Since January 2017, the Dutch public prosecutor has applied a new approach to export controls and sanctions violations. This new approach entails that violations of these laws are more actively investigated and prosecuted. A specific public prosecutor has been appointed to fully focus on these kind of violations. If a breach of export controls or sanctions is found, such breach will in principle be prosecuted. This does not only apply to entities but also to de facto leaders involved in such violations. Out-of-court settlements with the entity or individual(s) involved will in principle no longer be possible in such cases.
This new, more active, approach has resulted in multiple cases that were prosecuted in court since the beginning of this year. Whereas certain of the court rulings have been published, others have not yet. The cases that were published all led to penalties. Most of the court cases in 2017 relate to exports or transits of military items without a license. B&A Law has also been involved in recent court cases related hereto. Those cases have not yet been published. Below, we will address two cases that were published.
Recent Cases
Two recently published cases deal with the transit of military items through the Netherlands.
In the first case the defendant was a logistics provider, who had been charged with willfully having transited items listed in the Common Military List of the European Union originating from the United States and designated for the Ministry of Defense of Saudi Arabia, through the Netherlands without the required transit licenses. The items in question were drones (UAVs), which classified as military items on the Military List and for which the logistics provider should have requested a transit license. Because of the current Dutch policy regarding Saudi Arabia, which is regarded as a country of concern, the license application for these items would have been refused by the authorities. The defendant argued, among others, that no individual transit license was required and that a general license sufficed, which general license was available at the authorized representative of the exporting party and that, pursuant to the export documentation, it was unable to see that the export concerned military items. The court ruled that a general license would not have been sufficient as the export concerned complete drone systems, which require an individual license. Moreover, both the addressee (Saudi Arabian Ministry of Defense) and the description of the items (UAV systems). Therefore, the defendant can be held criminally liable for the transit of the items without the required license and is imposed a fine of EUR 50,000. This is a rather high fine, which is motivated by alleged prior (2015) commitments of the entity involved that such transfers would be checked more thoroughly. Moreover, the value of the items (approx. EUR 14 million) and the fact that this is considered to be a serious violation is also taken into account.
In the second case, Royal Dutch KLM is fined EUR 40,000, of which EUR 20,000 conditionally with a probation time of two years. This fine concerned a rather similar case, in which KLM had transited spare parts for UAVs from South Africa to Ecuador, which spare parts were designated for the Ministry of Defense in Ecuador. The defendant argued, inter alia, that the shipping company, Panalpina, was legally held to correctly fill out the Airwaybill, according to the Treaty of Montreal and that Panalpina was responsible for obtaining the relevant licenses. For KLM, it was impossible to see what the nature of the items and the ultimate destination of the items was. The court rejects these arguments and rules that there is no order in responsibilities. Both KLM and Panalpina are equally responsible for their own acting and for having the right licenses when being involved in such transit and both parties have their own duty of investigation. The court, however, does take into account the fact that KLM has increased its measures and has been training its staff more thoroughly on this legal subject in order to prevent such violations.
Lessons Learned
The lessons to be learned from these cases is that once a violation has been committed, whether one knew or not of the violation or the content of the items, it is very difficult to avoid conviction. Intent hardly ever is an issue in these matters. The question is whether one could or should have known what the content of the items was. That questions is almost always answered positively. Furthermore, it is important to keep in mind that each party involved in an export or international transaction – whether as a carrier, a shipping company, a freight forwarder, etc. – has its own responsibility to ensure that all the right licenses have been obtained. Liability in this regard cannot be shifted to other parties.
Contact
Should you have any questions or require further information regarding the above, or should you require assistance in matters related to export controls or economic sanctions, please Contact B&A Law at info@balaw.nl or +31(0)20 260 0082