Hong Kong Stock Exchange proposes SPAC listing regime with strict criteria

The Hong Kong Stock Exchange has launched a consultation paper on proposals to create a listing framework for special purpose acquisition companies (SPACs) in Hong Kong. The paper compares these to the SPAC regimes in other key jurisdictions such as the US, the UK and Singapore. In their e-bulletin, our team in Hong Kong consider the key proposals for the new SPAC regime in Hong Kong, which aim to introduce a regime for Hong Kong that is competitive but includes sufficient shareholder protections to uphold the quality and integrity of the Hong Kong market. Continue reading

OFAC Sanctions Cryptocurrency Exchange to Combat Ransomware Payments, Releases New Ransomware Guidance

On September 21, 2021, the Office of Foreign Assets Control (“OFAC”) of the Treasury Department issued an Updated Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments (“Updated Advisory”), which warns of the sanctions risks of making or facilitating ransomware payments and provides expanded guidance on steps that companies may take to mitigate ransomware risk. Continue reading

US Sanctions and the right of borrowers to withhold repayment: Commercial Court signals return to orthodoxy

The Commercial Court has granted summary judgment in favour of a bank seeking to recover payments under Credit Agreements entered into with the Venezuelan state-owned oil and gas company, Petroleos De Venezuela SA (PDVSA), finding that the defaulting borrower had no real prospect of successfully defending the claims on the basis of certain US Sanctions imposed on Venezuela which post-dated the execution of the Credit Agreements: Banco San Juan Internacional Inc v Petroleos De Venezuela SA [2020] EWHC 2937 (Comm). Continue reading

HSF Launches New Sanctions Blog

Herbert Smith Freehills’ US Sanctions team has recently launched a new Sanctions blog. The blog will provide commentary on economic sanctions and export control issues, with a focus on US laws, and will be of particular interest to in-house counsel and compliance personnel in both US and non-US companies. Continue reading

OFAC Issues Finding of Violation — but No Penalty — for Sanctions Violations Caused by Compliance System Defects and Human Error

On April 30, 2020, the US Department of Treasury (“Treasury”)’s Office of Foreign Assets Control (“OFAC”) issued a Finding of Violation to American Express Travel Related Services Company (“AMEX”). AMEX issued a prepaid travel card to Gerhard Wisser, a specially designated national or “SDN,” and subsequently processed approximately $35,000 in transactions Wisser conducted using the card. AMEX had automated sanctions screening processes in place to prevent SDNs such as Wisser from obtaining cards—and those processes did, in fact, flag Wisser as an SDN. However, defects in the system, paired with human error, allowed the automated flags to be overridden so that Wisser could obtain a card. OFAC did not issue a monetary penalty for AMEX’s violations.

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High Court finds terms of English law Facility Agreement allowed borrower to withhold interest payments given risk of US “secondary” sanctions

In a recent decision, the High Court has found that the terms of a Facility Agreement governed by English law allowed the borrower to withhold payment of interest instalments where there was a risk of secondary sanctions being imposed on the borrower under US law, notwithstanding that the Facility Agreement had no connection with the US: Lamesa Investments Limited v Cynergy Bank Limited [2019] EWHC 1877 (Comm).

At first sight the decision is surprising because English law does not generally excuse contractual performance by reference to a foreign law unless it is the law of the contract or the place of performance (and these exceptions did not apply here). However, the court noted that parties can contract out of this general rule, which is precisely what happened in this case. The relevant clause of the Facility Agreement permitted the borrower to withhold payment of interest instalments “in order to comply with any mandatory provision of law, regulation or order of any court of competent jurisdiction”.

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