Dec

20

Freight Forwarder Fined for Shipper’s Anti-Boycott Compliance

Posted by at 2:08 pm on December 20, 2006
Category: Anti-Boycott • BIS

Just Say No to Saying No!The BIS website recently listed an anti-boycott settlement agreement involving freight forwarder and customs broker International Specialist, Inc., located in Boston, Massachusetts. The charging letter provided this significant bit of information about the alleged violation:

In connection with the transaction described above, on or about August 29, 2003, you provided to a customer in Oman, AEA Technology commercial invoice #102075, Order #CO133795, which contained the following information:

“NO ISRAELI COMPONENTS USED.”

Note that this is not an allegation that the freight forwarded actively provided the proscribed information about Israeli components; rather the freight forwarder merely provided the information passively by delivering shipping documents that contained a statement from its customer that provided the proscribed information.

The freight forwarder was charged with a violation of EAR § 760.2(d) which prohibits any U.S. person from providing information about that person’s or a third party’s business relationships with a boycotted country. Significantly, however, EAR § 760.1(e)(3) makes clear that intent is required for each anti-boycott violation and not merely the intent to perform the act that constituted the violation but also the “intent to comply with, further, or support an unsanctioned foreign boycott.”

This high-standard of intent is inconsistent with what looks like an effort by BIS to impose absolute liability on freight forwarders for forwarding commercial documents with proscribed information. Perhaps International Freight actually read every word of the customer’s invoice to the recipient in Oman and therefore had the requisite intent. But BIS doesn’t allege that and, frankly, it seems unlikely that International Freight bothered to scour all the terms of AEA’s invoice before forwarding it along with the shipped goods.

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Copyright © 2006 Clif Burns. All Rights Reserved.
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2 Comments:

The information furnishing regulations have no statutory authority under IEEPA because 50 USC 1702(b) expressly excludes from the delegation of power to the President the authority to regulate information unless it is controlled under Section 5 of the EAA or anti-proliferation or antiterrorist provisions of Section 6. There is no carve-out for Section 8, the anti-boycott section. Beyond that, 1st Amendment protection for commercial speech is far broader now that it was when the 8th Circuit decided, wrongly, the Trane case (no other circuit has opined). For BIS to continue to assert authority over furnishing information is actionable fraud.

Comment by Mike Deal on December 20th, 2006 @ 5:31 pm

[…] This is not unlike BIS’s penalizing a freight forwarder for a prohibited boycott term buried in the shipping documents, which we have complained about before. EAR § 760.1(e)(3) makes clear that intent is required for each anti-boycott violation and not merely the intent to perform the act that constituted the violation but also the “intent to comply with, further, or support an unsanctioned foreign boycott.” Since the Bank likely did not read the entire commercial invoice, it almost certainly didn’t have the requisite intent. Nor does there seem to be any sound policy basis to force banks to read every word of all customer export documents to ferret out anti-boycott violations. Permalink No Comments […]

Comment by ExportLawBlog » The Boycott Woes of Cairo on January 23rd, 2007 @ 2:36 pm