NEWS & INSIGHTS

On May 16, 2012, President Obama issued a new Executive Order authorizing the U.S. Treasury Secretary to sanction parties who undermine Yemen’s internal security or obstruct a November 2011 power-sharing agreement brokered by the Gulf Cooperation Council (“GCC Agreement”) between the Government of Yemen and opposition leaders. The property of parties designated under the Executive Order would be blocked and U.S. persons would be prohibited from engaging in any transactions with designated parties.

No parties have been designated yet under the Executive Order, which reflects growing U.S. concern regarding Yemen’s internal stability. It is somewhat unusual for the President to issue an Executive Order declaring a national emergency and establishing a new list-based sanctions program without designating any parties. Administration officials have described the order as a tool that can be used against individuals who are “dragging their feet” in relinquishing power or otherwise undermining the transitional government.

The GCC Agreement called for the resignation of former Yemeni President Ali Abdullah Saleh, the establishment of a power-sharing government, and interim presidential elections that were successfully held in February 2012. The plan also envisions rewriting the Yemeni constitution, followed by fresh elections and the formation of a new parliament within the next eighteen months.

The new Executive Order does not target the Yemeni Government or the country as a whole. Instead, it focuses on parties—including Yemeni political or military leaders—who engage in activities that threaten the peace and security of Yemen; third parties who provide financial, material or other support to such parties; as well as parties that are owned or controlled by designated persons. Effective immediately, the Secretary of the Treasury may block the property of any party meeting these criteria. The order covers any property or interest in property located in the United States or otherwise held or controlled by U.S. persons. U.S. persons will have ten business days to report blocked property to the Treasury Department’s Office of Foreign Assets Control. The order also prohibits U.S. persons from providing any funds, goods or services to blocked persons—including charitable donations.

U.S. companies and financial institutions should watch for future designations under this new sanctions regime.

If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work.

Lawyers in our Sanctions Practice advise companies on the applicability of U.S. sanctions programs to corporate and banking transactions, insurance contracts and the sale of goods and services. We handle license applications for agricultural commodities, medical devices and medicines under the Trade Sanctions Reform and Export Enhancement Act of 2000. We also represent companies in enforcement actions involving U.S. sanctions, assist with internal investigations and the development of compliance programs, and counsel clients on voluntary disclosures. For more information about our Sanctions Practice please contact Lisa Crosby (lcrosby@sidley.com, +1.202.736.8754) or Robert Torresen (rtorresen@sidley.com, +1.202.736.8570)

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This Sidley update has been prepared by Sidley Austin LLP for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers.

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