (Phoenix, Arizona) Mary-Beth Moylan (University of the Pacific McGeorge School of Law) Erin Okuno (Stetson University College of Law) Sandy Patrick (Lewis & Clark Law School) Joi Pearson (Salt Lake City, Utah) Cassandra Roberts (Elon University School of Law) Renee Schimkat (University of Miami School of Law)
VOL. 50
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INTERNATIONAL LEGAL DEVELOPMENTS YEAR IN REVIEW: 2015 3
Karen Shaw (Loyola University Chicago School of Law) Cynthia Stroud (Florida Coastal School of Law) John Thornton (Northwestern Pritzker University School of Law) Mandana Vidwan (Charlotte School of Law) Susan Wawrose (University of Dayton School of Law) Ursula Weigold (University of Wisconsin Law School) Melissa Woods (Charlotte School of Law)
On behalf of the readers and researchers who will use this volume in future years, we thank the hundreds of authors, committee editors, deputy editors, and law student editors whose collective efforts produced this volume and whose work over the years have created a reliable and useful record of international law developments. It has been an honor for both of us to work with you. The Co-General Editors would also like to acknowledge the amazing work of our previous Co-General Editors and take this opportunity to recognize and publicly thank them—Professor Mark Wojcik (who was the Editor or Co-Editor of the Year in Review for seven years!), Professor Kim Chanbonpin, and Professor Cindy Buys.
SPRING 2016
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PUBLISHED IN COOPERATION WITH SMU DEDMAN SCHOOL OF LAW THE YEAR IN REVIEW AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
Customs Law
LUIS ARANDIA, SHANE DEVINS, VINCE DRAA, GEOFFREY GOODALE, PATRICIO LA PORTA, KEITH P. LARSEN, GREG KANARGELIDIS, DANIEL KISELBACH, MATT NAKACHI, RUTA RILEY, MARCOS RIOS, REBECCA RODRIGUEZ, NEO T. TRAN, GEORGE R. TUTTLE, III, AND MATIAS´ VERGARA*
I. Introduction This article summarizes important developments in 2015 in customs law, including U.S. judicial decisions, trade, legislative, administrative, and executive developments, as well as Canadian, Chilean, and European legal developments.1
II. U.S. Judicial Nominations and Appointments and Review of Customs- Related Determinations2
A. CHANGES, NOMINATIONS, AND APPOINTMENTS
Judge Restani assumed senior status in 2015 at the U.S. Court of International Trade (CIT).3 President Obama nominated Elizabeth J. Drake (currently a partner in the law firm of Stewart and Stewart), Jennifer Choe Groves (currently Chief Executive Officer of Titanium Law Group LLC and Choe Groves Consulting LLC), Justice Gary Stephen Katzmann (currently serving as an Associate Justice on the Massachusetts Appeals Court),4 and renominated Jeanne E. Davidson (currently at the Department of Justice Civil Division as Director of the Offices of Foreign Litigation and the International Legal
* The committee editors of this year in review article were Vincent Draa, Esq., Vice President and General Counsel for Grainger International and Rebecca A. Rodriguez, Esq., Associate Attorney for GrayRobinson, P.A. in Miami, Florida. Section editors and contributors are identified in each section. 1. For developments during 2014, see Jennifer Diaz et al., Customs Law, 49 ABA/SILYIR 5 (2015). 2. Section editor: George R. Tuttle, III, Esq. Section Authors: George R. Tuttle, III, Esq.; Luis Arandia, Esq.; Shane Devins, Esq. 3. History of the Federal Judiciary, Biographical Dictionary of Federal Judges: Restani, Jane A., FEDERAL JUDICIAL CENTER, http://www.fjc.gov/servlet/nGetInfo?jid=3213&cid=999&ctype=na&instate=na (last visited Mar. 31, 2016). 4. President Obama Nominates Three to Serve on the United States Court of International Trade, THE WHITE HOUSE (July 30, 2015), https://www.whitehouse.gov/the-press-office/2015/07/30/president-obama- nominates-three-serve-united-states-court-international.
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Assistance and the International Trade Field Office in the Commercial Litigation Branch) to serve on the court.5 President Obama also appointed Kara Farnandez Stoll to the Court of Appeals for the Federal Circuit6 to fill the court’s only vacancy and, she is the court’s twelfth active circuit judge.7
B. U.S. COURT OF APPEALS CASES
1. GRK Canada v. United States8 The Court of Appeals for the Federal Circuit (CAFC) denied a petition for rehearing en banc by GRK Canada regarding the CAFC’s majority opinion in GRK Canada v. United States,9 which reversed the CIT’s ruling on the proper tariff classification of wood screws. In the CAFC panel decision, the Court held that use of subject articles may, under certain circumstances, be considered when the tariff classification is an eo nomine provision.10 Circuit Judge Wallach and Reyna strongly dissented from the Court’s refusal to reconsider the case en banc. In the dissent, Judge Wallach wrote that the CAFC panel decision “undermines our case law requiring a distinction between use and eo nomine provisions without articulating whether an exception applies in this case, or whether the subheadings at issue should be properly reclassified as use provisions at the beginning of the analysis. Because the majority opinion upends a once-clear analytical framework and will breed confusion in future cases, the concerns raised are “of exceptional importance” and “en banc consideration is necessary to secure or maintain uniformity of the court’s decisions.”11
2. Belimo Automation AG v. United States12 The CAFC affirmed a decision by the CIT regarding the classification of certain imported devices consisting of an electric motor, gears, and two printed circuit boards, which are principally used in heating, ventilating, and air conditioning (“HVAC”) systems within buildings as “electric motors” under subheading 8501.10.40, Harmonized Tariff Schedule of the United States (“HTSUS”).13 Belimo argued that the subject imports should have been classified as “automatic regulating and controlling instruments and apparatus; parts and accessories thereof” under HTSUS 9032.89.60.14 The CAFC said
5. Presidential Nominations Sent to the Senate, THE WHITE HOUSE (Jan. 7, 2015), https:// www.whitehouse.gov/the-press-office/2015/01/07/presidential-nominations-sent-senate. 6. History of the Federal Judiciary, Biographical Dictionary of Federal Judges: Stoll, Kara Farnandez, FEDERAL JUDICIAL CENTER, http://www.fjc.gov/servlet/nGetInfo?jid=3592&cid=999&ctype=na&instate=na (last visited Mar. 31, 2016). 7. U.S. Circuit Judge Kara F. Stoll Joins the U.S. Court of Appeals for the Federal Circuit, U.S. CT. OF APPEALS FOR THE FED. CIRCUIT, http://www.cafc.uscourts.gov/announcements/us-circuit-judge-kara-f- stoll-joins-us-court-appeals-federal-circuit (last visited Mar. 31, 2016). 8. GRK Canada, Ltd. v. United States, 773 F.3d 1282 (Fed. Cir. 2014). 9. GRK Canada, Ltd. v. United States, 761 F.3d 1354 (Fed. Cir. 2014). 10. Id. at 1359. 11. GRK Canada, Ltd., 773 F.3d, at 1289. 12. Belimo Automation AG v. United States, 774 F.3d 1362 (Fed. Cir. 2014). 13. Id. 14. Id. at 1363.
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that the devices are similar to a traditional actuator but represent an improvement in that they incorporate a programmed Application Specific Integrated Circuit (“ASIC”). The ASIC’s purpose is to continuously and independently monitor the damper blade’s position and maintain it at the correct angle without any input from the central controller. The CIT found that the actuators could not be classified under HTSUS 9032 because they do not automatically measure the actual value of the temperature or any variable of air, as required by HTSUS Chapter 90, Note 7(a). The CAFC concluded that Belimo’s actuators are only designed to monitor motor behavior and not the actual value of a factor of liquids or gases, as required in the note and thus could not be classified under HTSUS Heading 9032. The CAFC found that the classification of Belimo’s products as motors under Heading 8501.10.40 was proper because the ASIC’s functions are complementary to the principal function of an electric motor, and all relate to improving the precision and reliability of the motor’s operation.15
3. Hartford Fire Insurance Co. v. United States16
The CAFC affirmed a decision by the CIT to dismiss a surety’s claim that it had the right to avoid its obligations under bonds it posted on behalf of a company that imported freshwater crawfish tailmeat from China. Hartford acted as surety for eight single-entry bonds that covered the estimated antidumping duties on entries of freshwater crawfish tailmeat from Chinese producer Hubei Qianjiang Houhu Frozen (“Hubei”). After Hubei’s new shipper review was rescinded, Customs liquidated the Hubei Entries at the 223.01% country-wide rate in effect pursuant to the final results of the relevant administrative review of the Order.17 Following the importer’s failure to pay the duties owed after liquidation, Customs demanded payment from Hartford. Hartford did not satisfy the demand and instead filed a complaint at the CIT on February 7, 2007, seeking to void its obligations under the bonds securing the Hubei Entries. Hartford alleged the bonds were voidable because Customs had been investigating Sunline for possible import law violations during the period in which the bonds were secured and the Hubei entries filed, and Customs failed to inform Hartford of the investigation.18 Hartford alleged that Customs, as obligee on the bonds, abused its discretion by either failing to require a cash deposit in lieu of a bond for the Hubei Entries or by failing to reject the entries altogether. The CIT dismissed the case for failure to state a claim for which relief can be granted. In affirming the CIT decision, the CAFC said that Hartford failed to plead facts suggesting that the Customs’ investigation had any impact on the importer’s default or increased the risk of default in any fashion. As the CIT noted, Customs acted “in full compliance with the governing statutes and regulations when it accepted the bonds.”19
15. Id. at 1366. 16. Hartford Fire Ins. Co. v. United States, 772 F.3d 1281 (Fed. Cir. 2014). 17. Id. at 1282. 18. Id. 19. Id. at 1289.
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4. Best Key Textiles v. United States20
The CAFC vacated and remanded a decision of the U.S. Court of International Trade.21 Best Key is a maker, but not importer, of metalized polyester yarns. Best Key sought a ruling from Customs on the tariff classification of metalized yarn. Customs classified the yarn under HTSUS 5605.00.90, which has a rate of duty of 13.2% ad valorem.22 Best Key requested a second ruling from Customs on the tariff classification of a pullover garment (“Johnny Collar”) made of Best Key’s metalized yarn. Best Key argued for a tariff provision of a men’s shirt of other textile materials with a duty rate of 5.6% ad valorem, as opposed to men’s shirts made of polyester, which carries a duty rate of 32% ad valorem.23 Customs classified the Johnny Collar as a pullover of man-made non- metalized fibers under HTSUS 6110.30.3053. Best Key requested that Customs reconsider the Johnny Collar ruling. In response, Customs reviewed and revoked both the yarn ruling and Johnny Collar ruling. Customs reclassified Best Key’s yarn under HTSUS 5402.47.90 with a duty rate of 8% ad valorem.24 The Johnny Collar classification remained the same. Best Key challenged the yarn ruling revocation but not the revocation of Johnny Collar ruling before the CIT. Initially, the CIT dismissed the action because Best Key had not established jurisdiction. On rehearing, the CIT reversed its jurisdictional holding and concluded that it had jurisdiction under 28 U.S.C. § 1581(i)(4) which is the residual jurisdiction section’s “administration and enforcement” provision. On the merits, the CIT denied Best Key’s Motion for Judgment on the Agency Record, thereby sustaining the revocation. Best Key appealed. The CAFC ruled that the CIT erred in reversing itself and “presuming” jurisdiction under § 1581(i)(4). The Government argued that another jurisdictional avenue exists under § 1581(a) for those injured by the Revocation, thereby rendering jurisdiction under the residual provision inappropriate. Best Key, in response, said § 1581(a) is neither available nor adequate because it does not import the yarn. Best Key argued that the remedy it seeks is a reversal of the Revocation of the Yarn Ruling, even though this would result in a higher duty rate on Best Key’s yarn, because the Revocation “caused Best Key’s customers to cancel orders en masse.” The CAFC agreed with the Government’s argument that the proper “avenue of approach” to redress Best Key’s harm is a challenge under § 1581(a). That is, any producer who imports items made from Best Key’s yarn and believes the merchandise should be subject to a lower duty rate should protest the classification and challenge any denial of its protest before the CIT.
C. U.S. COURT OF INTERNATIONAL TRADE CASES The United States Court of International Trade (CIT) has exclusive jurisdiction over any civil action commenced pursuant to 28 U.S.C. § 1581 and 28 U.S.C. § 1582.25 In the
20. Best Key Textiles Co., Ltd. v. United States, 777 F.3d 1356 (Fed. Cir. 2015). 21. Best Key Textiles Co. Ltd. v. United States, 2014 WL 705286 (Ct. Int’l Trade Feb. 25, 2014). 22. Hartford Fire Ins. Co., 772 F.3d at 1358. 23. Id. 24. Best Key Textiles Co., Ltd., 777 F.3d at 1359. 25. Any civil action which arises out of an import transaction and which is commenced by the United States: (1) to recover a civil penalty under section 592, 593A, 641(b)(6), 641(d)(2)(A), 704(i)(2), or 734(i)(2) of
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context of customs litigation, the two subparagraphs of § 1581 most frequently invoked by litigants are subparagraphs (a)26 and (i).27
D. TARIFF CLASSIFICATION
1. Am. Fiber & Finishing, Inc. v. United States28
In this action, American Fiber & Finishing, Inc. (“AFF”) challenged the denial of its protests made pursuant to 19 U.S.C. § 1514, pertaining to a change in classification of imported cotton gauze fabric from duty free to 10.2%. The question before the court was whether a Notice of Action informing AFF of the change could constitute an “interpretive ruling or decision” within the meaning of 19 U.S.C. § 1625(c), requiring CBP to publish notice and comment before implementing the change in classification. The court ultimately concluded that AFF had not offered sufficient evidence to establish that the notice of action was the result of considered deliberation and effectively revoked a treatment, thus constituting an interpretive ruling or decision. Because the court concluded that genuine issues of material fact remained, the cross motions for summary judgment were denied.
2. Composite Tech Intl. v. United States29
The court rejected a protest challenge by Composite concerning the tariff classification of its imported plywood by Customs. Customs classified the plywood under 4421.90.97, as “Other articles of wood: Other: Other: Other” (at 3.3%).30 Composite claimed the product was properly classified under 4412.99.51 “Plywood, veneered panels and similar laminated wood: Other: Other: With at least one outer ply of non-coniferous wood: Other: Other:” (duty free).31 Composite contended that the merchandise fit within the common meaning of “veneered panels” provided by lexicographical sources and supported by the Explanatory Notes. The court, however, disagreed because the panels involved in the imported products were in excess of 6 millimeters thick and therefore, were not “veneering sheets” as defined under HTSUS 4408. The court looked to this provision
the Tariff Act of 1930; (2) to recover upon a bond relating to the importation of merchandise required by the laws of the United States or by the Secretary of the Treasury; or (3) to recover customs duties. 28 U.S.C. § 1582 (2015). 26. 28 U.S.C 1581(a) provides that the “Court of International Trade shall have exclusive jurisdiction of any civil action commenced to contest the denial of a protest, in whole or in part, under section 515 of the Tariff Act of 1930.” 28 U.S.C. § 1581 (2015). 27. Section 1581(i), provides a broader and more general grant of jurisdiction, including actions arising from matters related to (1) revenue from imports or tonnage; (2) tariffs, duties, fees, or other taxes on the importation of merchandise for reasons other than the raising of revenue; (3) embargoes or other quantitative restrictions on the importation of merchandise for reasons other than the protection of the public health or safety; or (4) administration and enforcement with respect to the matters referred to in paragraphs (1)–(3) of this subsection and subsections (a)–(h) of this section. 28 U.S.C. § 1581 (2015). 28. Am. Fiber & Finishing, Inc. v. United States, 121 F. Supp.3d 1273, Slip Op. 2015-1117 (Ct. Int’l Trade Oct. 21, 2015). 29. Composite Tech. Int’l, Inc. v. United States, 106 F.Supp.3d 1337, Slip Op. 2015-115 (Ct. Int’l Trade Sept. 28, 2015) (appeal filed by Composite Tech. v. US, Fed. Cir., Nov. 25, 2015). 30. Id. at 1339. 31. Id.
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because 4412 did not define the term “thin” veneer. Thus, concluded the court, the only remaining heading under which the merchandise could be classified was “Other articles of wood,” as directed by Customs.
3. Digidesign Inc. v. United States32
Digidesign challenged the classification by CBP of factory consoles that work with computers to manipulate music in digital format on a host computer’s hard drive as: “electrical machines and apparatus, having individual functions, not specified or included elsewhere in this chapter; parts thereof: Other machines and apparatus: Other: Other: Other: Other” under 8543.89.96 (2.6%). Digidesign claimed that the consoles were properly classified as units of automatic data processing machines under Heading 8471 (duty free). No recording, editing or mixing occurs on the units themselves. In rejecting Digidesign’s claim, the court focused on the language of Chapter 84, Note 5(E), which requires machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine be classified in the heading appropriate to their respective functions or, failing that, in a residual heading. Applying Note 5(E), the court found that the consoles performed only non-data processing functions. Next, the court considered whether the consoles “work[ed] in conjunction with an automatic data processing machine.”33 Noting that the HTSUS does not specifically define the phrase “working in conjunction,” the court looked to dictionary definitions of the phrase, and found it to be “functioning or operating in a specified manner while joined together for a common purpose.”34 The court found the imported products worked in conjunction with an ADP machine (i.e., the host computer). From this the court determined that the consoles are precluded from classification under HTSUS Heading 8471 by operation of Chapter 84, Note 5(E). Further, because no specific heading governs the functions provided by the consoles, the court affirmed CBP’s classification under the residual heading 8543.
4. G.G. Marck & Assocs. v. United States35
The action concerned the tariff classification of cups and mugs that were imported together. Customs classified the mugs as “mugs and other steins” under 6912.00.44 (10%) and the cups as “Other” under 6912.00.48 (9.8%).36 G.G. Marck claimed the products were properly classified under 6912.00.39 as Tableware and kitchenware “Available in specified sets: In any pattern for which the aggregate value of the articles listed in additional U.S. note 6(b) of this chapter is over $38.”37 The issue, noted the court was whether the cups and mugs were “[a]vailable in specified sets” as defined by Chapter Note 6(a) and “in the same pattern” as required by Chapter Note 6(a), which the court found to mean “coordinate in shape, color and decoration, and were designed to be used
32. Digidesign, Inc. v. United States, 44 F.Supp.3d 1366 (Ct. Int’l Trade Jan. 22, 2015). 33. Id. at 1374. 34. Digidesign, Inc., 44 F.Supp.3d at 1375. 35. G.G. Marck & Assocs. v. United States, 2015 WL 3757040 (Ct. Int’l Trade June 17, 2015). 36. Id. at 2. 37. Id.
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as a set.”38 Thus, noted the court, to be classified under subheading 6912.00.39, the merchandise must be of a single pattern and each of the specified pieces must be sold or offered for sale in that pattern. Following a detailed factual inquiry and expert testimony, the court found that some of the articles are in specified sets and some are not, and classified the various cups and mugs accordingly.
5. Infantino v. United States39
At issue in this case is the proper tariff classification of merchandise sold under the name Shop & Play® Funny Farmer (“Funny Farmer” or “merchandise”) imported by Plaintiff Infantino, LLC (“Infantino”). The articles consisted of play mats for children, which can be used both as a normal play mat and inside of a shopping cart. At liquidation, Customs classified the mats under 9404.90.20 (6%) for “mattress supports; articles of bedding . . .” and Infantino claimed that the mats were properly classifiable under subheading 9503.00.0080 (duty free) as “other toys . . .” The court stated the item was prima facie classifiable under both, so the court applied GRI 3 and discussed essential character. The court found the item’s essential character was to be imparted by its toy components and that it was packaged and priced as a toy. Accordingly, the court agreed with Infantino and classified it as a toy and duty free.
E. MISCELLANEOUS CASES 28 U.S.C. § 1581(A) AND (I)
1. JBLU, Inc. v. United States40 (Country of Origin)
Plaintiff, JBLU, Inc., protested “Notices to Mark and/or Redeliver” issued by CBP for jeans exported from China and entered into the port of Los Angeles.41 “Customs issued the ‘Notices to Mark and/or Redeliver’ . . . stating that jeans were not legally marked with ‘Country of Origin’” because a “Country of Origin” marking was not in “close proximity” to references “USA” and “Los Angeles” on the name of the jeans, contrary to 19 C.F.R. § 134.46.42 The markings on the jeans included “C’est toi Jeans Los Angeles,” “CT Jeans USA,” and “C’est Toi Jeans USA.”43 All three of which were trademarked.44 JBLU claimed the less stringent “Country of Origin” marking requirements of 19 C.F.R. § 134.47 applied instead of 19 C.F.R. § 134.46 because of the trademarks.45 Customs responded that the goods were imported before submission of the trademark applications.46 Customs agreed that any jeans imported after applications were filed with USPTO were legally marked.47 The court found that because 19 C.F.R. § 134.47 is silent as to definition of “trademark,” it must give deference to Customs’ interpretation of the
38. Id. at 8. 39. Infantino, LLC v. United States, 2014 WL 7331753 (Ct. Int’l Trade Dec. 24, 2014). 40. JBLU, Inc. v. United States, 44 F. Supp. 3d 1391 (Ct. Int’l Trade 2015). 41. Id. at 1393. 42. Id. at 1393, 1398. 43. Id. at 1393. 44. JBLU, Inc., 44 F. Supp. 3d at 1391. 45. Id. at 1396. 46. Id. at 1393. 47. Id.
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regulation.48 The court then found Customs’ interpretation of the regulation to mean registered trademarks or marks subject to a pending application to be reasonable and consistently applied and concluded that Customs’ “Notices to Mark and/or Redeliver” were properly issued.49
2. Ford Motor Co. v. United States50 (Drawback)
Ford challenged a CBP determination that seventeen drawback claims filed prior to December 3, 2014, were not deemed liquidated pursuant to 19 U.S.C. § 1504(a)(2), as enacted in December 2004, to provide for the deemed liquidation of old drawback claims.51 Under subparagraph (C) of 19 U.S.C. § 1504(a)(2), all drawback claims filed before December 3, 2005 (the effective date of the statute), and to which liquidation was not final as of that date, were deemed liquidated on the one-year anniversary of enactment at the amounts asserted by the claimants in the respective drawback entries and claims.52 The court rejected CBP’s position that, notwithstanding the language of subparagraph (C), drawback claims that were filed before December 3, 2004, and which remained unliquidated one year later, were not deemed liquidated pursuant to subparagraph (C) if any of the import entries underlying the drawback claims were not yet liquidated and those liquidations were final as of December 3, 2005.53 In other words, Customs read subparagraph (C) as a restrictive condition which appears nowhere in the language of that provision. The court ruled that Customs did not have legal authority to review, liquidate, or take any other action with respect to Ford’s seventeen drawback claims other than to recognize the status of those drawback claims as deemed liquidated as of December 3, 2005, at the amounts claimed by Ford.
3. Int’l Fresh Trade Corp. v. United States54 (Bonds)
International Fresh Trade Corp. (“IFTC”) moved to enjoin CBP from imposing the “single transaction bond requirement on [IFTC]’s entries of fresh garlic from China”, which were subject to an antidumping order.55 Helpful details, which are gleaned directly from the decision, indicate that IFTC imported from an exporter “who was granted a combination rate with its producer.”56 However, due to discrepant information CBP requested “further documentation to verify the identity of the producer and shipper of the entries.”57 “The documents indicated that [the Chinese producer] had undergone changes, including restructuring, that potentially rendered it a different entity and ineligible for the combination rate.”58 Because of this uncertainty CBP “denied entry
48. Id. at 1395. 49. Id. at 1396. 50. Ford Motor Co. v. United States, 44 F. Supp. 3d 1330 (Ct. Int’l Trade 2015). 51. Id. at 1339. 52. Id. at 1342. 53. Id. at 1348-49. 54. Int’l Fresh Trade Corp. v. United States, 26 F. Supp. 3d 1363 (Ct. Int’l Trade 2014). 55. Id. at 1365. 56. Id. 57. Id. at 1366. 58. Id.
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until IFTC posted additional bonding to make its cash deposit rate commensurate with its potential antidumping duty liability.”59 The court denied IFTC’s motion for a preliminary injunction because IFTC could not demonstrate a clear threat of irreparable harm.60 IFTC did not provide financial documents nor did it utilize the available and appropriate remedy, which was the Department of Commerce’s changed circumstances review, or a likelihood of success on the merits that CBP could not make substantive determinations under the antidumping duty laws.61
4. Ovan Int’l & Carriage House v. United States62 (Standing/ Protest Sufficiency)
Carriage House is the owner of a 1958 Rolls Royce Silver Cloud car.63 Carriage exported the vehicle “to the United Kingdom in March 2012 to be sold by auction.”64 The vehicle “did not sell at auction and was returned to Carriage House” by the auction house using Ovan as the Importer of Record and Customs Broker.65 At the time of entry, Ovan claimed the entry should be duty free under HTSUS 9801.00.25.66 Customs issued a Notice of Action stating that the vehicle did not qualify for duty-free treatment and would be classified under HTSUS 8703.23.00 (2.5% duty) at liquidation.67 Carriage House filed a protest 189 days after liquidation.68 Customs denied the protest as untimely filed. Ovan paid $23,647.70 in duties and filed the CIT complaint.69 Analyzing 28 U.S.C. § 2631(a), the court ruled that Ovan did not have standing to bring the action as only a person who filed the protest nor as “a surety on the transaction which is the subject of the protest.”70 Neither may bring a civil action to contest the denial of a protest.71 Ovan did not file the protest nor serve as surety on the transaction.72 The Court dismissed Ovan as a plaintiff from the case.73 The Court then dismissed the case for lack of subject matter jurisdiction because the remaining plaintiff, Carriage House, failed to meet the jurisdictional requirement of filing a valid timely protest.74 The Court dismissed Carriage House’s claims that an affidavit filed forty-six days after liquidation was a valid protest because it failed to meet all of the statutory and regulatory requirements for validity.75 The court reasoned that the purported protest was not on a
59. Id. 60. Int’l Fresh Trade Corp. v. United States, 26 F. Supp. 3d 1363, 1368 (Ct. Int’l Trade 2014). 61. Id. 62. Ovan Int’l, Ltd. v. United States, 49 F. Supp. 3d 1327 (Ct. Int’l Trade 2015). 63. Id. at 1329. 64. Id. 65. Id. 66. Id. at 1329-30. 67. Id. at 1330. 68. Ovan Int’l, Ltd. v. United States, 49 F. Supp. 3d 1327, 1330 (Ct. Int’l Trade 2015). 69. Id. 70. Id. at 1330-31. 71. Id. 72. Id. at 1331. 73. Ovan Int’l, Ltd. v. United States, 49 F. Supp. 3d 1327, 1331 (Ct. Int’l Trade 2015). 74. Id. at 1337. 75. Id. at 1333, 1335.
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Customs standard protest Form 19, it was not clearly labeled “protest,” and it did not list the liquidation date of the subject entry.76
5. Hutchison Quality Furniture, Inc. v. United States77 (Subject Matter Jurisdiction)
Plaintiff, Hutchison Quality Furniture, is an importer of wooden bedroom furniture manufactured in China.78 “Hutchison’s entries were subject to the third administrative review of an antidumping order on wooden bedroom furniture from China.79 This administrative review covered furniture entries made in 2007.”80 Chinese exporters fought the results of the review, but they eventually cleared in February 2013.81 CBP liquidated the imported furniture in September 2013 at a rate of 83.55 percent for Hutchison’s Chinese exporter.82 The decision was unsuccessfully protested by Hutchison. CBP denied Hutchison’s protests arguing that the entries it imported “were deemed liquidated six months” before the February 2013 in the CIT opinion.83 Hutchison challenged the validity of Commerce’s liquidation instructions under 28 U.S.C. § 1581(i), the CIT’s residual jurisdiction, thus avoiding the pre-payment requirement under a denial of a protest claim.84 The court, however, stated that “[t]he true nature of [Hutchison’s] claims involved a protestable CBP decision regarding liquidation and/or deemed liquidation, and therefore, § 1581(a) jurisdiction would not have been manifestly inadequate.”85 Hutchison could have filed a protest “claiming that the entries had already been deemed liquidated by operation of law.”86 Plaintiff did not allege these grounds in the protest it filed with CBP.87 Thus, the court dismissed Hutchison’s claim “for lack of jurisdiction because a remedy under § 1581(a) would not have been manifestly inadequate.”88
6. Shah Bros, Inc. v. United States89 (Attorneys’ Fees)
As a result of previous litigation, Shah Bros, Inc. was awarded “compensation for attorneys’ fees and expenses it had reasonably incurred” pursuant to the Equal Access to Justice Act.90 Shah Bros brought an action for “a supplemental award of the additional attorneys’ fees it incurred while litigating its EAJA application.”91 The court granted the supplemental award, in part, as “Plaintiff was entitled to recover attorneys’ fees for work
76. Id. 77. Hutchison Quality Furniture, Inc. v. United States, 71 F.Supp.3d 1375 (Ct. Int’l Trade 2015). 78. Id. at 1377. 79. Id. 80. Id. 81. Id. 82. Id. 83. Hutchison Quality Furniture, Inc. v. United States, 71 F.Supp.3d 1375, 1377 (Ct. Int’l Trade 2015). 84. Id. at 1378. 85. Id. 86. Id. at 1379. 87. Id. 88. Id. 89. Shah Bros., Inc. v. United States, 32 F. Supp. 3d 1348 (Ct. Int’l Trade 2014). 90. Id. at 1350. 91. Id.
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reasonably expended to obtain the amount previously awarded.”92 But the Court reduced the supplemental award “to reflect excess hours and to the extent of Plaintiff’s success in the [original] fee litigation.”93
D. CIVIL PENALTY CASES (28 U.S.C. § 1582)
1. United States v. Freight Forwarder Int’l, Inc.94
The United States brought an action pursuant to 28 U.S.C. § 1582(1) to recover a civil penalty against Freight Forwarder International, Inc. (“FFI”) for violations of 19 U.S.C. § 1641(b)(6) and 19 C.F.R. § 111.4 for “transacting customs business without a broker’s license.”95 While FFI had an employee that was a licensed customs broker, it did not possess a corporate broker license.96 The CIT granted the government’s motion for default judgment as FFI failed to answer or otherwise respond to the complaint.97
2. United States v. NYCC 1959 Inc.98
The United States brought an action to recover a civil penalty under 19 U.S.C. § 1592 against NYCC 1959 Inc. (“NYCC”) for negligently attempting to enter merchandise, which were “candles from the People’s Republic of China.”99 NYCC failed to appear.100 Because the “complaint and supporting evidence adequately established liability of the defendant for a grossly negligent violation of Section 592 as a matter of law”, and because the claim was for a civil penalty amount within the statutory limit for such violations, the CIT granted the United States’ motion for default judgment against NYCC in the amount of “$15,310.08 plus post-judgment interest.”101
3. United States v. CTS Holding, LLC102
CTS Holding, LLC (“CTS”) moved for summary judgment against the United States “in a duty recovery and penalty action.”103 CTS contended that the CIT lacked subject matter jurisdiction over the penalty claim because CBP “did not perfect its claim at the administrative level,” and that the U.S. “may not seek recovery from it as a ‘successor-in- interest’ to TJ Ceramic Tile & Sales Import, Inc. (“TJ”), the importer of the subject merchandise.”104 The CIT denied the motion by CTS because the United States “complied with the procedural requirements of § 1592(b) and [CTS] had notice that the
92. Id. 93. Id. 94. United States v. Freight Forwarder Int’l, Inc., 44 F. Supp. 3d 1359 (Ct. Int’l Trade 2015). 95. Id. at 1360. 96. Id. at 1361. 97. Id. at 1362. 98. United States v. NYCC 1959 Inc., 79 F. Supp. 3d 1343 (Ct. Int’l Trade 2015). 99. Id. at 1344-45. 100. Id. at 1345. 101. Id. at 1345, 1350. 102. United States v. CTS Holding, 2015 Ct. Intl. Trade LEXIS 71, (Ct. Int’l Trade June 30, 2015). 103. Id. at *1. 104. Id.
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penalty claim” asserted negligence.105 On the question of successorship liability, the CIT cited cases which “held corporate successors may be held liable for their predecessors’ actions in duty recovery and penalty actions,” construing the word “person” to “include corporations and their successors and assigns,” noting that common law allows successor liability where the successor appeared to be a “mere continuation or reincarnation of the old corporation.”106 The CIT, however, found there were “genuine issues of material fact as to whether CTS was a mere continuation of TJ, and, thereby, liable for TJ’s actions” and denied CTS’s motion for summary judgment.107
III. Canadian Legal Developments108
A. FREE TRADE
This year, Canada and eleven other countries signed the most ambitious economic and free trade agreement in history, namely, the Trans Pacific Partnership (“TPP”). TPP countries represent almost 800 million people and an economy of approximately $27 trillion; forty percent of global gross domestic product (“GDP”).109 The TPP is designed to eliminate or reduce tariffs (particularly in Malaysia and Vietnam) and non-tariff barriers.110 It is also designed to provide market access to Japan.111 Some sectors in Canada have not been TPP supporters. Under the TPP Canada will provide new market access to 3.5 percent of the dairy industry.112 Dairy producers have opposed any weakening of Canada’s supply management system, which involves the imposition of punitive tariffs on dairy products imported in the absence of a permit.113 Concerns have also been voiced in the auto sector. The TPP will lower the regional value content requirements for imported autos and parts. Union representatives have argued that the TPP will facilitate the importation of Japanese cars made with large amounts of Chinese parts.114 It has been suggested that the TPP will facilitate the importation of cheaper autos and parts and undermine the rationale for maintaining Japanese-owned auto plants in Ontario. The ratification process will likely take at least one year, and it is uncertain whether the TPP will be ratified by all twelve countries.
105. Id. at *1, 24. 106. Id. at *28-32. 107. Id. at *34. 108. Section Editor: Greg Kanargdelis, Esq. ; Section Authors: Greg Kanargdelis, Esq., Daniel L. Kiselbach, Esq. 109. Brock R. Williams, Cong. Research Serv., R42344, Trans-Pacific Partnership (TPP) Countries: Comparative Trade and Economic Analysis (2013). 110. Id. 111. See id. 112. See id; see also Owen Lippert, The Perfect Food in a Perfect Mess: The Cost of Milk in Canada, 52 Pub. Policy Sources 2001. 113. See id. 114. See William H. Cooper, Cong. Research Serv., R42676, Japan Join the Trans-Pacific Partnership: What Are the Implications? (2013).
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B. VALUATION
In January 2015, the Canadian Border Services Agency (“CBSA”) issued Customs Notice 15-0001 titled: Treatment of Downward Price Adjustments in Value for Duty Calculations.115 This Customs Notice was issued as a result of the 2014 Canadian International Trade Tribunal (“CITT”) decision in Hudson’s Bay Company v. President of the Canada Border Services Agency.116 In Hudson’s Bay, the CITT held that the importer was entitled to make a downward price adjustment of the value for duty of goods in specific circumstances.117 It indicated that a post-importation downwards adjustment is appropriate for discounts paid to the importer after importation if, and only if: (1) the discounts were the result of an agreement to reduce the price; and (2) that agreement was in effect at the time the subject goods were imported into Canada.118 The Customs Notice represented a significant departure from the CBSA’s longstanding policy to refuse to recognize downward post-importation adjustments to the price paid or payable and stated that where an agreement to make a post-importation price reduction was effective at the time of importation, and conditions were met for the post-importation price reduction to occur (providing reason to believe that an original value declaration is incorrect), the importer must adjust the value for duty of the goods, pursuant to section 32.2 of the Customs Act.119 An importer must also account for downward post- importation adjustments that were of a non-revenue nature (i.e. duty-free goods), pursuant to section 32.2 of the Customs Act.120 If applicable, an importer may claim a refund of duties, pursuant to paragraph 74(1)(e) of the Customs Act.121
C. SELECTED CITT JURISPRUDENCE
1. DeRonde Tire Supply – NAFTA Origin Based on “Own Knowledge”
DeRonde Tire Supply, Inc. v. President of the Canada Border Services Agency is the first decision in which the CITT considered what is required for an exporter—who is not the manufacturer of the exported goods—to certify that goods originate in the NAFTA territory on the basis of the exporter’s “personal knowledge.”122 The decision is significant not only because it is the first occasion the CITT has had to deal with the issue, but also because of the manner in which the CITT rejected the arguments of the CBSA, which seemed determined to tie all claims to know that goods originate to information obtained from the manufacturer. In soundly rejecting this restrictive position, the CITT acknowledged that there are many potential roads to supporting a NAFTA origin claim based on personal knowledge.123
115. Canada Border Services Agency, Customs Notice 15-001, “Treatment of Downward Price Adjustments in Value for Duty Calculations”, Jan. 19, 2015. 116. Hudson’s Bay Company v. President of the Can. Border Servs. Agency, [2014] C.I.T.T. (Can.). 117. Id. ¶¶ 18, 189. 118. Id. ¶ 62. 119. Customs Act, R.S.C., 1985, c.1 (2nd Supp.) (Can.). 120. See Hudson’s Bay, ¶¶ 3, 20, 74. 121. See id., ¶¶ 3, 19, 74. 122. DeRonde Tire Supply Inc. v. President of the Can. Border Servs. Agency, [2015] C.I.T.T. (Can.). 123. Id. ¶ 43.
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2. Stylus Sofas – Latest Decision Clarifying Goods Used for “Domestic Purposes”
Imported furniture is an example of a good that is dutiable if the good is used “for domestic purposes,” but duty-free if used for “other than domestic purposes.” In a series of appeals, the CBSA has sought to extend the concept of “domestic” outside of the household. In Stylus Sofas the CBSA argued that a hotel is a “home away from home,” and that hotels are “domestic environments” due to the fact that they are places people go to sleep.124 The CITT sided with Stylus Sofas, holding that there is a conceptual connection between a “domestic setting” and a house or household.125 But while hotels may be places where individuals and families go to sleep, the CITT could not look beyond the fact that hotels are, in reality, businesses rather than households or homes.126 Having held that furniture intended for use in a hotel was not ipso facto intended for domestic purposes, the CITT then considered whether Stylus Sofa’s had discharged its burden of establishing that the imported furniture was intended primarily for use in hotels, as opposed to in domestic settings.127 In this regard, the CITT considered evidence that the furniture was constructed to a degree of durability exceeding what would be expected from furniture used in a home, as well as evidence that Stylus Sofas had marketed the furniture directly to hospitality clients.128 The CITT was satisfied that Stylus Sofas had met its burden of establishing that the CBSA had incorrectly classified the goods and allowed the appeal.129
3. Bri-Chem – CITT Reprimands CBSA for Failing to Follow CITT Decisions
Bri-Chem Supply Ltd. v. President of the Canada Border Services Agency concerned whether an importer may file correcting entries pursuant to subsection 32.2 of the Customs Act to correct an error in tariff classification and at the same time claim NAFTA origin treatment.130 The original import entries were not subject to duty on the basis of an erroneous tariff classification coupled with a NAFTA origin claim.131 The CBSA rejected Bri-Chem’s corrections, resulting in Bri-Chem’s appeal to the CITT.132 The CBSA argued that the CITT did not have the jurisdiction to hear Bri- Chem’s claims on the grounds that the B2 rejected notifications issued to the Bri-Chem did not constitute “decisions” that could be appealed to the CITT pursuant to section 67 of the Customs Act.133 The CITT rejected this argument, citing two earlier decisions in C.B. Powell134 and Fritolay.135 The CITT found it significant that Bri-Chem had always claimed that the goods were of U.S. origin, and thus that it was only the tariff
124. Stylus Sofas Inc. v. President of the Can. Border Servs. Agency, [2015] C.I.T.T. (Can.). 125. Id. ¶ 56. 126. Id. ¶ 61. 127. Id. ¶ 62. 128. Id. ¶ 78. 129. Id. ¶ 91. 130. Bri-Chem Supply Ltd. v. President of the Can. Border Servs. Agency, [2014] C.I.T.T. (Can.). 131. Id. ¶¶ 2, 40. 132. Id. ¶¶ 26, 27. 133. Id. ¶ 27. 134. C.B. Powell Ltd. v. President of Can. Border Servs. Agency, [2010] C.I.T.T. (Can.). 135. Frito-Lay Canada, Inc. v. President of the Can. Border Servs. Agency, [2012] C.I.T.T. (Can.).
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classification, and not the declared origin, of the goods that was being corrected.136 The deadline contained in section 74 of the Customs Act was held to be irrelevant, as it pertained to refunds of monies paid, and Bri-Chem, according to the CITT, was never in a refund position.137 In addition to rejecting the CBSA’s substantive and jurisdictional arguments, the CITT also criticized the CBSA for essentially ignoring the CITT’s prior decision in Frito-Lay Canada, Inc. v. President of the Canada Border Services Agency and attempting to use the Bri-Chem appeal to retry the case.138 The CITT allowed the appeal, and in chastising the CBSA for engaging in an abuse of process, the CITT went so far as to say that it “regrets that it lacks the power to award costs in such circumstances.”139
IV. European Union Legal Developments140
A. UNION CUSTOMS CODE
Beginning May 1, 2016, the Union Customs Code (UCC)141 will replace the Community Customs Code (CCC)142 as the new customs framework regulation for the European Union (EU) customs rules and procedures. The UCC aims to improve the existing EU customs framework by simplifying customs procedures while offering greater legal certainty to trade as well as improved procedural clarity for customs officials.143 All electronic systems required by the UCC must be implemented by December 31, 2020, thus ensuring a fully electronic customs environment by that date.144 The UCC also reinforces expedited customs procedures for Authorized Economic Operators (AEO).145 The UCC substantial provisions will come into force only after the Implementing Act146 and Delegated Act147 are in force.148 Until May 1, 2016, the CCC and its implementing provisions continue to apply.
136. Id. 137. Id. ¶ 22. 138. Id. ¶ 28. 139. Id. ¶ 4. 140. Section Editor/Author: Ruta Riley, Redondo Beach, California. 141. 2013 O.J. (L 952) 269, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri= OJ:L:2013:269:0001:0101:EN:PDF (last visited Nov. 15, 2015). 142. 2008 O.J. (L 450) 145, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri =OJ:L:2008:145:0001:0064:EN:PDF (last visited Nov. 15, 2015). 143. See The European Commission, The Union Customs Code: a recast of the Modernised Customs Code, available at http://ec.europa.eu/taxation_customs/customs/customs_code/union_customs_code/index_en.htm (last visited Nov. 15, 2015). 144. Id. 145. Id. 146. Consolidated preliminary draft of the Union Customs Code Implementing Act, TAXUD/UCC-IA/ 2014-1, available at http://ec.europa.eu/taxation_customs/resources/documents/customs/customs_code/ ucc_implementing_act_2014.pdf (last visited Nov. 15, 2015). 147. Commission Regulation, 5195/F1, available at http://ec.europa.eu/transparency/regdoc/rep/3/2015/ EN/3-2015-5195-EN-F1-1.PDF. (the Delegated Act was adopted by the European Commission on July 28, 2015). 148. See The Union Customs Code, supra note 141. (no objections have been expressed to the Delegated Act by either the European Parliament or the Council within the permitted objection period. Consequently, the Implementing Act is expected to be presented for the Customs Code Committee’s vote before 2016).
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B. FREE TRADE AGREEMENTS (“FTAS”) AND NEGOTIATIONS149
1. EU Trade Strategy
The EU’s current trade strategy focuses on a transparent trade negotiations process, removal of non-tariff barriers, and trade liberalization.150 The European Commission (the “Commission”) lists the Transatlantic Trade and Investment Partnership (“TTIP”), the Japan FTA, and the China investment agreement among the top FTA priorities.151 The Commission also expressed its interest in modernizing the FTAs with Mexico and Chile and in continuing negotiations for a comprehensive FTA with Mercosur.152
2. EU-Ecuador Trade Agreement153
On September 23, 2014, the Commission released154 the text of the trade agreement between the EU and Ecuador, which provides for Ecuador joining the EU’s existing agreement with Colombia and Peru.155 The agreement will improve access for key EU exports (automotive and alcoholic beverages) and Ecuador exports (fisheries, bananas, cut flowers, coffee, and cocoa). The agreement is undergoing legal text revisions before being submitted for ratification.
3. EU-Canada Trade Agreement (CETA)156
The CETA, signed September 26, 2014,157 is the most comprehensive of the EU’s FTAs to date.158 Among other things, CETA removes 99% of customs duties, liberalizes trade in services, promotes and protects investments, and provides for protections against unauthorized copying of EU innovations and traditional products.159 The Commission intends to submit the Agreement to the European Council (the “Council”) and then to the European Parliament (the “Parliament”) for approval in early 2016.160
149. The list of 2015 EU trade agreements presented in this section is not all-inclusive. 150. See generally The European Commission, Trade for all – Towards a more responsible trade and investment policy, available at http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf (last visited Nov. 15, 2015) [hereinafter “Trade for all”]. 151. See id. at 5. 152. Id. at 33. Mercosur signatories are Argentina, Brazil, Paraguay, Uruguay, and Venezuela. 153. Trade Agreement between the European Union and its Member States, of the one part, and Colombia, Peru and Ecuador, of the other part, available at http://trade.ec.europa.eu/doclib/docs/2015/february/ tradoc_153147.%20Textual%20Amendments.pdf (last visited Nov. 15, 2015). 154. EU and Ecuador publish text of trade agreement, THE EUROPEAN COMM’N, http://trade.ec.europa.eu/ doclib/press/index.cfm?id=1156 (last visited Nov. 15, 2015). 155. Trade Agreement between the European Union and its Member States, of the one part, and Colombia, Peru and Ecuador, of the other part, supra note 153, ¶ 2. 156. Comprehensive Economic and Trade Agreement (CETA), available at http://trade.ec.europa.eu/doclib/ docs/2014/september/tradoc_152806.pdf (last visited Nov. 15, 2015). 157. Countries and Regions: Canada, THE EUROPEAN COMM’N, http://ec.europa.eu/trade/policy/countries- and-regions/countries/canada/ (last updated Mar. 31, 2016). 158. Trade for all, supra note 150 at 30. 159. See Comprehensive Economic and Trade Agreement (CETA), THE EUROPEAN COMM’N, available at http:// ec.europa.eu/trade/policy/in-focus/ceta/ (last visited Nov. 15, 2015). 160. Trade for all, supra note 150 at 31.
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4. EU-Vietnam FTA161
On August 4, 2015, the EU and Vietnam reached an agreement in principle for an FTA.162 The legal text of the agreement still needs to be finalized and then approved by the Council and the Parliament.163 In addition to eliminating nearly all tariffs on goods traded between the two economies, Vietnam also agreed to remove practically all export duties.164
5. WTO Trade Facilitation Agreement (TFA)165
On October 5, 2015, the EU ratified the World Trade Organization (“WTO”) Trade Facilitation Agreement (“TFA”).166 The agreement affects all WTO members and is expected to simplify customs procedures.167 The TFA contains provisions for expedited movement, release and clearance of goods (including goods in transit); provides for special and differential treatment to developing and least-developed countries with respect to implementation of the Agreement’s individual provisions; and establishes a permanent committee on trade facilitation at the WTO while requiring members to create a national committee to facilitate domestic coordination and implementation of the Agreement.168
6. Transatlantic Trade and Investment Partnership (TTIP)169
As of November 15, 2015, eleven rounds of negotiations on the comprehensive EU-US trade and investment agreement have been completed.170 At this stage, the EU and the US have made substantial progress on market access, tariffs, services, and public procurement.171 A second tariff offer and proposals on product-specific rules of origin have been exchanged.172 The next round is expected to take place in February of 2016.173
161. EU and Vietnam Reach Agreement on Free Trade Deal, THE EUROPEAN COMM’N, (Aug. 4 2015), available at http://europa.eu/rapid/press-release_IP-15-5467_en.htm. 162. Id. 163. Id. 164. Id. 165. WTO Agreement on Trade Facilitation, WT/L/931 (Jul. 15, 2014), available at https://docs.wto.org/ dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/L/931.pdf (last visited Nov. 15, 2015). 166. The EU Ratifies WTO Trade Facilitation Agreement, THE EUROPEAN COMM’N, (Oct. 5, 2015), http:// trade.ec.europa.eu/doclib/press/index.cfm?id=1374. 167. Id. 168. See WTO, Trade Facilitation, available at https://www.wto.org/english/tratop_e/tradfa_e/tradfa_e.htm (last visited Nov. 15, 2015). 169. Report of the Eleventh Round of Negotiations for the Transatlantic Trade and Investment Partnership, THE EUROPEAN COMMISSION, available at http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_ 153935.pdf (last visited Nov. 15, 2015). 170. 11th round of TTIP talks brought progress in most areas of the negotiations, THE EUROPEAN COMM’N, (Oct. 23, 2015), http://trade.ec.europa.eu/doclib/press/index.cfm?id=1389. 171. Id. 172. Id. 173. Id.
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7. EU-Ukraine Deep and Comprehensive Free Trade Agreement (DCFTA)174
The EU-Ukraine DCFTA provisions will take effect beginning January 1, 2016.175 According to the Commission, the agreement is expected to aid Ukraine in modernizing its trade relations by opening its markets via progressive removal of customs tariffs and quotas, and by harmonization of laws and regulations in various trade-related areas in order to create the conditions for aligning the Ukrainian economy with EU standards.176
C. COMBINED NOMENCLATURE EXPLANATORY NOTES
On March 4, 2015, the EU published a revised version of the EU Combined Nomenclature Explanatory Notes (“CNENs”) that replaced the 2011 version of CNENs.177
D. THE CONTROL LIST OF DUAL-USE ITEMS178
On October 12, 2015,179 the Commission adopted the Commission Delegated Regulation,180 amending Council Regulation (EC) No 428/2009181 and setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items, and updating of the EU list of dual-use items.182 The update183 incorporates approximately 400 changes to the export controls, including changes to technical parameters for nuclear reactor parts and components; new controls on certain chemicals, as well as new controls on special materials; electronics and computers; telecommunications and information security equipment; sensors and lasers; and aerospace and propulsion items.184 The update also removes from the list certain items and technologies that have become more widely available and represent a lower security risk.185
174. Trade Policy: Ukraine, THE EUROPEAN COMM’N, http://ec.europa.eu/trade/policy/countries-and- regions/countries/ukraine/ (last updated Apr. 7, 2016). 175. Id. 176. See EU and Ukraine Deep and Comprehensive Free Trade Area, THE EUROPEAN COMM’N, available at http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_150981.pdf (last visited Nov. 15, 2015). 177. See Explanatory Notes to the Combined Nomenclature of the European Union, THE EUROPEAN COMM’N, available at http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.C_.2015.076.01.0001.01.ENG &toc=OJ:C:2015:076:TOC (last visited Apr. 11, 2016). 178. Update of the EU Control List of Dual-Use Items, THE EUROPEAN COMM’N, (Oct. 22, 2015), available at http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153907.pdf. 179. Id. 180. The regulation will receive its registration number when published in the Official Journal of the European Union. 181. Council Regulation 428/2009, 2009 O.J. (L 134) 428 available at http://eur-lex.europa.eu/legal- content/EN/TXT/?uri=uriserv:OJ.L_.2009.134.01.0001.01.ENG&toc=OJ:L:2009:134:TOC. Amended by: Commission Delegated Regulation 1382/2014, 2014 O.J. (L 371) 1, available at http://eur-lex.europa.eu/ legal-content/EN/TXT/PDF/?uri=CELEX:32014R1382&qid=1460435624056&from=EN (last visited Nov. 15, 2015). 182. Update of the EU Control List of Dual-Use Items, supra note 178. 183. See generally id. 184. See The European Commission, Commission Updates EU Control List on Dual Use Items, (Oct. 22, 2014) http://trade.ec.europa.eu/doclib/press/index.cfm?id=1166. 185. Id.
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E. WCO GUIDE TO CUSTOMS VALUATION AND TRANSFER PRICING
On June 26, 2015, the World Customs Organization issued a Guide to Customs Valuation and Transfer Pricing.186 The key message of the report is that customs officials are encouraged to consider transfer pricing studies in the “circumstances of sale” analysis when determining whether transaction value may be accepted in related party transactions.187
V. Chilean Legal Developments188
A. AMENDMENT TO SELF-ACCUSATION REGULATIONS IN THE CUSTOMS ORDINANCE
As set forth by a 2014 tax reform in Chile189, on January 1, 2015, an amendment to Article 177 of the Chilean Customs Ordinance190 entered into force. This article regulates the self-accusation (autodenuncio) of individuals and legal entities before the SNA, after committing certain customs offenses triggered by the filing of customs declarations with incorrect and/or inaccurate information that, in turn, cause the payment of incorrect amounts of customs duties and taxes. As a result of this amendment, as of January 1, 2015, the SNA is no longer legally authorized to formulate accusations and/or apply fines originating from such customs offenses, provided that: (a) these are duly notified by the infringing party to the SNA prior to the commencement of any auditing or supervising proceeding against the infringing party, and (b) all relevant customs duties and taxes are fully paid. The SNA has construed that auditing or supervising proceedings comprehend all actions, requests, or processes carried out by the SNA to verify the existence of a customs offense in the filing of customs declarations.191 But it has also determined that all such proceedings must have been duly notified to the breaching party for the latter to be unable to exercise its right to file a self-accusation.192 Thus, the main purposes of this amendment were to: (a) eliminate the prior discretionary nature of self-accusations, in which the SNA could, at its sole discretion, decide if a reduction or elimination of fines was applied or not; and (b) increase duties and tax collection by incentivizing the exercise of self-accusations by guaranteeing the exemption of fines, while requiring the payment of outstanding duties and taxes. The SNA has construed that this amendment is only applicable to customs declarations filed after January 1, 2015, i.e., the SNA may still exercise its discretional authorities in
186. WCO Guide to Customs Valuation and Transfer Pricing, WORLD CUSTOMS ORG., available at http:// www.wcoomd.org/en/topics/key-issues/revenue-package/~/media/36DE1A4DC54B47109514FFCD0AAE6 B0A.ashx (last visited Nov. 15, 2015). 187. Id. 188. Section Editors/Authors: Marcos R´ıos, Carey y C´ıa; Mat´ıas Vergara and Patricio Laporta, Carey y C´ıa. 189. Law No. 20780, Septiembre 26, 2014, Diario Official [D.O.] (Chile), art. 11, available at http:// www.leychile.cl/Navegar?idNorma=1067194. 190. Decree with Force of Law No. 30, Octubre 18, 2004 (Chile), art. 177, available at http:// www.leychile.cl/Navegar?idNorma=238919&idVersion=2014-10-10. 191. SNA Resolution No. 7303, Diciembre 30, 2014 (Chile), par. 2, available at https://www.aduana.cl/ aduana/site/artic/20141230/asocfile/20141230161941/res__7303__30_12_2014.pdf. 192. Id. par. 2.
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respect of imports and self-accusations regarding customs declarations filed before January 1, 2015.193
B. CUSTOMS REGULATIONS MODERNIZATION BILL
On June 30, 2015, a bill aiming to amend several Chilean customs regulations194 was submitted to the Chilean Congress (the “Bill”).195 The Bill was drafted and submitted in response to, among other matters: (a) an increasing volume of international trade operations involving Chile over the last decade, representing 53% of its domestic product as of 2004; (b) the ratification of several new bilateral and multilateral trade agreements; and (c) the need to improve the SNA’s collection methods of applicable customs duties and taxes.196 Considering these matters, the Bill seeks to modernize and overhaul Chilean customs regulations and strengthen existing authorities by: (a) regulating the legal concept of authorized economic operators, i.e., parties involved in the logistics management of international trade, certified by the SNA, in compliance with the WCO Framework of Standards to Secure and Facilitate global trade;197 (b) granting a legal statute to regulations regarding the rights and obligations applicable to international courier companies,198 currently only regulated in SNA resolutions;199 (c) authorizing the use and commercialization of imported goods by certain companies and operators, before the payment of applicable customs tariffs and taxes (i.e., an exception to general import regulations), following the granting of a guarantee;200 (d) increasing the term within which consignees may request the reimbursement of customs fees and taxes paid in excess, from one to three years from such payment;201 and (e) further regulating the customs destination regime entitled “temporary admission for the perfecting of assets” (admission temporal para perfeccionamiento activo), which authorizes Chilean manufacturers of export goods to enter supplies into Chile for their processing, perfecting, and exporting.202 In light of the growing volume of Chilean international trade operations and the rising number of preferential treatments available and set forth in commercial trade agreements, the Bill also seeks to strengthen the supervising authorities of the SNA. Thus, the Bill would authorize the SNA to reject all customs entry declarations aiming to benefit from preferential treatment and/or customs destination regimes that suspend the payment of applicable customs tariffs and taxes, in such cases where the person filing such declaration: (a) registers one or more outstanding debts from unpaid tariffs, taxes, and fines/penalties
193. SNA Official Form Letter No. 7894, issued July 22, 2015 [content reserved]. 194. The Bill would amend, among others: (a) Decree with Force of Law Nr. 30, containing the Customs Ordinances; (ii) Ministry of Treasury Decree No. 1,148, containing applicable customs tariffs; and (c) Decree with Force of Law Nr. 329, which regulates the legal statute of the SNA. 195. Legislative Bulletin No. 10165-05, Julio 1, 2015 (Chile), available at https://www.camara.cl/pley/ pley_detalle.aspx?prmID=10587&prmBoletin=10165-05. 196. Id. Section I No. 1, Presidential Message. 197. Id. Article 1 No. 5, Presidential Message. 198. Id. Article 1 No. 4, Presidential Message. 199. SNA Exempt Resolution No. 7263, Diciembre 26, 2014 (Chile), available at http://www.aduana.cl/ aduana/site/artic/20140103/asocfile/20140103170904/resolucion_7263.pdf. 200. Supra note 195, Article 1 No. 10, Presidential Message. 201. Id. Article 1 No. 7a, Presidential Message. 202. Id. Article 1 No. 11, Presidential Message.
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for an amount greater than 200 UTM (monthly tax unit, approximately USD 16,000) for a period of over a year; (b) has been convicted for customs offenses; and/or (c) has materially breached customs regulations, as determined by the SNA’s National Director.203
203. Id. Article 1 No. 5, Presidential Message.
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Export Controls and Economic Sanctions
JOHN BOSCARIOL, J. PATRICK BRISCOE, GEOFFREY GOODALE, JAHNA HARTWIG, JONATHAN MEYER, CHRISTOPHER STAGG, LAWRENCE WARD*
This article discusses the significant legal developments that occurred in the area of export controls and economic sanctions in 2015.
I. Export Control Reform Initiative
A. INTRODUCTION
October 2015 marked the two-year anniversary of initial implementation of the President’s Export Control Reform initiative (ECR).1 With ECR well underway, the Obama Administration has now revised fifteen of the twenty-one United States Munitions List (USML) categories.2 Another three USML categories have been released for public comment,3 and are expected to be implemented as final rules in 2016. In particular, the State Department has reported a significant reduction in overall license volume from 78,387 (in 2013) to 59,527 (in 2014).4 The number of commodity jurisdiction requests also has decreased dramatically, from a high of 1,348 (in 2012) to 1,045 (in 2013).5 Although commodity jurisdiction numbers since 2013 have not been officially reported, the numbers reported by the State Department’s website have remained around 1,000 since 2013, which demonstrate a thirty percent reduction.6
* Contributing authors include John Boscariol, McCarthy T´etrault LLP; J. Patrick Briscoe, University of Minnesota; Geoffrey Goodale, Trade Law Advisors, PLLC; Jahna Hartwig, Sikorsky Aircraft; Jonathan Meyer; Christopher Stagg, Noonan LLP; and Lawrence Ward, Dorsey & Whitney LLP. Mr. Stagg and Mr. Ward served as editors of this article. This article includes developments occurring between December 1, 2014, and November 30, 2015. 1. Press Release, U.S. Dep’t of State, Export Control Reform Marks One Year of Progress (Nov. 3, 2014), http://www.state.gov/r/pa/prs/ps/2014/11/233659.htm. 2. Id. 3. Export Control Reform: Control List “Tracker”, U.S. DEP’TOF COMMERCE (July 2015), http:// build.export.gov/build/idcplg?IdcService=DOWNLOAD_PUBLIC_FILE&RevisionSelectionMethod=latest &dDocName=EG_main_048264. 4. Tony Dearth, Sarah Heidema, & Sue Gainor, Directorate of Defense Trade Controls BIS Update 2015, U.S. DEP’TOF STATE (2015), http://bis.doc.gov/index.php/forms-documents/doc_download/1345-state-ddtc-bis- update-2015. 5. Id. 6. Id.
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B. PROPOSED USML AND COMMERCE CONTROL LIST (CCL) REVISIONS
This year began with a proposed rule for USML Category XII (Fire Control, Range Finder, and Optical, Guidance, and Control Equipment).7 A proposed concurrent rule was published by the Department of Commerce’s Bureau of Industry and Security (BIS).8 The Government received a significant number of public comments on this proposed rule.9 It is anticipated that a final rule will take effect in 2016. On June 17, 2015, the State Department released a proposed rule for USML Category XIV (Toxicological Agents, including Chemical Agents, Biological Agents, and Associated Equipment) and USML Category XVIII (Directed Energy Weapons).10 A proposed concurrent rule was published by the BIS.11 The Government did not receive many public comments for these categories.12
C. REVISED CATEGORY REVIEWS
One concern that industry voiced with the movement to positive control criteria was how the revised lists would be changed to account for civilian developments and technologies.13 The State Department responded with a policy to periodically review every USML category through Notice of Inquiries within the Federal Register.14 Although it is not clear whether every USML category will receive an annual review, the State Department started with USML Categories VIII (Aircraft and Related Articles) and XIX (Gas Turbine Engines and Associated Equipment) on March 2, 2015.15 The Commerce Department also released its companion inquiry for associated items on the Commerce
7. Amendment to the International Traffic in Arms Regulations: Revision of U.S. Munitions List Category XII, 80 Fed. Reg. 25,821, 25,825 (proposed May 5, 2015) (to be codified at 22 C.F.R. pt. 121), available at http://www.gpo.gov/fdsys/pkg/FR-2015-05-05/pdf/2015-09673.pdf. 8. Revisions to the Export Administration Regulations (EAR): Control of Fire Control, Ranger Finder, Optical, and Guidance and Control Equipment the President Determines No Longer Warrant Control Under the United States Munitions List (USML), 80 Fed. Reg. 25,798, 25,798 (proposed May 5, 2015) (to be codified at 15 C.F.R. pts. 134, 740, 742, 744, 772, and 774), available at http://www.gpo.gov/fdsys/pkg/FR- 2015-05-05/pdf/2015-10353.pdf. 9. The Department of Commerce Public Comments, U.S. DEP’TOF COMMERCE (2015), http:// efoia.bis.doc.gov/index.php/electronic-foia/index-of-documents; The State Department Public Comments, U.S. DEP’TOF STATE (2015), http://www.pmddtc.state.gov/regulations_laws/documents/proposed_rules/ CategoryXII_Comments.pdf. 10. Amendment to the International Traffic in Arms Regulations: Revision of U.S. Munitions List Categories XIV and XVIII, 80 Fed. Reg. 34,572, 34,572 (proposed June 17, 2015) (to be codified at 22 C.F.R pt. 121). 11. Commerce Control List: Addition of Items Determined to No Longer Warrant Control Under United States Munitions List Category XIV (Toxicological Agents) or Category XVIII (Directed Energy Weapons), 80 Fed. Reg. 34,562, 34,562 (proposed June 17, 2015) (to be codified at 15 C.F.R. pt. 774). 12. Public Comments Regarding Category XIV and XVIII Proposed Amendments, U.S. DEP’TOF STATE (2015), https://www.pmddtc.state.gov/regulations_laws/documents/proposed_rules/Category XIVandXVIII_Comments.pdf. 13. See e.g., id. 14. Request for Comments Regarding Review of United States Munitions List Categories VIII and XIX, 80 Fed. Reg. 11,314, 11,314 (Mar. 2, 2015) (notice of inquiry). 15. Id.
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Control List.16 The Government released the public comments it has received and expects to revise these USML categories shortly.17 The State Department also released another Notice of Inquiry for USML Categories IV (Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines), VII (Ground Vehicles), XIII (Materials and Miscellaneous Articles), and XX (Submersible Vessels and Related Articles), on October 9, 2015.18 These notices will have a sixty-day window for commenting.19 In particular, the State Department requested public comments for identifying (1) emerging and new technologies, (2) items that are controlled on the USML or 600 series but have entered into normal commercial use, (3) items where commercial use is anticipated within the next five years, and (4) drafting or technical issues with the control text.20
II. Other Developments in International Traffic in Arms Regulations (ITAR)
A. HARMONIZATION OF DEFINITIONS
The State Department published a proposed rule on June 3, 2015, to amend or create definitions in ITAR Part 120, primarily for the purpose of harmonizing the definitions between the ITAR and Export Administration Regulations (EAR) “to the extent appropriate.”21 The State Department proposed updates to the definitions of “defense article,” “defense services,” “technical data,” “public domain,” “export,” and “reexport or retransfer,” and proposed to create definitions for “required,” “technical data that arises during, or results from, fundamental research,” “release,” “retransfer,” and “activities that are not exports, reexports, or retransfers.”22 The State Department also proposed significant changes to address electronic transmission and storage of “unclassified technical data via foreign communications infrastructure.”23 If adopted, the proposed revision would allow for such electronic transmission or storage if the data is sufficiently secured to prevent access by foreign persons.24
16. Request for Comments Regarding Controls on Military Aircraft and Military Gas Turbine Engines on the Commerce Control List, 80 Fed. Reg. 11,315, 11,315 (Dep’t of Commerce Mar. 2, 2015) (notice of inquiry). 17. AIA, Public Comments Regarding USML Category VIII & CCL Category 9 Proposed Amendments, U.S. DEP’TOF STATE (2015), https://www.pmddtc.state.gov/regulations_laws/documents/proposed_rules/ Categories_VIII_and_XIX_Comments.pdf. 18. Request for Comments Regarding Review of United States Munitions List Categories VI, VII, XIII, and XX, 80 Fed. Reg. 61,138, 61,138 (Dep’t of State Oct. 9, 2015) (notice of inquiry). 19. Request for Comments Regarding Review of United States Munitions List Categories VIII and XIX, 80 Fed. Reg. at 11,314, 11,314 (Dep’t of Commerce Mar. 2, 2015) (notice of inquiry). 20. Id. 21. International Traffic in Arms Regulations: Revisions to Definitions of Defense Services, Technical Data, and Public Domain; Definition of Product of Fundamental Research; Electronic Transmission and Storage of Technical Data; and Related Definitions, 80 Fed. Reg. 31,525, 31,526 (proposed June 3, 2015) (to be codified at 22 C.F.R. pt. 120, 123, 125, and 127). 22. Id. 23. Id. 24. Id.
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The State Department reportedly received thousands of public comments on the proposed rule, many of which focused on the proposed revision to the definition of public domain. In fact, the ABA Section of International Law’s Export Controls and Economic Sanctions Committee formed a Task Force that prepared comments on many aspects of the proposed rule that were ultimately filed by the Ad Hoc Coalition for Effective Export Control Reform.25 Moreover, as described below, at least one person has filed suit against the State Department, claiming that the definition of public domain as proposed would be an unconstitutional prior restraint on speech.26
B. REGISTRATION AND LICENSING OF U.S. PERSONS EMPLOYED BY FOREIGN PERSONS
On May 26, 2015, the State Department published a proposed rule to clarify when an individual U.S. person, who is employed by a foreign person, is considered to be “engaged in the business of furnishing defense services to their foreign person employers,” and therefore may be required to register as an exporter and obtain authorization from the State Department.27 The proposed rule is intended to impact both U.S. persons working for foreign subsidiaries or affiliates of U.S. companies, and U.S. persons employed by foreign companies with no U.S. affiliation.28 The specific proposed changes include a revision to section 122.1 to “clarify the existing requirement that U.S. persons performing defense services abroad are required to be registered pursuant to 22 CFR 122.2,”29 a new provision at section 124.17 to add “[a]n exemption for natural U.S. persons employed by foreign persons located in NATO countries and other specified nations,”30 and a revision to section 124.1(a) to “clarify that defense services performed by natural U.S. persons may be authorized via a DSP–5 [license].”31
C. OTHER ITAR DEVELOPMENTS
On May 22, 2015, the State Department proposed changes to various ITAR provisions, including: • Revision of various ITAR provisions relating to the process for obtaining State Department authorization to export EAR-controlled items; • Clarification of the ITAR exemption in Section 126.4 for exports by or for an agency of the U.S. Government, particularly regarding use of the exemption for items sent to contractor support personnel;
25. Comments on Proposed Revisions to Certain EAR and ITAR Definitions, AD HOC COALITION (2015), http://www.regulations.gov/#!documentDetail;D=DOS-2015-0023-7826. 26. Memorandum of Points and Authorities in Support of Plaintiff’s Motion for a Preliminary Injunction, Stagg P.C. v. U.S Dep’t of State, Civ. No. 15-cv-08468-SAS (S.D.N.Y. Nov. 2, 2015). 27. Amendment to the International Traffic in Arms Regulations: Registration and Licensing of U.S. Persons Employed by Foreign Persons, and Other Changes, 80 Fed. Reg. 30,001, 30,001 (proposed May 26, 2015) (to be codified at 22 C.F.R. pts. 120, 122, 124, 125, and 126). 28. Id. 29. Id. at 30,002 (emphasis added). 30. Id. 31. Id. (emphasis added).
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• Harmonization of the Destination Control Statement (DCS) in Section 123.9 with that in the EAR (15 C.F.R. § 758.6); and • Minor edits to address erroneous or outdated reporting requirements.32 The public comments on the proposed rule included both positive comments and requests for further modification.33 On May 29, 2015, the State Department rescinded its long-standing policy of denying exports of defense articles and defense services to Fiji.34 This change in policy was a result of the democratic elections held in Fiji in September 2014, which were determined to be credible by the Multinational Observer Group.35
D. RELATED CASES
Four suits were filed against the State Department in 2015. Each of these cases is currently pending before the court in which it was filed. Defense Distributed, a non-profit organization known for publishing on its website CAD files to enable 3D printing of a plastic gun,36 and the Second Amendment Foundation filed a complaint in March 2015 asserting that the State Department’s imposition of a pre-publication approval requirement for technical data related to defense articles is unconstitutional.37 Similarly, the law firm Stagg P.C. requested a preliminary injunction in November to prohibit the State Department from imposing the pre-publication review requirement announced in its June 3, 2015, proposed rulemaking.38 A U.S. manufacturer of firearms accessories, Leo Combat LLC, filed a complaint in October 2015, challenging the imposition of a registration requirement and registration fees as unconstitutional when applied to domestic manufacturers who do not export.39 Goldstein PLLC, a U.S.-based law firm, filed a complaint in March 2015, challenging the U.S. State Department’s apparent regulation under the ITAR brokering rules of the provision of legal advice regarding U.S. international trade laws.40 The State Department filed a motion to dismiss the complaint based on its May 2015 letter to the plaintiff noting
32. Amendment to the International Traffic in Arms Regulations: Exports and Temporary Imports Made to or on Behalf of a Department or Agency of the U.S. Government; Procedures for Obtaining State Department Authorization to Export Items Subject to the Export Administration Regulations; Revision to the Destination Control Statement; and Other Changes, 80 Fed. Reg. 29,565, 29,565 (proposed May 22, 2015) (to be codified at 22 C.F.R. pts. 120, 123, 124, 125, and 126). 33. Public Comments regarding ITAR and EAR proposed amendments, U.S. DEP’TOF STATE (2015), http://www.pmddtc.state.gov/regulations_laws/documents/proposed_rules/BehalfofGovt_Comments.pdf. 34. Amendment to the International Traffic in Arms Regulations: Policy on exports to the Republic of Fiji, 80 Fed. Reg. 30,614, 30,614 (May 29, 2015) (to be codified at 22 C.F.R. pt. 126). 35. Id. 36. See DEFENSE DISTRIBUTED, https://defdist.org (last visited Feb. 6, 2016). 37. See Def. Distributed v. U.S. Dep’t of State, No. 1:15-cv-00372-RP (W.D. Tex. Apr. 29, 2015). 38. See Memorandum of Points and Authorities in Support of Plaintiff’s Motion for a Preliminary Injunction at 1, Stagg P.C. v. U.S Dep’t of State, Civ. No. 15-cv-08468-SAS (S.D.N.Y. Nov. 2, 2015). 39. See Complaint for Declaratory and Injunctive Relief at 7, Leo Combat LLC v. U.S Dep’t of State, Civ. No. 1:15-cv-2323 (D. Colo. filed Oct. 20, 2015). 40. See Complaint for Declaratory and Injunctive Relief at 2, Matthew A. Goldstein PLLC v. U.S Dep’t of State, Civ. No. 1:15-cv-311 (D.D.C. filed Mar. 3, 2015).
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that the activities described in the complaint would not fall within the scope of regulated brokering activities.41
III. EAR Developments: Restrictions, Liberalizations, and Key Proposed Rules
Effective January 29, 2015, the BIS published a final rule that imposed licensing requirements for all items subject to the EAR, except food and medicine designated as EAR99 for export or reexport to the Crimea region of Ukraine, and for which there would be a general presumption of denial for all such exports and reexports.42 Subsequently, however, the BIS published a final rule on May 22, 2015, allowing exports:
without a license to the Crimea region of Ukraine of software that is necessary to enable the exchange of personal communications over the Internet, provided that such software is designated EAR99, or is classified as mass market software under. . .ECCN 5D992.c of the [CCL], and provided further that such software is widely available to the public at no cost to the user.43
In addition to the export controls imposed on the Crimea region of Ukraine, the BIS also sought to further the Obama Administration’s targeted Ukrainian-related sanctions by adding a number of Russian entities to the Entity List in 2015.44 The BIS issued several final rules in 2015 that were designed to liberalize certain export controls that had been imposed against Cuban entities. To begin with, on January 16, 2015, the BIS promulgated a final rule that: (1) amended License Exception Gift Parcels and Humanitarian Donations (GFT) to remove the license requirement for consolidated shipments of gift parcels that would not require a license if shipped separately; (2) revised License Exception Consumer Communications Devices (CCD) to remove the donation requirement and update the list of eligible items; and (3) created a new License Exception—Support for the Cuban People (SCP) that authorizes certain exports and reexports to improve living conditions, promote independent economic activity, strengthen civil society and “improve the free flow of information to, from, and among the Cuban people.”45 Subsequently, on July 22, 2015, the BIS published a notice pursuant to which Cuba was removed from Country Group E:1 (terrorist-supporting countries),
41. See Defendants’ Memorandum in Support of their Motion to Dismiss Plaintiff’s Amended Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) at 6, Matthew A. Goldstein PLLC v. U.S Dep’t of State, Civ. No. 1:15-cv-311 (D.D.C. filed May 18, 2015). 42. Russian Sanctions: Licensing Policy for the Crimea Region of Ukraine, 80 Fed. Reg. 4,776, 4,779 (Jan. 29, 2015) (to be codified at 15 C.F.R. pts. 738, 740, 746, and 772). 43. Russian Sanctions: Revisions and Clarifications for Licensing Policy for the Crimea Region of Ukraine, 80 Fed. Reg. 29,530 (May 22, 2015) (to be codified at 15 C.F.R. pts. 738, 740, and 746). 44. See, e.g., Russian Sanctions: Additions to the Entity List to Prevent Violations of Russian Industry Sector Sanctions, 80 Fed. Reg. 47,402, 47,402 (Aug., 7, 2015) (to be codified at 15 C.F.R. pts. 744 and 746); Addition of Certain Persons to the Entity List, 80 Fed. Reg. 52,963, 52,963 (Sept. 2, 2015) (to be codified at 15 C.F.R. pt. 744). 45. Cuba: Providing Support for the Cuban People, 80 Fed. Reg. 2,286, 2,286 (Jan. 16, 2015) (to be codified at 15 C.F.R. pts. 736, 740, 746, and 748).
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which thereby made Cuba eligible for a general 25% de minimis level.46 Further, it authorized Cuba under portions of four license exceptions, and removed anti-terrorism (AT) license requirements from Cuba.47 References to Cuba as a State Sponsor of Terrorism were eliminated, although pre-existing license requirements were maintained for all items subject to the EAR unless authorized by a license exception.48 Most recently, on September 21, 2015, the BIS published a final rule that expanded License Exception SCP to facilitate engagement between U.S. and Cuban people, made temporary sojourns of most vessels to Cuba eligible for License Exception Aircraft, Vessels, and Spacecraft (AVS), and created a case-by-case review policy of license applications to export and reexport to Cuba items to ensure the safety of civil aviation and safe operation of commercial passenger aircraft.49 In addition to the country-specific amendments discussed above, the BIS also implemented several regime-specific amendments in 2015. On April 7, 2015, the BIS published a final rule to amend the EAR to reflect changes to the Missile Technology Control Regime (MTCR) Annex that were agreed to by MTCR member countries at the September and October 2014 Plenary in Oslo, Norway, and pursuant to the 2014 Technical Experts Meeting in Prague, Czech Republic.50 Subsequently, on May 21, 2015, the BIS published a final rule that implemented Wassenaar Arrangement 2014 Plenary Agreements and certain Country Policy Amendments, which collectively resulted in revisions to 42 ECCNs, the addition of one ECCN, and the removal of another ECCN.51 In addition, on June 6, 2015, the BIS published a final rule to implement the recommendations presented at the Australia Group (AG) Intersessional Meeting that was held in Budapest, Hungary, on November 18 – 22, 2013, and adopted under the AG silent approval procedure in January/February 2014.52 The BIS also published a final rule that amended certain support document requirements for license applications on March 13.53 In addition to clarifying and streamlining the support document requirements for license applications in EAR Part 748, this final rule removed the requirement to obtain an International Import Certificate or Delivery Verification in connection with a license application and limited the requirement to obtain a Statement by Ultimate Consignee and Purchaser to exports, reexports, and transfers (in-country) of 600 Series Major Defense Equipment.54
46. Cuba: Implementing Rescission of State Sponsor of Terrorism Designation, 80 Fed. Reg. 43,314, 43,314 (July 22, 2015) (to be codified at 15 C.F.R. pts. 734, 736, 740, 742, 746, 748, 750, 758, 772, and 774). 47. Id. 48. Id. 49. Enhancing Support for the Cuban People, 80 Fed. Reg. 56,898, 56898 (Sept. 21, 2015) (to be codified at 15 C.F.R. pts. 740, 746, and 772). 50. Revisions to the Export Administration Regulations Based on the 2014 Missile Technology Control Regime Plenary Agreements, 80 Fed. Reg. 18,522, 18,522 (Apr. 7, 2015) (to be codified at 15 C.F.R. pt. 774). 51. Wassenaar Arrangement 2014 Plenary Agreements Implementation and Country Policy Amendments, 80 Fed. Reg. 29,432, 29,432 (May 21, 2015) (to be codified at 15 C.F.R. pts. 738, 740, 742, 743, 772, and 774). 52. Implementation of the Australia Group (AG) Nov. 2013 Intersessional Decisions, 80 Fed. Reg. 34,266, 34,267 (June 16, 2016) (to be codified at 15 C.F.R. pts. 740, 742, 752, and 774). 53. Revisions to Support Document Requirements for License Applications under the Export Administration Regulations, 80 Fed. Reg. 13,210, 13,210 (March 13, 2015) (to be codified at 15 C.F.R. pts. 742, 748, and 762). 54. Id. at 13,212.
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On August 26, 2015, the BIS published a final rule that served to remove the Special Comprehensive License (SCL) provisions from the EAR.55 In the preamble to the final rule, the BIS stated that it had concluded that “SCL has outlived its usefulness to the exporting public because recent changes to the EAR permit exporters to accomplish similar results using individual licenses and without undertaking the more onerous SCL application.”56 The rule took effect on September 25, 2016.57 On May 20, 2015, the BIS published a proposed rule relating to the implementation of: agreements by the Wassenaar Arrangement at the Plenary Meeting in December 2013 with regard to systems, equipment or components specially designed for the generation, operation or delivery of, or communication with, intrusion software; software specially designed or modified for the development or production of such systems, equipment or components; software specially designed for the generation, operation or delivery of, or communication with, intrusion software; technology required for the development of intrusion software; Internet Protocol (IP) network communications surveillance systems or equipment and test, inspection, production equipment, specially designed components therefor, and development and production software and technology therefor.58
On June 3, 2015, the BIS published a proposed rule that would serve to create new definitions in the EAR for numerous terms (e.g., “technology,” “required,” “peculiarly responsible,” “proscribed person,” “published,” results of “fundamental research,” “export,” “reexport,” “release,” “transfer,” and “transfer (in-country)”) to enhance clarity and consistency with terms also found in the ITAR.59
IV. OFAC Sanctions Developments and Enforcement Actions
A. MAJOR REGULATORY AND POLICY DEVELOPMENTS
1. Cuba
President Obama announced plans to normalize relations with Cuba on December 17, 2014.60 Since then, the Office of Foreign Assets Control (OFAC) has twice made substantial changes to the Cuban Assets Control Regulations (CACR).61 The first set of amendments, effective January 16, 2015: (1) expanded the scope of existing authorizations for twelve travel categories (while comporting with the unchanged statutory prohibition
55. Export Administration Regulations: Removal of Special Comprehensive License Provisions, 80 Fed. Reg. 51,725, 51,725 (Aug. 26, 2015) (to be codified at 15 C.F.R. pts. 730, 732, 738, 743, 748, 752, 762, 772, and 774). 56. Id. 57. Id. 58. Wassenaar Arrangement 2013 Plenary Agreements Implementation: Intrusion and Surveillance Items, 80 Fed. Reg. 28,853, 28,853 (May 20, 2015) (to be codified at 15 C.F.R. pts. 740, 742, 748, 772, and 774). 59. Revisions to Definitions in the Export Administration Regulations, 80 Fed. Reg. 31,505, 31,505 (June 3, 2015) (to be codified at 15 C.F.R. 734, 740, 750, 764, and 772). 60. Press Release, White House, Statement by the President on Cuba Policy Changes (Dec. 17, 2014), https://www.whitehouse.gov/the-press-office/2014/12/17/statement-president-cuba-policy-changes. 61. Cuban Assets Control Regulations, 80 Fed. Reg. 2,291, 2,291 (Jan. 16, 2015) (to be codified at 31 C.F.R. pt. 515).
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on tourism and leisure transactions); (2) eliminated the requirement that travel service providers and airlines be licensed by OFAC when facilitating or furnishing travel to Cuba, and raised the quarterly remittance limit from $500 to $2,000 (among other remittance- related adjustments); (3) authorized the use of debit and credit cards in Cuba; (4) eased restrictions on transactions relating to telecommunications and the support of independent Cuban entrepreneurs, and permitted banks to open correspondent accounts at Cuban financial institutions to facilitate lawful transactions; and (5) authorized U.S.- owned or -controlled entities in third countries to furnish goods and services to Cuban nationals located in those countries.62 Moreover, U.S. travelers returning from Cuba may now bring back Cuban-origin merchandise, provided the goods are for personal use and do not exceed a value of $400 per person ($100 of which may consist of alcohol or tobacco products).63 The second set of amendments, published on September 21, 2015, continued in the same vein, further relaxing the requirements applicable to various non-tourist transactions.64 Cuba-related activities benefitting from the new rules include ocean-going vessel travel; the provision of telecommunications services; the establishment of physical, in-country operations for certain purposes; the opening of bank accounts; accompanied family travel; and educational travel and services.65
2. Iran
On July 14, 2015, the United States, Iran, and five other countries concluded a Joint Comprehensive Plan of Action (JCPOA), an arrangement under which Iran has committed not to seek, develop, or acquire nuclear weapons in exchange for the lifting of economic sanctions.66 OFAC sanctions relief is to be phased in as Iran meets specified milestones over a period of several years.67 As of the end of 2015, a set of modest, interim measures first enacted in 2014 remain in effect.68 While U.S. persons and U.S.-owned or controlled entities are still prohibited from engaging in Iran-related transactions without authorization from OFAC, the agency is applying a favorable licensing policy to activities relating to the safety of Iranian civil aviation, as well as, humanitarian exports to Iran.69 Moreover, OFAC has eased certain banking-related restrictions with the intent of making it easier for non-U.S. persons and
62. Id. 63. Id. (stating new 31 C.F.R. § 515.560(c)(3)). 64. Cuban Assets Control Regulations, 80 Fed. Reg. 56,915, 56,915 (Sep. 21, 2015) (to be codified at 31 C.F.R. pt. 515). 65. Id. at 56915- 16. 66. Joint Comprehensive Plan of Action, July 14, 2015, http://eeas.europa.eu/statements-eeas/docs/ iran_agreement/iran_joint-comprehensive-plan-of-action_en.pdf. 67. Id. at 16. 68. U.S. DEP’T OF THE TREASURY, GUIDANCE RELATING TO THE CONTINUATION OF CERTAIN TEMPORARY SANCTIONS RELIEF PURSUANT TO THE JPOA PRIOR TO IMPLEMENTATION OF THE JCPOA (Aug. 7, 2015), http://www.treasury.gov/resource-center/sanctions/Programs/Documents/ guidance_ext_20150807.pdf (last visited Nov. 24, 2015). 69. U.S. DEP’T OF THE TREASURY, FREQUENTLY ASKED QUESTIONS RELATING TO THE CONTINUATION OF CERTAIN TEMPORARY SANCTIONS RELIEF PURSUANT TO THE JPOA PRIOR TO IMPLEMENTATION OF THE JCPOA at 2 (Aug. 7, 2015), http://www.treasury.gov/resource-center/sanctions/ Programs/Documents/jpoa_ext_faq_20150807.pdf (last visited Nov. 24, 2015).
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entities to conduct business with Iran in the petrochemical, crude oil, precious metals, and automotive sectors.70
3. Crimea Region
President Obama issued Executive Order 13685, Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to the Crimea Region of Ukraine, on December 19, 2014.71 The order freezes the assets of certain persons involved in the conflict in the Crimea region, and imposes comprehensive investment, export, import, and financial restrictions.72 OFAC issued a series of general licenses authorizing various activities relating to the Crimea region that would otherwise be prohibited. General License No. 4 permits the export of specified agricultural commodities, medical supplies, and replacement parts.73 General License No. 5 authorizes certain financial transactions necessary to wind up or divest from business operations in the region.74 General License No. 6 allows for the transfer of noncommercial, personal remittances to the Crimea region.75 General License No. 7 authorizes the operation of personal bank accounts for individuals ordinarily resident in the Crimea region whose assets are not blocked.76 Finally, General Licenses 8 and 9 authorize the provision of postal and telecommunications services, as well as, certain Internet-related software, to Crimean recipients.77
4. Miscellaneous
Following reports of an organized, foreign-origin cyber-attack directed at Sony Pictures Entertainment Inc., President Obama issued Executive Order No. 13687, Imposing
70. Id. at 3-7. 71. Exec. Order No. 13685, 79 Fed. Reg. 77357 (Dec. 19, 2014). 72. Id. at 77359. 73. U.S. DEP’T OF THE TREASURY, GENERAL LICENSE NO. 4, AUTHORIZING THE EXPORTATION OR REEXPORTATION OF AGRICULTURAL COMMODITIES, MEDICINE, MEDICAL SUPPLIES, AND REPLACEMENT PARTS (Dec. 19, 2014) https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ ukraine_gl4.pdf. 74. U.S. DEP’T OF THE TREASURY, GENERAL LICENSE NO. 5, AUTHORIZING CERTAIN ACTIVITIES PROHIBITED BY EXECUTIVE ORDER 13685 OF DECEMBER 19, 2014 NECESSARY TO WIND DOWN OPERATIONS INVOLVING THE CRIMEA REGION OF UKRAINE (Dec. 30, 2014), https://www.treasury.gov/ resource-center/sanctions/Programs/Documents/ukraine_gl5.pdf. 75. U.S. DEP’TOFTHE TREASURY, GENERAL LICENSE NO. 6, NONCOMMERCIAL, PERSONAL REMITTANCES AUTHORIZED (Jan. 30, 2015), https://www.treasury.gov/resource-center/sanctions/Programs/ Documents/eo13685_gl_6.pdf. 76. U.S. DEP’T OF THE TREASURY, GENERAL LICENSE NO. 7, OPERATION OF ACCOUNTS AUTHORIZED (Jan. 30, 2015), https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ eo13685_gl_7.pdf. 77. U.S. DEP’T OF THE TREASURY, GENERAL LICENSE NO. 8, TRANSACTIONS RELATED TO TELECOMMUNICATIONS AND MAIL AUTHORIZED (Jan. 30, 2015), https://www.treasury.gov/resource- center/sanctions/Programs/Documents/eo13685_gl_8.pdf; GENERAL LICENSE NO. 9, EXPORTATION OF CERTAIN SERVICES AND SOFTWARE INCIDENT TO INTERNET-BASED COMMUNICATIONS AUTHORIZED (May 22, 2015), https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ ukraine_gl_9.pdf.
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Additional Sanctions with Respect to North Korea, on January 2, 2015.78 The order blocks the assets of designated North Korean Government organizations and personnel.79 On February 18, 2015, OFAC amended the Sudanese Sanctions Regulations to add a general license for the export of certain communications-related software, hardware, and services.80 Primarily in response to reports about hackers abroad penetrating U.S. Government computer systems, on April 1, 2015, President Obama issued Executive Order 13694, Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber- Enabled Activities.81 This order authorizes OFAC to block the property of persons determined to be “responsible for or complicit in. . .cyber-enabled activities” posing a “threat to the national security, foreign policy, or economic health or financial stability of” the U.S., as well as, persons involved in related misuses of hacked trade secrets.82 As of November 24, 2015, OFAC had not yet designated any persons subject to this order. OFAC amended the Syrian Sanctions Regulations on April 13, 2015, to include a general license for certain transactions relating to the creation, publishing, and marketing of manuscripts, books, journals, and newspapers.83 On June 24, 2015, the U.S. Department of Justice published a statement explaining that it does not intend to pursue criminal charges against any persons who may violate U.S. counterterrorism sanctions laws by paying ransoms for the release of family members held hostage abroad.84 OFAC did not issue a corresponding assurance regarding civil enforcement. OFAC promulgated the new Venezuela Sanctions Regulations on July 10, 2015.85 These regulations implement the Venezuela Defense of Human Rights and Civil Society Act of 2014, which directs the President to impose sanctions targeting persons responsible for significant acts of political violence and violations of human rights in Venezuela.86 To date, the President has designated seven Venezuelan Government officials now subject to asset freezes.87 On October 29, 2015, OFAC issued a general license under the Belarusian Sanctions Regulations that permits certain transactions with nine entities whose assets had been blocked in an earlier executive order.88
78. Exec. Order No. 13687, 80 Fed. Reg. 819 (Jan. 6, 2015). 79. Id. 80. Sudanese Sanctions Regulations, 80 Fed. Reg. 8531, 8532 (Feb. 18, 2015) (to be consolidated at 31 C.F.R. 538). 81. Exec. Order No. 13964, 80 Fed. Reg. 18,077 (Apr. 2, 2015). 82. Id. 83. Syrian Sanctions Regulations, 80 Fed. Reg. 19,532, 19,532 (Apr. 13, 2015) (to be codified at 31 C.F.R. pt. 542). 84. Press Release, U.S. Dep’t of Justice, Statement on U.S. Citizens Taken Hostage Abroad (June 24, 2015), http://www.justice.gov/opa/pr/department-justice-statement-us-citizens-taken-hostage-abroad. 85. Venezuela Sanctions Regulations, 80 Fed. Reg. 39,676 (July 10, 2015) (to be codified at 31 C.F.R. pt. 591). 86. Venezuela Defense of Human Rights and Civil Society Act of 2014, Pub. L. No. 113-278, § 5(a), 128 Stat. 3011, 3013 (2014). 87. See Venezuela Sanctions Regulations, 80 Fed. Reg. at 3,9683. 88. U.S. DEP’T OF THE TREASURY, GENERAL LICENSE NO. 2, GENERAL LICENSE WITH RESPECT TO ENTITIES BLOCKED PURSUANT TO EXECUTIVE ORDER 13405 (Oct. 29, 2015), https://www.treasury.gov/ resource-center/sanctions/Programs/Documents/belarus_gl2.pdf.
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On November 12, 2015, President Obama signed an executive order effectively ending the sanctions program targeting former Liberian President Charles Taylor (and associated persons).89 Finally, an executive order issued on November 22, 2015, blocked the assets of designated persons responsible for violence and repression in Burundi.90
B. MAJOR SANCTIONS ENFORCEMENT ACTIONS
On March 12, 2015, the U.S. Department of Justice announced that Commerzbank AG, headquartered in Germany, agreed to parallel civil and criminal settlement agreements with multiple federal and New York state agencies.91 The bank’s misconduct included processing (and often concealing) 1,596 transactions involving specially designated persons and countries subject to comprehensive trade embargoes (Burma, Cuba, Iran, and Sudan), in violation of OFAC regulations.92 The total civil and criminal fines and forfeitures reached $1.45 billion.93 In an agreement made public on March 25, 2015, PayPal, Inc. settled charges that it processed 486 transactions involving countries subject to comprehensive trade restrictions (Cuba, Iran, and Sudan), as well as, specially designated persons.94 PayPal agreed to remit $7,658,300 in civil fines to OFAC, which noted that the violations were systemic and reflected a reckless disregard for U.S. economic sanctions laws.95 On March 25, 2015, Schlumberger Oilfield Holdings Ltd. (SOHL), a multinational company having key operations in Sugar Land, Texas, agreed to plead guilty to one criminal count of conspiring to violate U.S. sanctions regulations by “willfully facilitating transactions and engaging in trade with Iran and Sudan.”96 The monetary penalty totaled $232,708,356; SOHL and its parent company, Schlumberger Ltd., also committed to a plan of continued cooperation and remediation.97 The underlying criminal conduct consisted of furnishing (and sometimes disguising) financial, business, and technical support for certain oilfield operations in Iran and Sudan.98 Cr´edit Agricole Corporate and Investment Bank, headquartered in France, agreed to a civil liability of $329,593,585 in a settlement with OFAC announced on October 20,
89. Exec. Order No. 13710, 80 Fed. Reg. 71,679 (Nov. 16, 2015). 90. Exec. Order No. 13712, 80 Fed. Reg. 73633 (Nov. 22, 2015). 91. Press Release, U.S. Dep’t of Justice, Commerzbank AG Admits to Sanctions and Bank Secrecy Violations, Agrees to Forfeit $563 Million and Pay $79 Million Fine (Mar. 12, 2015), http://www.justice.gov/ opa/pr/commerzbank-ag-admits-sanctions-and-bank-secrecy-violations-agrees-forfeit-563-million-and. 92. ENFORCEMENT INFORMATION FOR MARCH 12, 2015, U.S. DEP’T OF THE TREASURY, (Mar. 12, 2015), http://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20150312_commerzbank.pdf (last visited Nov. 24, 2015). 93. Press Release, supra note 92. 94. ENFORCEMENT INFORMATION FOR MARCH 25, 2015, U.S. DEP’T OF THE TREASURY, (Mar. 25, 2015), http://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20150325_paypal.pdf. 95. Id. 96. Press Release, U.S. Dep’t of Justice, Schlumberger Oilfield Holdings Ltd. Agrees to Plead Guilty and Pay Over $232.7 Million for Violating U.S. Sanctions by Facilitating Trade with Iran and Sudan (Mar. 25, 2015), http://www.justice.gov/opa/pr/schlumberger-oilfield-holdings-ltd-agrees-plead-guilty-and-pay-over- 2327-million-violating-us. 97. Id. 98. Id.
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2015.99 OFAC alleged that Cr´edit Agricole (including certain subsidiaries and acquisitions) committed 4,297 violations of federal sanctions laws by processing transactions involving embargoed countries (Sudan, Cuba, Burma, and Iran) to or through U.S. financial institutions.100 Rather than requiring payment of the $329,593,585, however, OFAC stated that the obligation would be “deemed satisfied by payment of an equal or greater amount to U.S. federal, state, or county officials arising out of the same pattern of conduct.”101 This concession was an acknowledgement of a parallel enforcement effort led by New York state financial authorities, which resulted in a separate $787 million fine for Cr´edit Agricole.102
C. OFAC LITIGATION
In OKKO Business PE v. Lew, the U.S. District Court for the District of Columbia declined to instruct OFAC to license the release of blocked wire transfer of funds originally—but no longer—intended for UE Belarusian Oil Trading House (UEB), a sanctioned entity since 2008.103 In April 2012, plaintiff OKKO Business PE (OKKO), a Ukrainian company, had attempted to wire a returnable deposit of 200,000_ to UEB in order to participate as a bidder in an online oil product auction.104 The transfer was routed through a U.K. affiliate of Citibank, which blocked the transaction in accordance with OFAC’s Belarus Sanctions Regulations.105 At issue in the litigation was OFAC’s refusal to issue a license allowing Citibank to return the blocked 200,000_ to OKKO after the auction, when OKKO had cancelled its arrangements with UEB and taken the position that UEB no longer had any actual or potential financial interest in the funds.106 Required by precedent to take an “‘extremely deferential’” approach in reviewing OFAC’s decisions,107 the court ruled that while UEB might not possess a “legally enforceable ownership interest” in the money, it had, at the time the wire transfer was stopped, a contingent interest sufficient for purposes of the sanctions regulations—specifically, 31 C.F.R. § 548.305, which expansively contemplates “an interest of any nature whatsoever, direct or indirect.”108 Moreover, the court stated that U.S. law vests authority to determine whether and when such an interest comes to an end in OFAC, and not the regulated parties.109
99. ENFORCEMENT INFORMATION FOR OCTOBER 20, 2015, U.S. DEP’T OF THE TREASURY, (October 20, 2015), http://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20151020_cacib.pdf. 100. Id. 101. Id. 102. Press Release, New York Dep’t of Financial Services, NYDFS Announces Cr´edit Agricole to Pay $787 Million, Install Independent Consultant, Terminate Employee for Transactions on Behalf of Sudan, Iran, Other Sanctioned Entities (Oct. 20, 2015), http://www.dfs.ny.gov/about/press/pr1510201.htm. 103. OKKO Business PE v. Lew, No. 1:14-cv-925 (CKK), slip op. at 3 (D.D.C. Sept. 28, 2015), https:// ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2014cv0925-18. 104. Id. at 4. 105. Id. 106. Id. at 5. 107. Id. at 7 (quoting Islamic Am. Relief Agency v. Gonzales, 477 F.3d 728, 734 (D.C. Cir. 2007)). 108. Id. at 8-10 (citing 31 C.F.R. pt. 548). 109. See OKKO Business PE v. Lew, No. 1:14-cv-925 (CKK), slip op. at 14—15 (D.D.C. Sept. 28, 2015), https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2014cv0925-18.
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V. Key Developments in Canadian Export Controls and Economic Sanctions
A record-setting government settlement at the beginning of 2015 started the year off with a stark reminder of the severe reputational impact of export control non-compliance, whether actual or alleged.110 The case involved a Canada Border Services Agency (CBSA) investigation against two Vancouver business people, Stephen and Perienne de Jaray.111 In 2010, they were criminally charged for failure to obtain export permits for the shipment of 5,100 dual-use electronic chips and circuit boards to Hong Kong.112 Those charges were later withdrawn after it was agreed the items were not controlled, but with their reputations and business destroyed as a result of the accusations, the de Jarays sued the Canadian government for $17 million.113 In January, it was reported that their claim was settled for more than $10 million, the second-largest payout of its kind in Canadian history.114
A. SANCTIONS AGAINST RUSSIA AND THE CRIMEA REGION OF UKRAINE
During 2015, Canada continued to add parties to its lists of designated persons under the Russia and Ukraine sanctions regulations.115 On February 17, 2015,116 and on June 29, 2015,117 Canada added seventy-one entities and individuals, bringing the total number of Russia/Ukraine designated persons to 290.118 These included designations of United Aircraft Corporation and the CEO of Rostec for purposes of the broad prohibitions against property dealings and facilitation, as well as Gazprom, Rosneft, and others that are the target of prohibitions against dealings in debt and/or equity financing.119 On June 29, 2015, Canada also imposed broad sanctions against the Crimea region of Ukraine, defined as “the Autonomous Republic of Crimea and the city of Sevastopol and includes their land areas and territorial sea.”120 These sanctions include prohibitions against: making investments and providing or acquiring financial or other related services for such investments; importing, purchasing, acquiring, shipping, or otherwise dealing in goods exported from the region; exporting, selling, supplying, shipping, or otherwise dealing in goods destined for the region; transferring, providing, or communicating technical data or services to, from, or for the benefit of or on the direction of any person in the region; providing or acquiring financial or other services related to tourism to,
110. John W. Boscariol, Robert A. Glasgow, and Simon V. Potter, Key Developments in Export Controls and Economic Sanctions During 2015 and What to Expect in 2016, MCCARTHY TERTRAULT (Jan. 15, 2016), https:// www.mccarthy.ca/article_detail.aspx?id=7194. 111. Id. 112. Id. 113. Id. 114. Id. 115. Id. 116. Regulations Amending the Special Economic Measures (Russia) Regulations (Special Economic Measures Act), SOR/2015-39 (Can.). 117. Regulations Amending the Special Economic (Ukraine) Regulations (Special Economic Measures Act) SOR/2015-179 (Can.). 118. Boscariol, supra note 110. 119. Id. 120. Id.
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from, or for the benefit of or on the direction of any person in the region; and docking cruise ships in the region.121 If a contract for a prohibited activity described above was entered into before June 29, 2015, there is an exemption from the particular prohibition.122 Because the Crimea region is not a recognized country (and may not commonly appear in address or location information), companies may encounter significant challenges in monitoring their international activities to ensure compliance with these new restrictions.123
B. NEW DUAL-USE GENERAL EXPORT PERMIT
On August 12, 2015, Canada issued a new dual-use general permit, General Export Permit No. 41 – Dual-use Goods and Technology to Certain Destinations (GEP 41), allowing for the transfer of certain goods and technology to thirty-two friendly countries without having to apply for an individual export permit.124 Dual-use goods and technology covered by GEP 41 include a broad range of items in Group 1 of the Export Control List (“ECL”), such as certain types of aircraft, computers and chips, sensors, protective equipment, information security items, various industrial components, and radar assemblies.125 GEP 41 also applies to certain Group 5 strategic goods and technology associated with satellite systems and spacecraft.126 While GEP 41 provides a streamlined export process for transfers to eligible destinations, exporters must be diligent and confirm that the goods and technology will be used in those recipient countries and not be re-exported or used in non-listed destination countries.127 GEP 41 explicitly provides that transfers of goods or technology to be used in non-eligible destinations is not authorized.128 If it is known that the goods will eventually be re-exported to or used in a non-eligible destination, exporters cannot take advantage of GEP 41.129
C. CHANGES COMING TO THE CONTROLLED GOODS PROGRAM
On May 2, 2015, Canada published proposed amendments to its domestic security regime for defense and space goods and technologies, the Controlled Goods Regulations under the Defence Production Act.130 The proposed amendments clarify current practices under the Controlled Goods Program and introduce new changes regarding high-risk employee screening; the visitor exemption process; reporting on security-assessed individuals; and revocations, suspensions, and reinstatements of CGP registrations.131
121. Id. 122. Id. 123. Id. 124. General Export Permit No. 41—Dual-use Goods and Technology to Certain Destinations (Export and Import Permits Act), SOR/2015-200 (Can). 125. Boscariol, supra note 110. 126. Id. 127. Id. 128. Id. 129. Id. 130. Boscariol, supra note 110. 131. Id.
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Of particular note are the proposed timelines for reporting requirements under the regulations, including the reporting of security breaches within three days and changes in registrant information within five days.132 Although the consultation period expired on June 1, 2015, the amendments have yet to come into force.133
D. CBSA INITIATING NEW EXPORTER AUDITS
On November 16, 2015, CBSA issued a Customs Notice134 advising that it is aware of a large number of businesses that have been exporting goods through the United States to Mexico and other countries without making proper export declarations.135 Shipments to the United States are exempt from export reporting.136 But if the ultimate destination is a country other than the United States, such exports must be reported if their value is $2,000 or more.137 In the case of such goods that are controlled and do not fall under a General Export Permit, the appropriate permit, license, or certificate, and an export declaration must be presented to CBSA prior to export, regardless of the value of the goods.138 According to the Notice, CBSA is commencing compliance verification activities on June 1, 2016, to determine whether exporters have complied with these reporting requirements.139 There will be a six-month grace period starting December 1, 2015, during which exporters may come forward to CBSA to disclose export reporting violations in order to avoid penalties.140
E. CHARGES LAID FOR RE-EXPORT OF U.S.-ORIGIN ITEMS TO IRAN
On October 13, 2015, the Royal Canadian Mounted Police laid charges against two Quebec businessmen regarding the export of U.S.-manufactured rail equipment from Canada to Iran.141 All U.S.-origin goods and technology are listed in item 5400 of the ECL and thereby controlled for transfer from Canada.142 But Canada has issued a General Export Permit that allows for such transfers to any destination other than Belarus, Syria, North Korea, Cuba, or Iran.143 In this case, the businessmen are accused of committing indictable offenses under both the Customs Act and the Export and Import Permits Act by misrepresenting the origin of U.S. railway equipment when exporting it to Iran, and also
132. Id. 133. Id. 134. CANADA BORDER SERVICES AGENCY, CUSTOMS NOTICE 15-035, VOLUNTARY DISCLOSURE OF UNREPORTED GOODS TRANSITING THROUGH THE UNITED STATES TO A SUBSEQUENT COUNTRY (November 16, 2015). 135. Boscariol, supra note 110. 136. Id. 137. Id. 138. Id. 139. Id. 140. Id. 141. Boscariol, supra note 110. 142. Id. 143. Id.
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by shipping the equipment through other countries in order to get it to Iran.144 Conviction under these offences attracts penalties of up to 10 years imprisonment and/or fines in an amount that is in the discretion of the Court.145
144. Id. 145. Id.
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International Antitrust
NIKIFOROS IATROU AND BRONWYN ROE, EDS. PAUL SCHOFF, KATRINA GROSHINSKI, ERIC WHITE, MARIA CECILIA ANDRADE, RAFAELA P. DE CALCENA´ , ADAM S. GOODMAN, PETER WANG, YIZHE ZHANG, LAURIE-ANNE GRELIER, PETER CAMESASCA, AURELIEN´ CONDOMINES, SUSANNE ZUEHLKE, VINOD DHALL, SONAM MATHUR, TAL EYAL-BOGER, ZIV SCHWARTZ, GERARDO CALDERON- VILLEGAS, VASSILY RUDOMINO, KSENIA TARKHOVA, ROMAN VEDERNIKOV, ALLA AZMUKHANOVA, HEATHER IRVINE, LARA GRANVILLE, JONATHAN TICKNER, JASVINDER NAKHWAL, WILLIAM F. CAVANAUGH, JR., ROBERT P. LOBUE, DEIRDRE A. MCEVOY, DANIEL A. FRIEDMAN, AND JAKE WALTER-WARNER*
This Article outlines the year’s most significant antitrust developments in thirteen jurisdictions. A more detailed publication will be released in 2016.
I. Australia
A. LEGISLATIVE DEVELOPMENTS
The Competition Policy Review released its final report in March 2015 (Review), making recommendations about competition policies; institutions; amendments to Australia’s merger review process; and laws regarding cartels, misuse of market power, exclusive dealing, and the introduction of a concept of “concerted practices.”1 The
* Nikiforos Iatrou & Bronwyn Roe, WeirFoulds LLP (CAN.); Paul Schoff, Katrina Groshinski & Eric White, Minter Ellison Lawyers (AU); Maria Cecilia Andrade & Rafaela P. de C´alcena, Mattos Muriel Kestener Advogados (BRA); Adam S. Goodman, Dentons Canada LLP (CAN); Peter Wang & Yizhe Zhang, Jones Day (PRC); Laurie-Anne Grelier & Peter Camesasca, Covington & Burling LLP (EU); Aur´elien Condomines, Aramis Soci´et´e d’Avocats (FRA); Susanne Zuehlke, Willkie Farr & Gallagher LLP (DE); Vinod Dhall & Sonam Mathur, Vinod Dhall and TT&A (IND); Tal Eyal-Boger & Ziv Schwartz, Fischer Behar Chen Well Orion & Co. (ISR); Gerardo Calderon-Villegas, Baker & McKenzie Abogados, S.C. (MEX); Vassily Rudomino, Ksenia Tarkhova, Roman Vedernikov & Alla Azmukhanova, ALRUD Law Firm (RUS); Heather Irvine & Lara Granville, Norton Rose Fulbright (S. AFR); Jonathan Tickner & Jasvinder Nakhwal, Peters & Peters (UK); William F. Cavanaugh, Jr., Robert P. LoBue, Deirdre A. McEvoy, Daniel A. Friedman & Jake Walter-Warner, Patterson Belknap Webb & Tyler LLP (USA). The editors thank Lia Boritz, student at WeirFoulds LLP, for her unflinching assistance. 1. AUSTRALIAN GOV’T COMPETITION POLICY REVIEW, The Final Report 18 (Mar. 31, 2015) (Austl.), http://competitionpolicyreview.gov.au/files/2015/03/Competition-policy-review-report_online.pdf.
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Australian Government announced that it will implement most recommendations, but will consult further on proposed amendments to the dominance prohibition.
B. MERGERS
In October, the Australian Competition and Consumer Commission (ACCC) approved cross-acquisitions between a monopoly pay television company and a free-to-air network, on the basis of strong competition from free-to-air networks and new streaming services (e.g. Netflix).2 It also approved two major telecommunications acquisitions. It publicly opposed only one merger clearance application: the proposed acquisition of the Northern Territory and far north Queensland marine freight business of Toll Marine Logistics Australia by Sea Swift.3 Sea Swift has applied for authorization on public interest grounds from the Australian Competition Tribunal.
C. CARTELS AND OTHER ANTICOMPETITIVE PRACTICES
The ACCC commenced proceedings involving serious allegations of bid-rigging affecting a state government tender process. In July 2015, the Federal Court delivered judgment in two appeals relating to cartels between agents and principals: one by the ACCC against the decision in proceedings against Australia and New Zealand Banking Group,4 and one by Flight Centre Travel Group.5 The decisions concern the application of Australia’s cartel laws to firms that sell goods and services both directly and through agents. The ACCC lost both appeals and, in August, sought special leave to appeal.6 In September, the Federal Court ordered Visa to pay penalties of AUD eighteen million, in addition to costs of AUD two million for unlawful exclusive arrangements for dynamic currency conversion services on point of sale transactions.7
D. DOMINANCE
In February, the Federal Court dismissed proceedings against Pfizer for alleged misuse of market power and exclusive dealing in the supply of generic cholesterol-lowering pharmaceuticals; the ACCC appealed.8 The misuse of market power prohibition attracted
2. Media Release, Australian Competition and Consumer Comm’n (ACCC), ACCC To Not Oppose Foxtel and Ten Acquisitions (Oct. 22, 2015), http://www.accc.gov.au/media-release/accc-to-not-oppose- foxtel-and-ten-acquisitions. 3. Media Release, ACCC, ACCC Opposes Sea Swift Pty Ltd’s Proposed Acquisition of Toll Marine Logistics (Jul. 9, 2015), http://www.accc.gov.au/media-release/accc-opposes-sea-swift-pty-ltd’s-proposed- acquisition-of-toll-marine-logistics. 4. Australian Competition and Consumer Comm’n v Austl. & N.Z. Banking Grp. Ltd. [2015] FCAFC 103 (Austl.). 5. Flight Ctr. Ltd. v Australian Competition and Consumer Comm’n [2015] FCAFC 104 (Austl.). 6. Media Release, ACCC, ACCC Applies For Special Leave to Appeal the High Court from the Full Federal Court Flight Centre Judgment (Aug. 25, 2015), http://www.accc.gov.au/media-release/accc-applies- for-special-leave-to-appeal-to-the-high-court-from-the-full-federal-court-flight-centre-judgment. 7. Media Release, ACCC, Visa Ordered to Pay $18 Million Penalty for Anti-Competitive Conduct Following ACCC Action (Sept. 4, 2015), https://www.accc.gov.au/media-release/visa-ordered-to-pay-18- million-penalty-for-anti-competitive-conduct-following-accc-action. 8. Media Release, ACCC, ACCC Appeals Pfizer Decision (Mar. 15, 2015), http://www.accc.gov.au/ media-release/accc-appeals-pfizer-decision.
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extensive debate in the Australian business community and media in the wake of the Government’s announcement for further consultation, following the release of a discussion paper. A final position on reform is expected for March 2016.
II. Brazil
A. LEGISLATIVE DEVELOPMENTS
In 2015, the Administrative Council for Economic Defense (CADE) launched its electronic information system (SEI), making case records available online.9 It published guidelines on “gun-jumping” and permitted consultations on guidelines for compliance programs and leniency. CADE approved a resolution allowing interested parties to request a consultation on the application and interpretation of antitrust law in specific cases.10 It also approved a resolution to allow parties to file petitions online11 (currently, only mergers can be filed online).
B. MERGERS
In January, CADE approved the global acquisition of Veyance Technologies by Continental AG.12 The parties agreed to structural remedies in Mexico and Brazil. CADE also approved the acquisition of America Latina Log´ıstica by Rumo Log´ıstica Operadora Multimodal, subject to behavioral commitments.13 This transaction raised concerns due to the potential to stimulate market foreclosure and encourage discrimination.
C. CARTELS AND OTHER ANTICOMPETITIVE PRACTICES
In March, CADE and the Federal Prosecutor’s Office signed a Leniency Agreement with Setal Engenharia e Constru¸c˜oes, SOG Oleo´ e G´as, and individuals from “Opera¸c˜ao Lava Jato” (Operation Car Wash).14 Operation Car Wash involved public bidding for Petrobras’ onshore industrial assembly construction and was Brazil’s largest ever
9. Instituto Brasileiro de Estudos de Concorrˆencia, Consumo e Com´ercio Internacional (IBRAC), Overview of Competition Law in Brazil 31 (Cristianne Zarzur, Krisztian Katona & Mariana Villela eds., 2015). 10. Resolu¸c˜ao No. 12, de 11 de Mar¸co de 2015, DIARIO´ OFICIAL DA UNIAO˜ [D.O.U] de 17.3.2015 (Braz.), http://www.cade.gov.br/upload/RESOLU%C3%87%C3%83O%20N%C2%BA%2012.pdf. 11. Resolu¸c˜ao No. 14, de 14 de Outubro de 2015, DIARIO´ OFICIAL DA UNIAO˜ [D.O.U] de 21.10.2015 (Braz.), http://www.cade.gov.br/upload/CADE%20-%20Resolu%C3%A7%C3%A3o%2014-2015%20 (002).pdf. 12. Ato de Concentra¸c˜ao No. 08700.004185/2014-50, de 29 de Janeiro de 2015, DIARIO´ OFICIAL DA UNIAO˜ [D.O.U.] de 4.2.2015 (Braz.). 13. Ato de Concentra¸c˜ao No. 08700.005719/2014-65, de 11 de Fevererio, DIARIO´ OFICIAL DA UNIAO˜ [D.O.U.] de 17.3.2015 (Braz.). 14. CONSELHO ADMINISTRIVO DE DEFENSA ECONOMICA (CADE), Newsletter No. 26 (Mar. 2015), http:/ /www.cade.gov.br/Default.aspx?cd61b147de34c84adc6afd55e36c.
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corruption case. In July, following the execution of a Leniency Agreement, CADE began investigating an alleged cartel in the foreign exchange market.15
D. DOMINANCE
In July, CADE convicted Eli Lilly for the practice of sham litigation, imposing a fine of BRL 36.6 million.16 In CADE’s view, Eli Lilly artificially obtained a monopoly over a medicine by filing numerous court actions in multiple jurisdictions while presenting misleading information and omitting important data from the judges.
E. COURT DECISIONS
In 2013, CADE fined SKF for setting minimum resale price restrictions for distributors in Brazil. SKF appealed. In May, after SKF’s appeal, the Federal Court decided that CADE’s decision had violated SKF’s right to legal certainty, since CADE changed the way it reviewed RPM conduct and did not prove concrete damages. CADE has appealed this decision.17
III. Canada
A. LEGISLATIVE DEVELOPMENTS
In 2015, a controversial bill18 that would have authorized the Commissioner of Competition (Commissioner) to investigate United States-Canada price gaps did not pass.19 The Competition Bureau (Bureau) released new guidelines regarding electronic production,20 corporate compliance programs,21 and its approach to outreach, enforcement and advocacy.22
15. Processo Administrativo No. 08700.004633/2015-04, de 2 de Julho de 2015, DIARIO´ OFICIAL DA UNIAO˜ [D.O.U.] de 14.8.2015 (Braz.). 16. Processo Administrativo No. 08012.011508/2007-91, de 24 de Junho de 2015 DIARIO´ OFICIAL DA UNIAO˜ [D.O.U.] de 30.6.2015 (Braz.). 17. Daniel O. Andreoli & Vivian Fraga, Resale Price Maintenance in Brazil: CADE’s Understanding After the SKF Case, MONOPOLY MATTERS, (ABA Section of Antitrust Law/Unilateral Conduct Comm., Chicago, I.L.), Spring 2016, at 19, http://www.americanbar.org/content/dam/aba/publications/antitrust_law/at322100_news letter_2016spring.authcheckdam.pdf. 18. Price Transparency Act, Bill C-49, 2nd Sess., 41st Parl. (2014) (Can.). 19. Id. 20. See COMPETITION BUREAU CANADA (CCB), Enforcement Guidelines: Production of Electronically Stored Information (Apr. 28, 2015), http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/vwapj/cb-ef-e- production-e.pdf/$FILE/cb-ef-e-production-e.pdf. 21. CCB, Bulletin: Corporate Compliance Programs (June 3, 2015), http://www.competitionbureau.gc.ca/eic/ site/cb-bc.nsf/vwapj/cb-bulletin-corp-compliance-e.pdf/$FILE/cb-bulletin-corp-compliance-e.pdf. 22. CCB, Bulletin: Competition and Compliance Framework (Nov. 10, 2015), http://www.competitionbureau. gc.ca/eic/site/cb-bc.nsf/vwapj/Competition-Compliance-Framework-Bulletin-e.pdf/$file/Competition- Compliance-Framework-Bulletin-e.pdf.
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B. MERGERS
The Bureau permitted magazine23 and newspaper24 transactions without remedies, citing “competitive pressures from digital alternatives,”25 but treated French-language “brick and mortar” and online book sales separately.26 In a merger involving a joint acquisition by two of Canada’s largest telecoms, the Bureau required a confidentiality protocol.27 Concerning Holcim/Lafarge, the Bureau required the divestiture of Holcim’s Canadian operations.28 The Competition Tribunal (Tribunal) prohibited the closing of a gas station transaction in six markets,29 although the Bureau had requested interim relief in fourteen.30
C. CARTELS AND OTHER ANTICOMPETITIVE PRACTICES
P´etroles Global was fined CAD one million for retail gasoline price fixing in a contested proceeding;31 an individual was sentenced for bid rigging;32 and a jury acquitted all accused in another significant bid rigging matter.33 In the (ultimately stayed) Chocolate proceedings, the Ontario Superior Court of Justice (SCJ) ruled that facts proffered to the Bureau by immunity and leniency applicants were not privileged.34
D. DOMINANCE
The Tribunal permitted continuation of the abuse of dominance application against Direct Energy, which had exited the relevant water heaters market.35
23. Press Release, CCB, Competition Bureau Clears TVA Group’s Acquisition of Transcontinental’s Magazines (Mar. 2, 2015), http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03876.html. 24. Position Statement, CCB, Competition Bureau Statement Regarding the Proposed Acquisition by Postmedia Network Inc. of the English-Language Newspapers of Quebecor Media Inc. (Mar. 25, 2015), http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03899.html. 25. Id. 26. Position Statement, CCB, Competition Bureau Statement Regarding the Acquisition by Renaud-Bray of Archambault Retail Stores (Sept. 29, 2015), http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/ 03988.html. 27. Position Statement, CCB, Competition Bureau Statement Regarding BCE and Rogers’ Acquisition of GLENTEL (May 14, 2015), http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03924.html. 28. Position Statement, CCB, Competition Bureau Statement Regarding the Proposed Acquisition by Holcim of Lafarge (May 4, 2015), http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03920.html. 29. Commissioner of Competition v. Parkland Industries Ltd., 2015 Comp. Trib. 4, para. 121 (Can.). 30. Press Release, CCB, Competition Bureau Challenges a Merger Between Gas Retailers Parkland and Pioneer (Apr. 30, 2015), http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03917.html. 31. R. c. Les P´etroles Global Inc., 2015 QCCS 1618, para. 2 (Can. Que.). 32. Press Release, CCB, Ontario Individual Sentenced After Pleading Guilty to Bid-Rigging (May 21, 2015), http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03936.html. 33. Press Release, CCB, Competition Bureau to Consider Not-Guilty Verdicts in Major Bid-Rigging Case (Apr. 27, 2015), http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03912.html. 34. R. v. Nestl´e Canada Inc., 2015 ONSC 810, para. 79 (Can. Ont. Sup. Ct. J.). 35. Commissioner of Competition v. Direct Energy Marketing Ltd., 2015 Comp. Trib. 2, para. 54, 56 (Can.).
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E. COURT DECISIONS
The Supreme Court of Canada held that the Commissioner had not properly quantified anticompetitive merger effects under the efficiencies defense.36 In class actions, air cargo was certified,37 but the SCJ refused jurisdiction over absent foreign claimants;38 in lithium ion batteries, the SCJ refused jurisdiction over two defendants,39 but certified the action against those remaining;40 in LCD panels, the SCJ dismissed a defense limitations motion,41 but refused to add another plaintiff on limitations grounds.42
IV. China
A. LEGISLATIVE DEVELOPMENTS
In 2015, the State Administration for Industry and Commerce (SAIC) published the “Provisions on the Prohibition of Abuse of Intellectual Property Rights to Eliminate or Restrict Competition” (Regulation).43 The Regulation is the first set of comprehensive rules dedicated to the intersection of antitrust and IP laws in China. The Regulation provides some safe harbors, a rule of reason analysis, and details on the application of the law to IP.
B. MERGERS
In Nokia/Alcatel-Lucent, the Ministry of Commerce of the People’s Republic of China (MOFCOM) required that Nokia observe its FRAND44 commitments for both Nokia’s and Alcatel-Lucent’s standard-essential patents (SEPs) rather than seek injunction or exclusion orders.45 MOFCOM also required that Nokia notify licensees in China of any of its future transfer of SEPs. MOFCOM changed conditions previously imposed in three cases—Google/Motorola, Western Digital/Hitachi, and Seagate/Samsung—after review of alleged changes in circumstances and/or market conditions.46
36. Tervita Corp. v. Commissioner of Competition, 2015 SCC 3, [2015] 1 S.C.R. 161, 163 (Can.). 37. Airia Brands Inc. v. Air Canada, 2015 ONSC 5352, para. 144 (Can. Ont. Sup. Ct. J.). 38. Id. at para. 205. 39. Shah v. LG Chem, Ltd., 2015 ONSC 2628, para. 1, 4, 6 (Can. Ont. Sup. Ct. J.). 40. Shah v. LG Chem, Ltd. 2015 ONSC 6148, para. 9-11 (Can. Ont. Sup. Ct. J.). 41. Fanshawe College v. AU Optronics Corp., 2015 ONSC 2046, para. 99, 115 (Can. Ont. Sup. Ct. J.). 42. Fanshawe College v. AU Optronics Corp., 2015 ONSC 3414, para. 34 (Can. Ont. Sup. Ct. J.). 43. SAIC’s New IPR Regulation to Take Effect on 1 August 2015, MAYER BROWN JSM (June 11, 2015) https:// www.mayerbrown.com/files/Publication/1dd13cef-3598-4127-ad90-3807a96e17a6/Presentation/Publication Attachment/b7aeed69-50a1-45ef-8f77-3b8ee1b1fd00/150611-HKGPRC-AntitrustCompetition-IP-TMT. pdf. 44. FRAND stands for “fair, reasonable, and non-discriminatory.” See, e.g., What is “FRAND”?, MOBILEBURN, http://www.globalization101.org/what-is-globalization/ (last visited Apr. 10, 2016). 45. News Release, MOFCOM, MOFCOM Approves Nokia’s Acquisition of Equity of Alcatel-Lucent Conditionally (Oct. 21, 2015), http://english.mofcom.gov.cn/article/newsrelease/significantnews/201510/ 20151001151049.shtml. 46. See Ministry of Commerce Announcement No. 2 of 2015, MOFCOM (Jan. 9, 2015, 3:42 PM), http://fldj. mofcom.gov.cn/article/ztxx/201501/20150100862331.shtml; Ministry of Commerce Announcement No. 41 of 2015, MOFCOM (Oct. 10, 2015, 9:25 AM), http://fldj.mofcom.gov.cn/article/ztxx/201510/20151001139040.
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MOFCOM published four penalty decisions for improperly notified transactions. Fines were imposed but the transactions were not reversed. Two involved non-filing for joint ventures and two involved two-step acquisitions with an initial acquisition of thirty-five percent of the target’s shares, which was considered to be “gun-jumping” even if the parties filed notifications for the overall transactions.47
C. CARTELS AND OTHER ANTICOMPETITIVE PRACTICES
NDRC and SAIC investigated and issued large fines in high-profile cases, including (1) an RMB six billion (USD 940 million) fine against Qualcomm for setting unfairly high royalties for wireless SEPs, tying sales of non-wireless SEPs, and imposing unfair conditions on sales of baseband chips;48 and (2) a fine of RMB 350 million (USD fifty-five million) on Mercedes-Benz, as well as a fine of RMB 120 million (USD nineteen million) on Nissan and their respective dealers for minimum resale price maintenance.49 Moreover, NDRC cracked down on several administrative monopolies including conduct by local governmental authorities requiring exclusive dealing with designated companies, discriminating against non-local companies, and restricting participation by non-local companies.
D. COURT DECISIONS
In February, the Intermediate People’s Court of Guangdong Province found that the Department of Education of Guangdong Province abused its administrative power by designating a software developed by a company called Glodon as the software to be used in its National Vocational Students Skills Competition.50 In June, the Beijing High People’s Court affirmed the jurisdiction of the Beijing Intellectual Property Court over antitrust civil litigation between an individual and Carrefour and Abbott.51 This may be the first follow-on antitrust civil litigation after a finding of violation by the AML enforcement agencies. The case has yet to be tried.
shtml; Ministry of Commerce Notice No. 43 of 2015, MOFCOM (Oct. 19, 2015, 1:16 PM), http:// fldj.mofcom.gov.cn/article/ztxx/201510/20151001144105.shtml. 47. See Commercial Letter No. 669, MOFCOM (Sept. 29, 2015, 2:39 PM), http://fldj.mofcom.gov.cn/ article/ztxx/201509/20150901124896.shtml; Commercial Letter No. 668, MOFCOM (Sept. 29, 2015, 2:38 PM), http://fldj.mofcom.gov.cn/article/ztxx/201509/20150901124887.shtml. 48. National Development and Reform Commission Administrative Penalty Decision No. 2015 [1], NAT’L DEV. & REFORM COMM’N http://jjs.ndrc.gov.cn/fjgld/201503/t20150302_666170.html (last visited Mar. 31, 2016). 49. Mercedes Was Fined 350 Million Yuan due to Price Fixing Car Prices Antitrust Sledgehammer Down Again, CHINA NEWS NETWORK, (Apr. 23, 2015, 9:49 AM), http://www.chinanews.com/auto/2015/04-23/ 7228159.shtml; Nissan in Guangdong Province, The Implementation of Price Fixing to be Punished, BUREAU OF PRICE MONITORING (Sept. 10, 2015), http://210.76.65.10:9000/pub/gdsfgw2014/zwgk/gzdt/gzyw/201509/ t20150910_328993.html. 50. China’s First Since “People Suing Government Officials” Anti-Monopoly Litigation Administrative Proceedings, CHINA YOUTH DAILY, (May 29, 2015, 7:00 AM), http://news.xinhuanet.com/politics/2015-05/29/ c_127854577.htm. 51. Beijing High Court Affirms IP Court’s Jurisdiction over Antitrust Civil Cases, HONG KONG LAWYER, (Feb. 2016), http://www.hk-lawyer.org/content/beijing-high-court-affirms-ip-court%E2%80%99s-jurisdiction- over-antitrust-civil-cases.
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V. European Union
A. LEGISLATIVE DEVELOPMENTS
The European Commission’s (EC) new Competition Commissioner, Margrethe Vestager, launched a public consultation on boosting European Union (EU) national competition authorities’ powers,52 and is considering proposals to extend the merger notification system to minority shareholdings.53
B. MERGERS
The EC opened investigations into Hutchinson’s planned acquisition of Telefonica UK and Liberty Global’s proposed takeover of BASE Belgium. The EC cleared Orange’s acquisition of Spain-focused Jazztel upon securing remedies. Telenor and TeliaSonera abandoned their Danish merger plans after failed remedies discussions. After in-depth examination and with remedies, the EC cleared General Electric’s acquisition of Alstom’s energy business, a deal that attracted significant political attention.54
C. ANTICOMPETITIVE PRACTICES
The EC issued five cartel decisions in 2015, imposing fines totaling EUR 365 million (approximately USD 407 million), lower than the more than EUR one billion annual totals reached in the past three years.55 In the digital space, the EC issued formal charges against Sky and six other film studios, alleging that they respectively prevented Sky from supplying pay-TV content to viewers located outside the UK and Ireland.56 As part of the Digital Single Market strategy, the EC commenced a sector-wide inquiry into e- commerce, sending questionnaires to multiple companies to identify potential anticompetitive barriers to the online trade and supply of digital content across the EU.57
52. Press Release, European Comm’n, Antitrust: Commission consults on boosting enforcement powers of national competition authorities (Nov. 4, 2015), http://europa.eu/rapid/press-release_IP-15-5998_en.htm. 53. Margrethe Vestager, Competition Comm’n, European Comm’n, Keynote Address at Studienvereinigung Kartellrecht: Thoughts on Merger Reform and Market Definition (Mar. 12, 2015). 54. Press Release, European Comm’n, Mergers: Commission Clears GE’s Acquisition of Alstom’s Power Generation and Transmission Assets, Subject to Conditions (Sept. 8, 2015), http://europa.eu/rapid/press- release_IP-15-5606_en.htm.
55. Cartels Cases, EUROPEAN COMM’N COMPETITION, http://ec.europa.eu/competition/cartels/cases/ cases.html (last updated Apr. 3, 2016). 56. Press Release, European Comm’n, Antitrust: Commission Sends Statement of Objections on Cross- Border Provision of Pay-TV Services Available in UK and Ireland (July 23, 2015), http://europa.eu/rapid/ press-release_IP-15-5432_en.htm. 57. Press Release European Comm’n, Antitrust: Commission Launches E-Commerce Sector Inquiry (May 6, 2015), http://europa.eu/rapid/press-release_IP-15-4921_en.htm.
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D. DOMINANCE
The EC adopted formal charges against Google for favoring its internet comparison shopping products.58 The EC sent charges to Gazprom in another “political-heavy” investigation involving territorial restrictions in supply agreements.59
E. COURT DECISIONS
In Dole Food Company, Inc. v. European Commission, the EU Court of Justice (CJEU) confirmed that the pure exchange of forward-looking strategic information among rivals equates to a cartel.60 In InnoLux Corp. v. European Commission, the CJEU confirmed that the EC may impose fines based on foreign sales of cartelized components that were transformed into finished products, within the same corporate group, and sold in the EU.61 In Huawei Technologies Co. Ltd. v. ZTE Corp., the CJEU provided guidance on a standard essential patent holder’s ability to seek an injunction against an infringer without violating EU antitrust law.62
VI. France
A. LEGISLATIVE DEVELOPMENTS
The Macron Law came into force, introducing settlement procedures for companies engaged in anticompetitive practices. Companies who agree to refrain from challenging the Authorit´e de la Concurrence’s (FCA) objections will be informed of the potential range of fines when applying for settlement.63 With respect to leniency, the FCA may now forgive a penalty without a prior written report. The Macron Law also introduced a “stop the clock” mechanism in Phase One of merger control that allows the FCA to extend the review period up to sixty business days.64 The FCA may extend the duration of Phase Two if commitments are proposed in extremis or if requested information is not provided in time.
58. Press Release, European Comm’n, Antitrust: Commission Sends Statement of Objections to Google on Comparison Shopping Service (Apr. 15, 2015), http://europa.eu/rapid/press-release_MEMO-15- 4781_en.htm. 59. Press Release, European Comm’n, Antitrust: Commission Sends Statement of Objections to Gazprom for Alleged Abuse of Dominance on Central and Eastern European Gas Supply Markets (Apr. 22, 2015), http://europa.eu/rapid/press-release_IP-15-4828_en.htm. 60. Case C-286/13P, Dole Food Co., Inc. v. Comm’n, 2015 E.C.R. I-184. 61. Case C-231/14P, InnoLux Corp. v. Comm’n, 2015 E.C.R. I-451. 62. Case C-170/13, Huawei Techs. Co. Ltd. v. ZTE Corp., 2015 E.C.R. I-477.
63. Dan Roskis, The Macron Law: What It Changes in Competition Law, EVERSHEDS (Oct. 10, 2015), http:// consumerhub.eversheds.com/retail/competition-retail/the-macron-law-what-it-changes-in-competition-law/. 64. Id.
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B. MERGERS
In May, the FCA applied the “fix it first” principle for the first time while clearing the acquisition of Totalgaz by UGI France, the parent company of Antargaz.65 UGI must identify an acquirer for the divestiture assets prior to the adoption of the decision.
C. CARTELS AND OTHER ANTICOMPETITIVE PRACTICES
In May, the FCA imposed moderate fines of EUR 15.2 million on poultry manufacturers for concerted practices that reduced uncertainty in their trade negotiations.66 The collective commitment to establish an inter-branch organization is likely to be more effective than fines calculated according to the usual method.
D. DOMINANCE
The FCA, together with the EC, Italian, and Swedish authorities, investigated “price parity” clauses in agreements between Booking.com and hotels, which required hotels to offer the same or better prices on Booking.com’s platform as offered on other distribution platforms or directly to clients. The case was closed following a five-year commitment to refrain from the practice.67 In September, the FCA rejected a request for interim measures relating to the suspension of the AdWords account of an editor of weather forecasting websites by Google, which is dominant in online search advertising.68 The FCA process continued on the merits given Google’s unclear terms of use, whereby accounts can be terminated in a non-transparent way.
VII. Germany
A. LEGISLATIVE DEVELOPMENTS
There were no new legislative amendments in 2015. The transposition of the EU directive by December 2016 will require changes to rules applicable to private damages claims, including the statutes of limitation, joint and several liability, and passing on defense.69
65. Press Release, Autorit´e de la Concurrence [Competition Authority], Acquisition of Totalgaz by UGI (Antargaz) (May 18, 2015), http://www.autoritedelaconcurrence.fr/user/standard.php?id_rub=607&id_ article=2555. 66. Press Release, Autorit´e de la Concurrence [Competition Authority], Concerted Practices in the Sector for the Sale of Poultry Meat (Chicken, Turkey, Duck, Rabbit, Etc.) (May 6, 2015), http:// www.autoritedelaconcurrence.fr/user/standard.php?id_rub=607&id_article=2626. 67. Press Release, Autorit´e de la Concurrence [Competition Authority], Online Hotel Booking Sector (Apr. 21, 2015), http://www.autoritedelaconcurrence.fr/user/standard.php?id_rub=607&id_article=2535. 68. Press Release, Autorit´e de la Concurrence [Competition Authority], Online Advertising (Sept. 9, 2015), http://www.autoritedelaconcurrence.fr/user/standard.php?id_rub=607&id_article=2637. 69. Directive 2014/104, of the European Parliament and of the Council of 26 November 2014 on Certain Rules Governing Actions for Damages Under National Law for Infringements of the Competition Law Provisions of the Member States and of the European Union, 2014 O.J. (L 349), 1.
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B. MERGERS
The FCO continued its active review of transactions, although only seven Phase Two investigations were opened in 2015, fewer than in previous years. One was withdrawn (furniture retailing), one cleared subject to conditions (car parts), two remain pending, and the rest were unconditionally cleared. The sole prohibition decision in 2015 concerned the proposed supermarket merger between Edeka and Tengelmann.70
C. CARTELS AND OTHER ANTICOMPETITIVE PRACTICES
Besides classic cartel enforcement, the Bundeskartellamt (FCO) seems focused on vertical restraints and the use of most-favored nation (MFN) clauses on internet platforms. The FCO also imposed fines exceeding EUR 150 million on companies in various product categories in the food retail sector, including sweets, coffee, beer, personal car, and pet food for resale price maintenance.71 Other fines included certain car parts (EUR seventy-five million), as well as resale price maintenance by mattress suppliers and suppliers of portable navigation devices. The FCO also concluded that a prohibition to resell ASICS products on price comparison tools or internet platforms was illegal.72 In Booking.com, the FCO confirmed its earlier HRS decision and found that MFN clauses requiring a hotel provider to offer its rooms at the best price on those platforms were illegal.73
D. DOMINANCE
The FCO pursued a limited number of abuse of dominance cases. Most prominently, it found that Deutsche Post AG had exposed suppliers of wholesale mailing services to a margin squeeze and engaged in exclusive dealing.74
E. JUDGMENTS
In February 2015, the Higher Regional Court in D ¨usseldorf confirmed the dismissal of an action by Cartel Damage Claims (CDC) for damages relating to the German cement cartel case, because the court considered the assignment of the claims by the purchasers of
70. See Press Release, Bundeskartellamt [Federal Cartel Office], Bundeskartellamt prohibits takeover of Kaiser’s Tengelmann by EDEKA (Apr. 1, 2015), http://www.bundeskartellamt.de/SharedDocs/Meldung/ EN/Pressemitteilungen/2015/01_04_2015_Edeka_Untersagung.html. 71. Press Release, Bundeskartellamt [Federal Cartel Office], Vertical Resale Price Maintenance in the Food Retail Sector - Majority of Fine Proceedings Concluded (June 18, 2015), http://www.bundeskartellamt.de/ SharedDocs/Meldung/EN/Pressemitteilungen/2015/18_06_2015_Vertikalfall.html. 72. Press Release, Bundeskartellamt [Federal Cartel Office], Unlawful Restriction of Online Sales of ASICS Running Shoes (Aug. 27, 2015), http://www.bundeskartellamt.de/SharedDocs/Meldung/EN/Press emitteilungen/2015/27_08_2015_ASICS.html. 73. Press Release, Bundeskartellamt [Federal Cartel Office], Bundeskartellamt Issues Statement of Objections Regarding Booking.com’s ‘Best Price’ Clauses (Apr. 2, 2015), http://www.bundeskartellamt.de/ SharedDocs/Meldung/EN/Pressemitteilungen/2015/02_04_2015_Booking.html. 74. Press Release, Bundeskartellamt [Federal Cartel Office], Deutsche Post AG Abuses Dominant Position in Tariffs for Bulk Mail Customers (July 7, 2015), http://www.bundeskartellamt.de/SharedDocs/Meldung/ EN/Pressemitteilungen/2015/07_07_2015_Post.html.
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the cement to CDC to be invalid.75 The judgment is final and marks an unceremonious end to a trailblazing case that had been pending since 2002. The CDC has since announced that it has re-launched an action concerning at least some damages claims.76 In a December 2014 judgment that was published in 2015, the Federal Supreme Court re-confirmed its prior findings that antitrust liability has to be assessed based on the acts of individuals and attributed to specific entities for which these individuals acted. Following, for example, a merger, the new entity is not necessarily liable for antitrust fines except in specific circumstances.77 This has already led to legislative amendments in order to ensure that legal successors inherit such liabilities.
VIII. India
A. LEGISLATIVE DEVELOPMENTS
The Competition Commission of India (CCI) amended its merger regulations to simplify procedural requirements, ease the filing process, and extend the deadlines for decisions.78 The amendments also provide guidance notes on requirements of the short filing form (Form-I).79
B. CARTELS AND OTHER AGREEMENTS
Penalties were imposed on four government-owned general insurance companies for bid rigging in a tender floated by the State of Kerala.80 The transport sector also came under scrutiny as price-fixing penalties were imposed on a cooperative union of truck operators in Punjab.81 The maximum penalty of 10 percent of the turnover was also imposed on the trade association for road transport service providers, All India Motor Transport Congress, for a coordinated hike in freight charges.82
75. Press Release, Cartel Damage Claims, Higher Regional Court Dismisses Appeal in German Cement Cartel Case (Feb. 25, 2015), http://www.carteldamageclaims.com/wordpress/wp-content/uploads/2014/02/ Cement-press-Release-4.pdf. 76. Press Release, Cartel Damage Claims, CDC Cartel Damage Claims Files New Action for Damages Against HeidelbergCement AG (Oct. 29, 2015), http://www.carteldamageclaims.com/wordpress/wp-content/ uploads/2014/02/Press-Release-Cement-II-151029.pdf. 77. Bundesgerichtshof [BGH] [Federal Court of Justice] Dec. 16, 2014, KARTELLBUbGELDSACHE [KRB] 47, 2013 (Ger.). 78. Shreeja Sen, CCI amends merger regulations to increase ease of doing business, LIVEMINT (July 3, 2015, 11:27 PM), http://www.livemint.com/Politics/fSQpGeOHP2ilHP9wmLTjsN/CCI-amends-merger-regula tions-to-increase-ease-of-doing-busi.html. 79. Karan Singh Chandhiok, CCI Amends Combination Regulations, THE FIRM (July 7, 2015, 9:13 AM), http://thefirm.moneycontrol.com/story_page.php?autono=1829801. 80. Competition Comm’n of India Suo Moto Case No. 02 of 2014, 2 (2014), available at http:// www.cci.gov.in/sites/default/files/022014S.pdf. 81. Competition Comm’n of India Case No. 43 of 2013, 6 (2013), available at http://www.cci.gov.in/sites/ default/files/432013_0.pdf. 82. Competition Comm’n of India Case No. 61 of 2012, 24 (2012), available at http://www.cci.gov.in/sites/ default/files/61-2012_0.pdf.
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CCI has also shown an increasing inclination to penalize individuals responsible for violations.83
C. MERGERS
CCI imposed structural remedies in two mergers: the acquisition of Ranbaxy Laboratories by Sun Pharmaceuticals subject to divestment of the overlapping brands in seven markets84 and the merger of Holcim Limited and Lafarge SA, wherein Lafarge was required to sell two cement plants to prevent “unilateral” and “coordinated” effects.85
D. DOMINANCE
CCI’s investigation arm (Director General) concluded that Google abused its dominant position in relation to its search and AdWord services.86 Google will have an opportunity to challenge the Director General’s report before CCI passes its final order in the case.
E. COURT DECISIONS
The Delhi High Court held that CCI has the power to review and recall its order to the Director General to investigate a matter.87 The Madras High Court clarified that the Director General cannot initiate investigations on its own, and must seek CCI’s permission before widening an investigation’s scope.88 Further, it held that in such cases, CCI is not required to form an entirely new opinion before directing the Director General to investigate.89 COMPAT set aside a penalty on Thomas Cook for “gun-jumping,” finding that the mere fact that several transactions were entered into around the same time and were approved by the board on the same date was insufficient to establish that they were interconnected.90 COMPAT also set aside the penalty imposed by CCI on the Board of Control for Cricket in India stating that the information relied on lacked evidentiary value.91
83. See Competition Comm’n of India Case No. 45 of 2012, 28 (2012), available at http://www.cci.gov.in/ sites/default/files/06201245_0.pdf; Competition Comm’n of India Case No. 26 of 2013, 31 (2013), available at http://www.cci.gov.in/sites/default/files/262013_0.pdf. 84. Competition Comm’n of India, Combination Registration No. C-2014/05/170 (Mar. 17, 2015), available at http://www.cci.gov.in/sites/default/files/C-2014-05-170A_0.pdf. 85. Competition Comm’n of India, Combination Registration No. C-2014/07/190 (Mar. 30, 2015), available at http://www.cci.gov.in/sites/default/files/C-2014-07-190_0.pdf. 86. Kian Ganz, Why did CCI write Google a bad report card?, LIVEMINT (Sept. 16, 2015, 7:53 AM), http:// www.livemint.com/Companies/5D4c8f9kKB41IyL99Rfm4H/Why-did-CCI-write-Google-a-bad-report- card.html. 87. Google Inc. v. Competition Comm’n of India, (2015) H.C.J. Delhi 22 (India), available at https:// indiankanoon.