UPDATE:U.S.-EU Safe Harbor Invalidated by European Court of Justice

Posted in U.S.-EU Safe Harbor

Urgent Need to Consider Alternative Compliance Mechanisms

On Oct. 6, 2015, the European Court of Justice (CJEU) released its final judgment on the closely-watched U.S.-EU Safe Harbor (Safe Harbor) case, ruling that national Data Protection Authorities (DPAs) in the European Union (EU) retain the right to investigate complaints relating to the Safe Harbor and declaring that the Safe Harbor itself is invalid. This important decision will have a significant impact on the large number of companies currently relying on the Safe Harbor to comply with EU law regarding their EU-to-United States (U.S.) data transfers.


The EU has very high standards for privacy and data protection, and the transfer of data from the EU to another jurisdiction is permitted only if the receiving jurisdiction has “adequate” data privacy laws in the eyes of EU authorities. Among the countries that are deemed by the EU not to have adequate data protection laws is the U.S. Given the need of many multi-national businesses to transfer data from the EU to the U.S., in 2000, the European Commission endorsed the Safe Harbor regime, a relatively streamlined and cost-effective means for companies to voluntarily commit to a certain level of data protection in order to legally transfer personal data from the EU to the U.S.

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12-Nation Pacific Rim Deal Aims to Spur Commerce in Countries Accounting for 40% of World’s Economy

Posted in Foreign Trade

Thursday, Nov. 5, 2015, witnessed the release of the long-awaited text of the Trans-Pacific Partnership (TPP) trade deal. This 12-nation[1] Pacific Rim deal aims to spur commerce in countries accounting for 40 percent of the world’s economy.

While TPP deserves serious analysis in and of itself, and its path to ratification in the U.S. is expected to be a politically rocky one, its treatment of cross-border data traffic provides an interesting juxtaposition to the recent European Court of Justice decision invalidating the Safe Harbor Program between the U.S. and the European Union. In two recent hearings on the Safe Harbor decision in the House – in the Energy & Commerce and Judiciary Committees, respectively – experts noted that the cross-border data flow protections expected to be embodied in TPP could set an example for how the U.S. and the E.U. should address the cross-Atlantic data protection issues in in upcoming T-TIP trade negotiations.

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Modern slavery reporting obligations – effective from 29 October 2015

Posted in Foreign Trade

As reported in an earlier Alert, the UK’s Modern Slavery Act has imposed far reaching reporting requirements on companies to produce an annual statement explaining the steps they have taken to eliminate modern slavery in their businesses, and also within their supply chains. The concept of modern slavery encompasses a range of exploitative behaviour including slavery, servitude, forced or compulsory labour, sexual exploitation, securing services from children and vulnerable people, and human trafficking. These new reporting obligations became effective as of 29 October 2015. This Alert sets out an overview of the statutory guidance published by the UK Government explaining its expectations for compliance.

By way of reminder, the Act’s reporting obligations apply to all companies that carry on some business in the UK, and that have a worldwide turnover in excess of £36m. There is no minimum threshold for the volume of turnover or activity that needs to be linked to the UK, and the turnover of any subsidiaries should be included in the calculation. Whether or not a company “carries on business in the UK” will be assessed using a common sense approach. This approach includes, but is not limited to, considering whether it has any commercial activities in the UK. That common sense approach may, however, allow non-UK companies that do not have a demonstrable business presence in the UK to fall outside of the Act’s jurisdiction. Similarly, simply having a UK subsidiary will not automatically mean that a parent company carries on business in the UK – much will depend on the degree of independence within the group organisation.

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Investor-State Dispute Settlement Provisions in the Trans-Pacific Partnership Agreement

Posted in Trans-Pacific Partnership

The parties to the Trans-Pacific Partnership (TPP), which include the United States and 11 other Pacific nations, concluded negotiations on the text of a multilateral trade and investment agreement on Oct. 5, 2015, and released the text of the agreement on Nov. 5, 2015. As anticipated, the agreement contains investor-state dispute settlement (ISDS) provisions that will provide substantial protection and dispute-resolution options for investors from the TPP countries once the agreement is ratified by the TPP states.

Under the ISDS provisions, an investor from one TPP country will be able to initiate arbitration proceedings directly against the host government of another TPP country for violations of certain substantive protections set forth in the TPP or for breaches of investment authorizations or agreements. According to the provisions, an investor will be able to initiate arbitration at the International Centre for Settlement of Investment Disputes (ICSID), based in Washington, D.C. or through ad hoc arbitration.

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U.S. Authorizes Transactions with Certain Belarusian Entities

Posted in Foreign Investment, OFAC

Effective Oct. 30, 2015, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a Belarus-related General License authorizing U.S. persons to engage in all previously prohibited transactions with certain Belarusian entities despite OFAC’s sanctions against certain targeted individuals and entities in Belarus. The General License, however, contains a reporting obligation that requires U.S. persons engaging in transactions with those particular entities to notify OFAC of the now licensed transactions. The General License is described below.

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Next Step in Iran Deal: Adoption Day requires JCPOA implementation

Posted in Iran

On Oct. 18, 2015, “Adoption Day” of the Iran Joint Comprehensive Plan of Action (JCPOA), the U.S. and EU took the required steps to prepare for implementation of the JCPOA. In the U.S., the president issued a memorandum directing the Departments of State, Treasury, Commerce, and Energy to make the necessary arrangements to implement the U.S. commitments in the JCPOA, including preparations for the termination of certain Iran-related Executive Orders. Further, the U.S. Secretary of State issued sanctions waivers contingent upon Iran’s compliance with its initial nuclear-related commitments under the JCPOA. The limited U.S. sanctions relief provided in the Administration’s contingent waivers will enter into effect on Implementation Day, the date on which the International Atomic Energy Agency (IAEA) verifies that Iran has met its nuclear-related commitments. Implementation Day will be no sooner than two months from Oct. 18, 2015, but could be as much as a year or more away, depending on whether and when Iran can meet its obligations under the JCPOA.

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U.S. Allows Additional Trade and Business with Cuba

Posted in Foreign Trade, US-Cuba relations

Cuban FlagAmendments Implement Additional Changes Laid Out by President Obama on Dec. 17, 2014

On Sept. 21, 2015, the U.S. Government further amended the existing Cuba-related regulations to allow for certain additional types of travel and the establishment of physical business premises in Cuba. The amendments also remove certain restrictions on remittances, financial transactions, and exports to Cuba.

The regulations are effective immediately upon publication on Sept. 21, 2015, and serve to further implement President Obama’s Dec. 17, 2014 announcement of a policy change with respect to Cuba, which included the official opening of the U.S. Embassy in Havana on Aug. 14, 2015.

While the amended regulations will expand business and other transactions in which U.S. persons can engage with Cuba, the United States nevertheless maintains a nearly comprehensive embargo on trade with Cuba. U.S. persons are reminded that they may only engage in transactions that are licensed or otherwise specifically authorized.

Summary of the Amendments

The U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) has implemented new measures in the following areas, among others:

1. Continued Easing of Travel Restrictions

The amended regulations ease travel to Cuba for authorized purposes, specifically by authorizing U.S. persons to provide carrier services by vessel (e.g., cruise ships) without the need for specific licenses, and allowing authorized travelers to open, maintain, and close bank accounts in Cuba.

Despite these changes, tourism-related travel is still not permissible so travel to Cuba by U.S. persons continues to be restricted to authorized travel categories only. U.S. persons should take note that, while certain authorized travel categories appear broad (e.g., travel related to “support for the Cuban people”), specific requirements apply to each permitted category of travel. Continue Reading.


Franchising in Cuba – The Next Frontier?

Posted in Foreign Investment, Foreign Trade, Uncategorized, US-Cuba relations

On Jan. 16, 2015,Cuban Flag following an announcement made by President Obama on Dec. 17, 2014 of a plan to ease the U.S. trade embargo and restore diplomatic relations between the U.S. and Cuba, the U.S. Department of Commerce’s Bureau of Industry and Security (the Commerce Department) and the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) amended the existing U.S. sanctions on trade with Cuba. The amendments revise the Cuban Assets Control Regulations (CACR), and Export Administration Regulations (EAR), administered by OFAC and the Commerce Department, respectively. Further, effective May 29, 2015, Cuba was officially removed from the list of State Sponsors of Terrorism (SSOT) by the U.S. Secretary of State, and on July 20, 2015, the embassies in Washington and Havana were re-established after more than 50 years, following an announcement by President Obama in early July that the United States will restore formal diplomatic relations with Cuba. Secretary of State John Kerry is currently expected to visit the U.S. embassy in Cuba on Aug. 14, 2015, and his visit will mark the first visit to Cuba by a U.S. Secretary of State in over 50 years. These recent developments signal a new direction for diplomatic and economic relations between the nations.

At first glance, the potential business opportunities seem limitless: Cuba is already a popular Caribbean destination for travelers from Canada and the European Union, and if travel restrictions are further lifted, U.S. tourists are certain to be drawn to Cuba’s beaches and rich culture. Franchisors are among the many types of businesses starting to envision how they might expand into Cuba in hope of attracting both tourists and Cuban consumers alike. Industries of particular interest include hospitality, restaurants (including quick-service and fast casual), and personal care services. As the easing of the economic sanctions on Cuba is still limited and very new, uncertainty about franchising and other business opportunities remains under the current U.S. trade restrictions and the laws of Cuba. While Cuba currently does not have any published laws specifically regulating franchising, as a communist state, the economy is effectively entirely run by the government and not by private individuals or entities. Furthermore, even activities that might be permissible or specifically authorized from the U.S. perspective will likely face hurdles on market entry on the Cuban side, such as operating permits, business licenses, and import regulations. Continue Reading.


Iran Deal Delivered to U.S. Congress and U.N. Resolution Issued

Posted in Iran, Sanctions

Middle East MapOn July 19, 2015, the U.S. State Department transmitted the Iran nuclear deal to Congress, commencing Congress’ 60-day review period. In addition, as required under the JCPOA, the U.N. Security Council passed a resolution endorsing the Iran nuclear deal on July 20, 2015. In this GT Alert, the authors discuss the impact of the moves on those conducting business in or with Iran.

Read the full GT Alert.


Iran Nuclear Deal Reached – Prospects for Sanctions Relief

Posted in Iran, Sanctions

Middle East MapOn July 14, 2015, the five permanent members of the U.N. Security Council (China, France, Russia, the United Kingdom, and the United States) plus Germany and Iran announced that they had reached a final deal regarding Iran’s nuclear program. In this GT Alert, the authors discuss the impact of the deal on those conducting business in or with Iran.

Read the full GT Alert.