HR6194-119

What This Bill Does

This bill protects U.S. persons who comply with U.S. sanctions or export controls from having foreign judgments or foreign arbitral awards enforced against them in U.S. courts. It states a U.S. policy that U.S. persons should not be disadvantaged for actions or omissions taken to comply with sanctions or export controls, and that foreign persons should not obtain compensation for actions related to good-faith U.S. compliance.

The bill adds a new title 28 section 1660. No person other than the United States or someone acting for the United States may bring a federal or state civil action to enforce a foreign judgment or arbitral award arising from a claim where the underlying conduct resulted from actions to comply with U.S. sanctions that impeded contract performance, or where the foreign tribunal asserted jurisdiction based on U.S. sanctions, U.S. export controls, or foreign laws enacted in response to them. Defendants may remove those enforcement actions to federal district court, and the federal court must dismiss them.

The bill preserves U.S. government enforcement authority, including OFAC and presidential delegates. It also preserves claims by U.S. victims of international terrorism, torture, extrajudicial killing, aircraft sabotage, or hostage taking and their families, including claims under specified terrorism and Iran or Syria sanctions statutes. It also preserves contract claims agreed to be resolved in U.S. courts or U.S. arbitration, and other state or federal claims arising from sanctions or export controls, as long as they are not actions to enforce the barred foreign judgment or arbitral award. The new rule applies to civil actions pending on or after enactment.

Who Benefits and How

U.S. sanctions-compliant companies benefit because foreign judgment creditors cannot use U.S. courts to collect awards arising from disrupted contracts caused by U.S. sanctions compliance. U.S. sanctions-compliant individuals benefit from the same protection when they acted in good faith under sanctions or export-control duties. Export-control compliance teams benefit from lower litigation risk when compliance with U.S. restrictions impedes contract performance abroad. OFAC officials benefit because the bill preserves U.S. government sanctions authority. U.S. terrorism victims benefit because the bill expressly preserves terrorism, torture, extrajudicial-killing, aircraft-sabotage, and hostage-taking remedies.

Who Bears the Burden and How

Foreign judgment creditors must overcome a statutory bar if their award arises from U.S. sanctions compliance or a tribunal's reliance on sanctions or export controls. Foreign arbitral award holders must litigate removal and dismissal in U.S. federal court when defendants invoke the new section. Federal district courts must process removals, determine whether the statutory bar applies, and dismiss covered enforcement actions. Contract counterparties affected by sanctions lose a U.S. enforcement route for certain foreign awards. U.S. businesses still must document good-faith compliance because the protection depends on the relationship between the claim and U.S. sanctions or export controls.

Key Provisions

• States U.S. policy that U.S. persons should not be disadvantaged for good-faith compliance with sanctions or export controls.
• Prohibits most U.S. civil actions to enforce foreign judgments or arbitral awards tied to U.S. sanctions compliance or sanctions-based foreign jurisdiction.
• Provides defendants with removal to federal district court and requires dismissal of covered enforcement actions.
• Preserves presidential, OFAC, and U.S. government enforcement authority.
• Preserves terrorism-victim, torture, extrajudicial-killing, aircraft-sabotage, hostage-taking, and specified Iran or Syria sanctions claims.
• Provides definitions for U.S. sanctions and applies the new limitation to pending and future civil actions.