§501.605 Reports on litigation, arbitration, and dispute resolution proceedings.
(a) U.S. persons (or persons subject to the jurisdiction of the United States in the case of parts 500 and 515 of this chapter) participating in litigation, arbitration, or other binding alternative dispute resolution proceedings in the United States on behalf of or against persons whose property or interests in property are blocked or whose funds have been retained pursuant to §596.504(b) of this chapter, or when the outcome of any proceeding may affect blocked property or retained funds, must:
(1) Provide notice of such proceedings upon their commencement or upon submission or receipt of documents bringing the proceedings within the terms of the introductory text to this paragraph (a);
(2) Submit copies of all pleadings, motions, memoranda, exhibits, stipulations, correspondence, and proposed orders or judgments (including any proposed final judgment or default judgment) submitted to the court or other adjudicatory body, and all orders, decisions, opinions, or memoranda issued by the court, to the Chief Counsel, Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW.—Annex, Washington, DC 20220, within 10 days of filing, submission or issuance. This paragraph (a)(2) shall not apply to discovery requests or responses, documents filed under seal, or requests for procedural action not seeking action dispositive of the proceedings (such as requests for extension of time to file); and
(3) Report by immediate facsimile transmission to the Chief Counsel, Office of Foreign Assets Control, at facsimile number 202/622-1911, the scheduling of any hearing or status conference in the proceedings whenever it appears that the court or other adjudicatory body may issue an order or judgment in the proceedings (including a final judgment or default judgment) or is considering or may decide any pending request dispositive of the merits of the proceedings or of any claim raised in the proceedings.
(b) The reporting requirements of paragraph (a) of this section do not apply to proceedings to which the Office of Foreign Assets Control is a party.
(c) Persons initiating proceedings subject to the reporting requirements of this section must notify the court or other adjudicatory body of the restrictions set forth under the applicable part in this chapter governing the transfer of blocked property or funds retained pursuant to §596.504(b) of this chapter, including the prohibition on any unlicensed attachment, judgment, decree, lien, execution, garnishment or other judicial process with respect to any property in which, on or after the applicable effective date, there existed an interest of any person whose property and property interests were subject to blocking pursuant to this chapter or were subject to retention pursuant to §596.504(b) of this chapter.
---[WITH VERSION PROPOSED IN 5-10-24 INTERIM FINAL RULE]---
§ 501.605 Reports on litigation, arbitration, and dispute resolution proceedings.
(a) U.S. persons (or persons subject to U.S. jurisdiction in the case of part 515 of this chapter) participating in litigation, arbitration, or other binding alternative dispute resolution proceedings in the United States on behalf of or against persons whose property or interests in property are blocked or whose funds have been retained pursuant to § 596.504(b) of this chapter, or when the outcome of any proceeding may affect blocked property or retained funds, must:
(1) Provide notice of such proceedings upon their commencement or upon submission or receipt of documents bringing the proceedings within the terms of the introductory text to this paragraph (a);
(2) Submit copies of all pleadings, motions, memoranda, exhibits, stipulations, correspondence, and proposed orders or judgments (including any proposed final judgment or default judgment) submitted to the court or other adjudicatory body, and all orders, decisions, opinions, or memoranda issued by the court, to the Office of the Chief Counsel (Foreign Assets Control) at [email protected] with the number of this section in the subject line, within 10 days of filing, submission, or issuance. This paragraph (a)(2) shall not apply to discovery requests or responses, documents filed under seal, or requests for procedural action not seeking action dispositive of the proceedings (such as requests for extension of time to file); and
(3) Report by email to the Office of the Chief Counsel (Foreign Assets Control), at [email protected] with the number of this section in the subject line, the scheduling of any hearing or status conference in the proceedings whenever it appears that the court or other adjudicatory body may issue an order or judgment in the proceedings (including a final judgment or default judgment) or is considering or may decide any pending request dispositive of the merits of the proceedings or of any claim raised in the proceedings.
(b) The reporting requirements of paragraph (a) of this section do not apply to proceedings to which the Office of Foreign Assets Control is a party.
(c) Persons initiating proceedings subject to the reporting requirements of this section must notify the court or other adjudicatory body of the restrictions set forth under the applicable part in this chapter governing the transfer of blocked property or funds retained pursuant to §596.504(b) of this chapter, including the prohibition on any unlicensed attachment, judgment, decree, lien, execution, garnishment or other judicial process with respect to any property in which, on or after the applicable effective date, there existed an interest of any person whose property and property interests were subject to blocking pursuant to this chapter or were subject to retention pursuant to §596.504(b) of this chapter.
The differences between the revised and pre-existing versions are limited to technical changes, requirements mandating the use of the “ORS” for submitting reports, and specifying that records will not be released via FOIA where “OFAC reasonably foresees that disclosure would harm an interest protected by a FOIA”. This revision is less FOIA-friendly than the prior version, but it accords with OFAC’s pre-existing FOIA practices, as informed by developments in Supreme Court and other case law.
Note that the comments below have not yet been amended to reflect the issuance of the 5-8-24 Interim final rule.
---
Notes:
Read in conjunction with the comments to the cases in which OFAC acknowledges that, in spite of the plain language of many sanctions regulations, it does not purport to require a license in order to litigate cases against or involving a blocked person. See e.g. Consarc Corp. v. Iraqi Ministry, 27 F.3d 695 (D.C. Cir. 1994) (Consarc I), Comet Enterprises Ltd. v. Air-A-Plane Corp. - OFAC Amicus Brief (1997), Empresa Cubana Del Tabaco v. General Cigar Co. - OFAC/Treasury Amicus Brief.
Requiring a license to commence of engage in litigation involving a blocked person would, apart from constitutional concerns, potentially exceed the scope of IEEPA. That OFAC does not require a license to engage in personal litigation involving a blocked person (in the U.S. at least) does not, however, necessarily have an impact on the requirement of 501.605 to provide "Reports on litigation, arbitration, and dispute resolution proceedings".