Opinion ID: 3016344
Heading Depth: 3
Heading Rank: 1

Heading: m., e.s.t., July 8, 1963.

Text: 4 thereof, has at any time on or since the effective date of this section had any interest of any nature whatsoever, direct or indirect:
limitation, transfers, withdrawals, or exportations of, any property or evidences of indebtedness or evidences of ownership of property by any person subject to the jurisdiction of the United States; and
regard to any property or property interest subject to the jurisdiction of the United States. See 31 C.F.R. § 515.201(b) (2005); see also 31 C.F.R. § 515.201(b) (1992); 31 C.F.R. § 515.201(b) (1993); 31 C.F.R. § 515.201(b) (2000). As CACR § 515.201(b) suggests, business transactions involving Cuba may be specifically authorized by OFAC; here, however, it is uncontested that no such authorization was ever obtained for the business transactions that gave rise to the underlying prosecution. The phrase “person subject to the jurisdiction of the United States” as used in CACR § 515.201(b) is defined in CACR § 515.329, 31 C.F.R. § 515.329, which provided, at the time the conspiracy charged in this case was allegedly in effect: 31 C.F.R. § 515.201(d) (2005). 5 The term ‘person subject to the jurisdiction of the United States’ includes: (a) Any individual, wherever located, who is a citizen or resident of the United States; (b) Any person within the United States as defined in § 515.330; (c) Any corporation organized under the laws of the United States or of any State, territory, possession, or district of the United States; and (d) Any corporation, partnership, or association, wherever organized or doing business, that is owned or controlled by persons specified in paragraphs (a) or (c) of this section. 31 C.F.R. § 515.329 (1993) (emphasis added); see also 31 C.F.R. § 515.329 (2000); 50 Fed. Reg. 27435 (July 3, 1985).3 The critical 3 Effective March 24, 2003, CACR § 515.329 was revised to provide: (c) Any corporation, partnership, association, or other organization organized under the laws of the United States or of any State, territory, possession, or district of the United States; and (d) Any corporation, partnership, association, or other organization, wherever organized or doing business, that is owned or controlled by persons specified in paragraphs (a) or (c) of this section. 6 phrase “owned or controlled” in CACR § 515.329(d) is not defined in the CACRs, but notably, the CACRs have included a broad “person subject to the jurisdiction of the United States” feature from their inception. See 28 Fed. Reg. 6974, 6978 (July 9, 1963) (CACR § 515.329). The effect of the prohibition against entities “owned or controlled by persons specified in [31 C.F.R. § 515.329 (a) or (c)]” from undertaking any of the transactions prohibited by CACR § 515.201(b), was substantially muted in prior years by a regulatory exemption permitting foreign subsidiaries of companies owned or controlled by American citizens to trade with Cuba under certain conditions, as well as liberal application of the licensing provision by OFAC. See 31 C.F.R. § 515.559 (1975); 40 Fed. Reg. 47108 (Oct. 8, 1975).4 See also Ralph H. Folsom,1 INT ’L BUS. TRANS. § 18.4 (2d ed. 2004); Harry L. Clark, “Dealing with U.S. Extraterritorial Sanctions and Foreign Countermeasures,” 20 U. PA . J. INT ’L ECON . L. 61, 66 & n. 14 (Spring 1999); John Ellicott, “Between a Rock and a Hard 31 C.F.R. § 515.329 (2005) (emphasis added). 4 The regulatory exemption was contained in CACR § 515.559 (“Transactions by American-owned or controlled foreign firms with Cuba”) which provided: (A) Specific licenses will be issued in appropriate cases for certain categories of transactions between U.S.-owned or controlled firms in third countries and Cuba, where local law requires, or policy in the third country favors, trade with Cuba. The categories include: [listing categories] ... 31 C.F.R. § 515.559 (1975). 7 Place: How Multinational Companies Address Conflicts Between U.S. Sanctions and Foreign Blocking Measures,” 27 STETSON L. REV . 1365, 1368 (Spring 1998). Thus, in the latter part of the 1970's and throughout the 1980's, “U.S. subsidiaries abroad developed significant trade with Cuba.” 1 INT ’L BUS. TRANS. §18.4. In 1992, Congress enacted the Cuban Democracy Act, Act of Oct. 23, 1992, 106 Stat. 2575, codified at 22 U.S.C. §§ 6001-6010, which, inter alia, rescinded OFAC’s authority to issue licences for the export of goods to Cuba by “persons subject to the jurisdiction of the United States.” See 22 U.S.C. § 6005(a) (popularly known as the “Mack Amendment”). See also Clara David, “Trading With Cuba: The Cuban Democracy Act and Export Rules,” 8 FLA . J. INT ’L Law 385 (Fall 1993) (author, then a licensing officer for OFAC, stating that the Cuban Democracy Act eliminated the prior exemption to the Cuban embargo for trade by foreign subsidiaries of American firms). The Cuban Democracy Act took effect on October 23, 1992, and the CACRs were subsequently amended to reflect the Act’s strict provisions. See 31 C.F.R. § 515.559 (1993).5 In March 1996, 5 CACR § 515.559 currently provides, in pertinent part: (a) Effective October 23, 1992, no specific licenses will be issued pursuant to paragraph (b) of this section for transactions between U.S.-owned or controlled firms in third countries and Cuba for the exportation to Cuba of commodities produced in the authorized trade zone or for the importation of goods of Cuban origin into countries in the authorized trade zone, unless, in addition to meeting all requirements of paragraph (b), one or more of the following conditions are satisfied: (1) The contract underlying the proposed 8 Congress further strengthened the American Cuban embargo by enacting the LIBERTAD. Pub. L. No. 104-114, 110 Stat. 785 (1996), codified at 22 U.S.C. §§ 6021-6091 (also known as the “HelmsBurton Act”). The LIBERTAD mandates that the American Cuban embargo, including all restrictions imposed by the CACRs, “remain in effect” unless and until the embargo is suspended or terminated in accordance with statutory procedures. 22 U.S.C. § 6032(h) (crossreferencing 22 U.S.C. § 6064 (“Termination of the economic embargo of Cuba”)). Such procedures, in turn, make suspension or termination of the embargo contingent upon a change of political power in Cuba. See 22 U.S.C. § 6064; see also 22 U.S.C. § 6065. Numerous countries, including the European Union, Canada and Mexico, reacted to the strengthening of the American Cuban transaction was entered into prior to October 23, 1992; (2) The transaction is for the exportation of medicine or medical supplies from a third country to Cuba, which shall not be restricted [except under certain laws or in certain cases];
telecommunications equipment from a third country, when the equipment is determined to be necessary for efficient and adequate telecommunications service between the United States and Cuba. (b) Specific licenses will be issued in appropriate cases for certain categories of transactions between U.S.-owned or controlled firms in third countries and Cuba, where local law requires, or policy in the third country favors, trade with Cuba. The categories include [listing categories]. ... 31 C.F.R. § 515.559 (2005). 9 embargo, and its purported application to American subsidiaries abroad, by enacting countermeasures (often called “blocking statutes” or “blocking orders”). See, e.g., Clark, “Dealing with U.S. Extraterritorial Sanctions,” 20 U. PA . J. INT ’L ECON . L. at 81-87.6 With this background, we turn now to the present appeal.