UK: International Sanctions Against Libya

Last Updated: 7 March 2011
Article by Michelle Linderman and James Rose

Further to our recent updates on international sanctions against Iran and the Ivory Coast, we provide below an update on the latest sanctions introduced in response to the current situation in Libya. As the situation unfolds, further developments and sanctions are likely from the international community in response to the escalating crisis in the country. Over the last few months the North African / Middle East region has seen a wave of internal protests and regime change which has led to uncertainty in the international community and particularly in world trade markets.

UN Sanctions

On 26 February 2011, the UN Security Council adopted Resolution 1970 (2011) in light of the "gross and systematic violation of human rights" in Libya. The sanctions are specifically targeted against the family of Muammar Al-Qadhafi or Colonel Gadaffi as he is widely known in the media and look to freeze his assets and prevent him and his regime acquiring military arms which may be used on the Libyan people. The Security Council also opted to refer the situation in Libya to the International Criminal Court.

Arms Embargo

Paragraph 9 of Resolution 1970 calls on all Member States of the UN to immediately take all the necessary measures to prevent the direct or indirect supply, sale or transfer to Libya of arms and related material. As part of this request, paragraph 11 calls upon all states to inspect cargo to and from Libya where the State concerned has reasonable grounds to believe that the cargo contains items which are prohibited under the arms embargo.

Asset Freeze

Paragraph 17, requests that all Member States shall freeze all funds, financial assets and other resources belonging to individuals and entities listed in Annex II – six members of the Qadhafi family. No funds or economic resources can be made available to these listed individuals.

EU Sanctions

On 28 February 2011, the Council of the European Union adopted a decision implementing UN Resolution 1970. The Decision placed a ban on the supply of arms to Libya and restricted trade on any goods which might be used for internal repression.

UK Sanctions

At 5.15pm on 27 February 2011, the UK implemented the "Libya (Financial Sanctions) Order 2011" to reflect UN Resolution 1970. The Order applies to those within the UK and all UK nationals wherever located. It freezes the funds and resources of those designated by the UN Security Council at Annex II of Resolution 1970 and restricts the provision of funds and other economic resources to those entities.

US Sanctions*

On 25 February 2011, US President, Barack Obama issued an Executive Order providing for certain sanctions against Libyan individuals.

The Executive Order targets assets held by Muammar Qadhafi and his family in the US. It also allows other persons to be subject to the Executive Order where they are determined by the Secretary of the Treasury in conjunction with the Secretary of State to be one of the following persons:

  • A senior official of the Libyan Government
  • A child of Colonel Muammar Qadhafi
  • Those responsible or complicit in human rights abuses or political repression
  • Those who have materially assisted, sponsored or provided financial assistance / support to those involved in human rights abuses or political repression.
  • Those who act or purport to act on behalf of a designated person.
  • The spouse or dependent child of a designated person.

The financial restrictions in the Executive Order block assets held in the US by designated entities and prevent the provision to or receipt of funds from those designated individuals. One important aspect of the Order is the requirement for US persons to block assets of Libyan Government-owned entities. Those entities include companies such as the State owned shipping line GNMTC and The Libyan National Oil Company.

Impact of the Libyan sanctions

Shipping Industry

Where vessels are ordered to load or discharge in Libya care must be taken by both Owners and Charterers in complying with the various international sanctions. For those involved in shipping it is important that they keep up to date with the latest developments particularly in relation to the main ports. With the opposition apparently in control of the cities of Benghazi and Tobruk and the Qadhafi regime remaining in control in Tripoli, issues could arise in relation to both the supply of goods to these and other Libyan ports; and, whether these ports can be considered unsafe.

Energy

Libya has extensive oil and gas resources and these have been hit by the internal unrest in the country with a number of major oil companies ceasing work in the country and evacuating their employees. Oil prices have surged in light of the uncertain situation and this will have a knock on effect for the international community with fuel prices rising globally. Where oil can be exported safely from the country there is further concern as to who is ultimately being paid for the oil shipments with the Qadhafi regime in control of much of the Libyan oil industry. As noted above, various financial restrictions are in place against the Qadhafi regime and where payments are being made to Libya, care should be taken to ensure money is not provided directly or indirectly to any of the designated entities.

What next?

With the Qadhafi regime continuing to remain in power in Libya it is likely that further action will be taken by the international community in the coming days and weeks. It is reported that the US has already blocked $30 billion worth of Libyan assets – the largest ever blocked under any sanctions regime according to David Cohen, undersecretary of Treasury for terrorism and financial intelligence. Various European Member States have also reported that billions of Euros of assets held by the Libyan regime in European banks have been frozen. With the developing situation, it is important that all those transacting business with Libya remain vigilant as to any restricted goods being sold or supplied to Libyan entities and that sufficient due diligence is carried out on these transactions to ensure that the latest sanctions are complied with.

* NOTE: Ince & Co are not US qualified lawyers and are unable to provide advice on US law. This information is furnished for information purposes only. Readers are advised to obtain specific legal advice from US lawyers should you require advice on US law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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