CUBA SANCTIONS RELAXATION: A CAUTIONARY TALE FOR NON-US SUBSIDIARIES
For more than 50 years, the US government has maintained a comprehensive embargo against Cuba under the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR). Under the CACR, both US companies and their owned or controlled non-US subsidiaries are subject to the CACR (collectively, CACR Parties). The extra-territorial aspects of the CACR can lead to conflicts with ‘blocking’ laws in other jurisdictions, particularly in regard to the EU, where many US companies have foreign subsidiaries.
In response to the US government’s recent relaxation of the CACR, companies may be looking to Cuba for potential growth opportunities. Foreign subsidiaries of US companies, however, should proceed with caution in any dealings involving Cuba because the recent changes to the CACR have not been relaxed to the same extent for non-US subsidiaries, as it has for their US parent companies. Non-US subsidiaries of US companies that are subject to EU jurisdiction need to be aware that their position largely remains unchanged under the amended CACR and that, to the extent they engage in any dealings involving Cuba, they remain at risk of facing a conflict between the CACR and EU Council Regulation (EC) 2271/96 (the EU Blocking Regulation). In this article, we focus on potential conflicts between the CACR and the EU Blocking Regulation, but similar issues can arise under similar measures in jurisdictions such as Canada and Mexico.
Jul-Sep 2015 Issue
Baker & McKenzie