Understanding the U.S. Anti-Boycott Provisions

Mainbrace | June 2017 (No. 3)

George T. Boggs and Stefanos A. Roulakis

Question: I have to certify that my subsidiary that owns a vessel is not on the Arab League’s boycott blacklist. Can I do that?

Answer: If you are subject to the U.S. anti-boycott rules, the answer is “no,” but your subsidiary can provide the certification for itself. This is discussed more fully below.

A frequent issue that vessels and cargo bound for ports in the Middle East encounter is compliance with U.S. anti-boycott provisions. The issue may also arise in connection with restrictions in charter agreements for vessels. These provisions provide that a U.S. person engaged in almost any type of commerce cannot comply with or support an unsanctioned foreign boycott. These anti-boycott provisions were promulgated in response to the Arab League’s boycott of Israel, which remains the primary focus of the U.S. anti-boycott regulations. To avoid penalties, persons that trade with or in countries with a non-sanctioned boycott, such as the Arab League’s boycott of Israel, should familiarize themselves with the requirements of U.S. law.


The Arab League’s boycott dates back to the founding of the Arab League in 1945 and continues to the present day. The United States first began to legislate on this issue in 1965 when Congress passed an amendment to the Export Administration Act (“EAA”), but the anti-boycott provisions took their current shape in 1979 amendments to the EAA and in the Export Administration Regulations (“EAR”) at 15 C.F.R. Part 760. Additional anti-boycott provisions exist in the U.S. tax code and can have tax consequences for U.S. persons, but such provisions are outside the scope of this article. The U.S. anti-boycott rules are complex and often drafted with specific requirements that are too detailed to be explained here in their entirety. This article seeks only to summarize some key points to be considered.


The U.S. anti-boycott provisions generally prevent U.S. persons (including foreign affiliates) engaged in U.S. commerce from taking actions intended to support an unsanctioned foreign boycott. U.S. commerce is viewed broadly and includes commercial activity with only a limited U.S. connection. Such actions can include:

  •  refusing, or agreeing to refuse, to do business with a boycotted country or entities based there;
  • furnishing information about business relationships with a boycotted country or nationals thereof;
  •  implementing a letter of credit that contains a prohibited boycott-related requirement, including certain shipping requirements; and/or
  •   furnishing information about the race, religion, sex, or national origin of any U.S. person or any employee, owner, officer, or director of any U.S. person.

Violations of these prohibitions can lead to criminal or civil penalties.


Despite these restrictions, several exceptions exist to the boycott rules. One key exception that impacts the maritime industry relates to a boycotting country’s import requirements. In most cases, U.S. persons can comply with a boycotting country’s import requirements that prohibit imports from a boycotted country. Also, a U.S. person may state it is not on a blacklist or restricted from doing business in a boycotting country, but a company can make that statement only about itself and not about its subsidiaries or affiliates. Additionally, when shipping goods to a boycotting country, U.S. persons can also agree to a specific voyage routing that may avoid a port of a boycotted country and to exclude the use of a carrier of the boycotted country.

However, this shipping exception does not allow a U.S. person to agree to use a vessel that has never called in a boycotted country. Further, this exception does not permit a U.S. person to agree to a blanket agreement to never do business with a boycotted country, and it does not permit a shipper to agree to refrain from using a vessel blacklisted by a boycotting country.

Another exception relates to compliance with shipping document requirements. This exception allows a company to furnish certain information that would otherwise be prohibited in order to comply with the import and shipping document requirements of the boycotting country. For example, under this exception, a shipping company could provide a positive or affirmative certificate of origin for the goods, the name of the supplier, and where the cargo did or did not transit. In addition, the rules permit a shipping certification appended to the bill of lading for a cargo destined for the boycotting country to certify that the vessel is not registered in a boycotted country, is not owned by nationals or residents of a boycotted country, and will not pass through a boycotted country port en route to its boycotting country destination.

On the other hand, a certification that the vessel is eligible to enter the ports of the boycotting country in conformity with its laws and regulations can be made only by the vessel’s owner, charterer, or master. It cannot be made by anyone else (such as the vessel’s shipping agent), unless one can establish that such certification was not required for boycott reasons.

It is important to note that these exceptions authorize furnishing the information only on the shipping documents, and that self-certifications are permissible. For example, a certification by a subsidiary on behalf of a parent company or by a vessel agent would not comply with the rule.

Reporting Requirements

Subject to limited exceptions, U.S. persons must report to the Commerce Department any requests to participate in or support an unsanctioned foreign boycott. Specifically, a request is “reportable” if someone “knows or has reason to know that the purpose of the request is to enforce, implement, or otherwise further, support, or secure compliance” with an unsanctioned foreign boycott. Receiving a request to comply with a boycott must be reported to the Commerce Department regardless of whether the recipient intends to comply. Requests to take actions that are permissible must be reported unless a specific reporting requirement exception, as discussed above, exists.

For example, a request to ship goods to a boycotting country via a prescribed route, or to refrain from shipping via a proscribed route (or a request to certify to either effect) is not reportable since this is a specific exception established in the EAR. In addition, a request to supply a certificate by the owner, master, or charterer that a vessel is eligible, permitted to enter, or not restricted from entering a particular port, country, or group of countries pursuant to the laws, rules, or regulations of that port, country, or group of countries, is not reportable. Conversely, a request for an exporter to certify that the vessel to be used for the shipment is eligible to enter the port of a boycotting country would be reportable and prohibited, while such a certification could be made by the vessel’s owner, master, or charterer and need not be reported. Also, a request to use a ship that had never called on a country subject to an unsanctioned boycott would be reportable in addition to violating the anti-boycott rules.

Conclusions and Recommendations

Given the longstanding nature of the Arab League’s boycott and the U.S. anti-boycott provisions, any company with a U.S. presence that does business in the Middle East or that may receive requests to comply with an unsanctioned boycott, should have a plan in place to ensure compliance. While the exceptions noted above are important, requests to participate in a non-sanctioned boycott should raise red flags that personnel should be trained to recognize and apply appropriate procedures. Finally, in the event of non-compliance, it is critical to undertake a proper course of action to remedy any systemic failure(s) that lead to a violation, and to consider options, including a voluntary disclosure, for mitigating any penalties.

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