BIS TAKES ENFORCEMENT ACTION AGAINST RUSSIAN AIRLINES FOR OPERATING IN VIOLATION OF U.S. EXPORT CONTROLS
May 19, 2022
On April 7, 2022, BIS’s Assistant Secretary for Export Enforcement issued a press release announcing the implementation of several orders denying export privileges of Russian airlines, Aeroflot, Azur Air, and UTair in response to alleged ongoing export violations by the airlines related to the export controls on Russia that were imposed by the Commerce Department. Specifically, BIS issued three 180-day “Temporary Denial Orders” (“TDOs”) which effectively terminated the rights of the three airlines to participate in transactions subject to the Export Administration Regulations, which includes exports and re-exports from the U.S.
As background, because of U.S. involvement with and connection to most aircraft, and U.S. sanctions and export controls placed on certain countries such as Russia, some airlines, including foreign and domestic airlines, must obtain a BIS license or a license exception to operate anywhere outside of the U.S. This means that in theory, the TDOs issued by BIS and its revocation of export privileges has effectively grounded the three Russian airlines while current U.S. export controls bans companies around the world from providing refueling, maintenance, repair, other services or spare parts to the identified aircraft. Issuance of the TDOs comes in direct response to the U.S. identification of more than 170 Boeing aircraft that Russian airlines had continued to operate in violation of U.S. sanctions, which included about 40 Aeroflot Boeing 737 and 777 aircraft, 21 Azur Boeing aircraft, and 17 UTair Boeing aircraft.
While the TDOs represent the first enforcement actions taken by BIS in response to the Russian invasion of Ukraine, it is important to note that it is unclear how BIS would be able to enforce the TDOs. For instance, it is likely that any penalties that are issued for violations of the TDOs will be difficult to enforce. It is possible that future monetary payment could be used to enforce these and future TDOs if any of the airlines penalized seek to operate to the U.S. in the future, however this guidance has not been put forth by nor confirmed by BIS.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com 202-659-6622) or Drew Derco (dderco@eckertseamans.com 202-659-6665).
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