Magistrate Judge Concludes that US Sanctions Applied to Turkish Nationals who, from Outside the US, Arranged for US Company to make Sale of Products to Iran through Canada and Turkey

The World in U.S. Courts: Winter 2016 - International Trade/US Trade Sanctions/ Iranian Transactions and Sanctions Regulations | October.28.2016

US v. Akova, US District Court for the Northern District of Georgia, October 28, 2016

A Turkish national was indicted with others for allegedly arranging to sell an epoxy glue having military uses to the Islamic Republic of Iran, via Canada and ultimately Turkey, in violation of the International Emergency Economic Powers Act (IEEPA) and the Iranian Transaction Regulations (ISTR).  The defendant moved to dismiss the indictment, arguing among other things that the IEEPA and the ISTR had no extraterritorial application and did not apply to a non-US national who ordered US goods for an Iranian customer. 

A magistrate judge in the District Court in Atlanta stated that congressional intent to apply both provisions to conduct outside the US had to be “clear” for them to be given extraterritorial effect, and concluded that such intent could be inferred from the language and purposes of the provisions.  In the case of the IEEPA, he found the law was intended to deal with international threats to US security.  In the case of the ISTR, he concluded that it would be “illogical” to think that the regulation would have carved out an exception for non-US persons exporting US goods to Iran.  He also concluded that the extraterritorial application of neither provision would violate principles of international criminal law, because each served the “protective principle” under which the US may lawfully protect itself from perceived threats from other countries.

Finally, the magistrate judge addressed the question whether the ISTR, by its own terms, prohibited a non-US person, located outside the US, from contracting with a US company to sell products to Iran, through a Turkish intermediary.  He concluded that the ISTR’s language did not limit violations to actions taken while a defendant was in the US.

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