Foreign Trade12.03.2021Cologne Newsletter

US export ban against German company

Non-US companies must also be aware of US export control regulations and - to the extent permitted under EU law - comply with them. The US authorities have recently demonstrated again that, when it comes to prosecuting violations, they do not stop at national borders: The US Bureau of Industry and Security (BIS) has sanctioned a medium-sized German aerospace company for alleged violations of Iran sanctions between September 2011 and July 2012 – in addition to imposing a fine, it also imposed a three-year export ban.

According to the order of the BIS, during this period the company allegedly intentionally and in conspiratorial collaboration with third parties exported three shipments of aircraft parts of US-origin with a value of $51,921 to Iran via Germany to Iran's largest private airline, Mahan Air, in violation of US export control regulations. 

In accordance with its usual practice, the BIS concluded a Settlement Agreement with the company on 5 March 2021 and imposed a fine of US $51,921 – i.e. the exact value of the goods. This amount is relatively small for a US settlement agreement; in this year alone the BIS imposed a fine of over US $8 million in a single settlement for more serious allegations.

The peculiarity of this case, therefore, is not the amount of the fine. Rather, the settlement is worth briefly reporting on because, in addition to the fine, a three-year export ban was imposed on the company, its agents, employees, sales representatives and legal successors. For the duration of the export ban, the company may not participate, directly or indirectly, in any transaction involving goods, technology or software of US origin. The ban even applies to negotiations on corresponding goods, without anything actually being exported at all.

However, this serious export ban is suspended for a "probationary period" of three years and is waived after three years if the company complies with US export control and sanctions laws, continues to cooperate with the US authorities, complies with the reporting requirements to notify the authorities of further violations, and pays the fine in full and on time.

The Settlement Agreement thus confirms once again that US authorities most certainly do take the extra-territorial effect of US export control regulations very seriously and also pursue violations abroad. Even seemingly minor violations can have quite serious consequences.

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Stephan Müller

Stephan Müller

PartnerAttorney

Konrad-Adenauer-Ufer 23
50668 Cologne
T +49 221 2091 448
F +49 221 2091 333

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Mareike Heesing<br/>LL.M. (Köln/Paris I)

Mareike Heesing
LL.M. (Köln/Paris I)

Junior-PartnerAttorney

Konrad-Adenauer-Ufer 23
50668 Cologne
T +49 221 2091 320
F +49 221 2091 333

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