The U.S. Department of State, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), and the U.S. Coast Guard have issued a global advisory​ alerting the maritime industry, and those actively engaged in the energy and metals sectors, to deceptive shipping practices used to evade sanctions throughout the world, and specifically in Iran, North Korea and Syria.  The new advisory is intended to provide specific guidance and recommended best practices to be used by those in the maritime industry to ensure sanctions compliance.  The advisory highlights the most common practices used by sanctions evaders, including (1) disabling or manipulating the AIS on the vessel; (2) physically altering vessel identification; (3) falsifying cargo and vessel documents; (4) STS transfers; (5) voyage irregulates; (6) false flags and flag hopping; and (7) complex ownership or management structures.

The advisory also includes a detailed set of general practices which should be adopted for various sectors of the industry to assist in identifying potential sanctions evaders.  An internal compliance program and strict “know your customer” guidelines should be developed and implemented with these guidelines in mind in order to ensure compliance with U.S. sanctions regulations. 

To read a copy of the advisory please click here.

If you have any questions, contact us at info@chaloslaw.com

Texas has turned into a legal and political battleground as individuals, businesses, and the Courts wrestle with how best to protect the general population without infringing on people’s civil liberties.   Two recent cases have made headlines as the limits of Texas Governor Greg Abbott’s Executive Orders have been challenged.

On May 1, 2020, Executive Order GA-18 went into effect which permitted Texas dine-in restaurants to reopen with specific limitations, including limiting the number of patrons and minimum distancing between parties.  The Blue Onyx, a gentlemen’s club in Houston, Texas opened on Friday May 1, 2020 at 12:01 AM with a menu and procedures in place to ensure social distancing.  City of Houston officials and police shut down the club shortly after opening, claiming that the Blue Onyx was in violation of the Governor’s Executive Orders and threatened the owner with citations and arrest.  Undeterred, Blue Onyx filed an emergency petition in Federal Court in the Southern District of Texas for a Temporary Restraining Order against the City.  The self-proclaimed Judicial Diva, District Judge Vanessa Gilmore (appointed by President Bill Clinton in 1994), issued a Temporary Restraining Order permitting the Club to immediately reopen and prohibiting the City of Houston from arresting any employee or representative of the Club.  Judge Gilmore found that the Club had made the necessary showing that immediate and irreparable injury, loss, or damage would occur unless the City was ordered to refrain from closing or attempting to close Club Onyx pursuant to Governor Abbott’s Executive Order GA 18.

In another case, Shelley Luther, a single mother who operates a hair salon, defied Governor Abbott’s Executive Orders and opened for business.  City and County officials in Dallas issued several citations for Ms. Luther’s failure to comply with the Executive Order requiring hair salons to remain closed since late March.  In the 14^th Civil District Court, Judge Eric Moyé (a Democrat who has held the elected position since 2008 and is up for re-election on November 3, 2020), issued a restraining order against the salon and Luther for violating the Governor’s Executive Orders.  When the salon reopened in defiance of the restraining order; Judge Moyé held an emergency hearing on Tuesday, May 5, 2020.  At the hearing, Judge Moyé issued a $7,000 fine and sentenced Ms. Luther to seven (7) days in jail for civil contempt.  The order was surprising to many given the fact that Texas (and Courts across the United States) have released thousands of non-violent offenders from jail in response to the COVID-19 pandemic to limit spread of the virus.  The Judge’s ruling sparked political ire from Republicans across Texas and the United States and has become a political rallying cry.  Texas Attorney General Ken Paxton wrote an open letter calling for Ms. Luther to be released from jail immediately and Lt. Governor Dan Patrick chipped in that he would serve out her sentence on house arrest so that Ms. Luther could be home with her family. Twelve District Judges in Dallas County responded in an Open Letter calling the Texas politicians’ public comments and attempted interference with the judiciary improper. A GoFundMe page for Shelley Luther has already raised over $500,000.

In response, on May 6, 2020 Governor Abbott issued a new Executive Order permitting the re-opening of hair and cosmetology salons in Texas starting on Friday May 8, 2020.

To read a copy of Judge Gilmore’s Temporary Restraining Order, please click here.

If you have any questions, contact us at info@chaloslaw.com

We are pleased to announce that Mrs. Otero Valdés is scheduled to present via webinar at the International Underwriting Association Market Briefing to discuss the symptoms, diagnosis, and challenges of handling insurance claims involving “Complex Regional Pain Syndrome” (“CRPS”).  The webinar will take place on May 6, 2020 at 9:00 EST.  Mrs. Otero Valdés will explore a recent case study and focus on the keys to success in the early stages of claims management and litigation.

To register for the program please click here.

For more information, please do not hesitate to contact us at  info@chaloslaw.com or mov@chaloslaw.com.

The United States has a statute which provides a very helpful tool for parties seeking testimony or documents from individuals or entities located in the United States in aid of a foreign dispute.  Specifically 28 U.S.C. § 1782 provides that a U.S. district court may, on the request of an interested party, provide assistance in connection with a proceeding before “a foreign or international tribunal” by ordering a person in its district “to give his testimony or statement or to produce a document or other thing for use in [the] proceeding.”  There has long been a lingering question among Courts and lawyers as to whether a private foreign arbitration proceeding qualified as a “tribunal.”

The leading authorities on the subject had been decisions from the Second Circuit Court of Appeals (NBC, Inc. v. Bear Stearns & Co., Inc., 165 F.3d 184 (2d Cir. 1999)) and the Fifth Circuit Court of Appeals (Republic of Kazakhstan v. Biedermann International, 168 F.3d 880 (5th Cir. 1999)), which both held that private arbitral bodies are not “tribunals” under the statute and therefore the use of Section 1782 was not permitted in aid of a foreign arbitration.  The Supreme Court of the United States stated in a 2004 decision that the tribunal definition in the statute was “unbounded by categorical rules” and quoted from a 1965 law review article by Professor Hans Smit which stated that the legislative history of the statute intended to include “arbitral tribunals.”   Intel Corp. v. Adv. Micro Devices, Inc., 542 U.S. 241 (2004).

Many district courts took this statement by the Supreme Court to mean that the definition of tribunal had been broadened and started granting discovery requests in aid of foreign private arbitrations.  However, other district courts rejected the statement as “mere dicta” and not binding authority which overruled the Second Circuit or Fifth Circuit decisions.   As District Judge Rakoff of the Southern District of New York held, NBC is still the law of the Circuit and Professor Smit’s quote has been taken out of context as there is no dispute that arbitration’s created by governmental entities would qualify as a tribunal under the statute, but the Supreme Court has not held that such a right extends to private arbitration created by parties.  In re Petrobras Sec. Litig., 393 F. Supp. 3d 376, 385 (S.D.N.Y. 2019).

Since Judge Rakoff’s decision, two (2) Federal Courts of Appeal have reviewed the issue and have ruled in favor of private arbitration qualifying as a tribunal.  Specifically, the Sixth Circuit Court of Appeals and the Fourth Circuit Court of Appeals have now ruled that both the original legislative intent and the Supreme Court’s ruling in Intel Corp. stand for the proposition that private arbitrations are covered by the statute.  See, e.g., In Servotronics, Inc. v. Boeing Co. 954 F.3d 209 (4th Cir. 2020) (citing In re Application to Obtain Discovery for Use in Foreign Proceedings, 939 F.3d 710, 723 (6th Cir. 2019)). The Fourth Circuit ruled that even though the arbitration was private, under the UK Arbitration Act of 1996, the arbitration was subject to governmental regulation and oversight, and therefore qualified as a “foreign tribunal” for purposes of § 1782. Finally, the Fourth Circuit stated that there was a built in protection for parties worried about excessive and expansive discovery in the United States, as any discovery under the statute is subject to the discretion of the district court and may be challenged by any interested respondent.  Said another way, it is not an unfettered right to general discovery.

There are currently pending appeals in the Fifth Circuit, Ninth Circuit, and Seventh Circuit on this question.  It is possible the issue will eventually make its way to the Supreme Court of the United States for further clarification and to resolve the circuit split.  Until then, the ability to obtain discovery in aid of a foreign arbitration proceeding could vary from jurisdiction to jurisdiction (and even from Judge to Judge within the same district).

The Fourth Circuit’s opinion can be found here.

For assistance in obtaining discovery in aid of a foreign arbitration, please contact us at info@chaloslaw.com

U.S. Federal and State Courts are grappling with the delicate balance between keeping the courthouses open for business, while also ensuring the health and safety of courthouse staff, jurors, and the public is not jeopardized.  Judges and courthouse staff around the country are taking numerous measures to manage and respond to the pandemic. We briefly summarize the current status and procedures implemented at Courts in New York, Texas, and Florida as of April 15, 2020.

New York: In the Southern District of New York, activity in federal courthouses has been dramatically curtailed. Jury trials have been suspended until June 31, and courthouses are generally closed for all but essential matters. Electronic filing of new cases, pleadings, and other filings remain available via the Court Managed-Electronic Case Filing (cm-ECF) system. Judges have implemented telephonic and videoconference appearances to attempt to minimize case interruptions where possible. In addition, the U.S. Marshal Service and court clerks have adjusted the procedure for ex parte relief, to limit the necessity for in person meetings to obtain and serve the Orders, writs, and warrants in attachment and arrest cases.

In the New York state court system, the filing of new cases and the use of the electronic filing system for existing cases remains prohibited until further notice. All Courts are continuing to allow for the filing of emergency applications. Starting April 13, 2020, Court proceedings for pending non-essential matters in New York State Courts will be heard virtually, with all interactions taking place by video (utilizing Skype and Zoom) or telephone.  Courts in Kings County, New York County, and Bronx County will release protocols as electronic conferencing systems are implemented. New York state Chief Judge DiFiore has acknowledged and commended the Court staff’s ability to adapt to a “virtual court system” to “stop the spread of the virus and save lives.”

Texas: In Texas, all the federal courthouses in the Southern District of Texas are closed to the public until further notice. This includes courthouses in Corpus Christi, Victoria, Brownsville, Galveston, Laredo, McAllen and Houston. To ensure public safety, Chief Judge Rosenthal of the Southern District of Texas has ordered all civil and criminal jury trials previously scheduled to begin through May 31, 2020 are continued and will be rescheduled. The Southern District of Texas clerks’ offices are all operating with a skeleton crew, enough to keep up with the mail and criminal intake needs. The Judges of the Southern District of Texas have already started holding conferences, hearings, and mediations via Zoom, and have even acknowledged the potential long-term use (and cost savings) of such technology even after things start to return to normal. In the Eastern District of Texas, the Beaumont Division is also closed to the public until further notice. In both the Southern District and Eastern District, the U.S. Marshal Service has confirmed their continued assistance with admiralty and maritime matters to attach/arrest vessels during COVID-19 and have made social distancing changes to procedures as well, including but not limited to, seizing vessels through service of the seizure order on the vessel’s agent to avoid unnecessary travel to/from foreign flagged vessels by the deputy marshals.

The Supreme Court of Texas has similarly encouraged Texas State Courts to modify deadlines and procedures as necessary to manage their docket. Notably, Texas has granted courts wide latitude to modify or suspend deadlines and procedures as needed. Civil statute of limitations have also been extended. The Harris County District Clerk is operating in a reduced capacity and monitoring a dropbox at the courthouse for those who lack e-filing capability and need to physically file court materials. Despite the physical closure of the courthouses, functionally the courts and clerks’ offices remain open for business and the state’s e-filing system permits filing of new cases, pleadings, and motions in all courts.

Florida: All federal courthouses in the Southern District of Florida remain open for business, albeit with minimum staffing levels. The clerk’s office, probation, and bankruptcy courts are also operating with reduced capacity. All jury trials have been continued until no earlier than July 6. Joining other districts across the country, Chief District Judge Michael Moore has encouraged the adoption of video and teleconferencing for court proceedings where practicable. All Florida state courthouses in Miami-Dade County are closed to the public except for essential matters. Florida’s federal and state courts all continue to accept new pleadings and filings electronically.

While it remains unclear how long these measures will be necessary, the legal system has proved itself capable of adapting to these unusual circumstances. We hope you and your loved ones continue to stay safe and healthy.

If you have a question or need assistance with a legal matter, please contact us at info@chaloslaw.com

The U.S. Environmental Protection Agency (“EPA”) announced a sweeping freeze on enforcing administrative violations of environmental regulations in response to the coronavirus pandemic.  The EPA’s memorandum, titled “COVID-19 Implications for EPA’s Enforcement and Compliance Assurance Program” was distributed by Susan Bodine, the Assistant Administrator for Enforcement and Compliance Assurance. In it, she details the consequences of the pandemic, which may constrain the ability of regulated corporations to perform routine compliance monitoring and details specific enforcement policy changes for facility operations, public water systems, and other critical infrastructure.

In short, the EPA has stated it does “not expect to seek penalties for violations of routine compliance monitoring, integrity testing, sampling, laboratory analysis, training, and reporting or certification obligations in situations where the EPA agrees that Covid-19 was the cause of the noncompliance.”  While some examples were provided, no exact policy for what would be required to demonstrate that COVID-19 was the cause of the non-compliance has been given.  The policy is retroactive and applies from March 13, 2020 forward, with no set end date. Former Obama Administration EPA Enforcement Chief Cynthia Giles has criticized the memo and called it unprecedented and “an abdication of EPA’s responsibility to protect the public.”

The EPA’s memorandum can be found here.

If you have any questions on environmental compliance matters, please contact us at: info@chaloslaw.com

As the world is battling the coronavirus outbreak, the legal community has been forced to adapt in their own unique ways. State courts in New York are closed for all but emergency filings, while other federal and state courts around the country have postponed jury trials, in-person hearings, and shifted to telephonic or video appearances. Everyone is operating with limited staff and skeleton crews. Many federal judges have issued standing orders detailing their own unique policies and procedures.  Including Magistrate Judge Edison of the Southern District of Texas, who reminded attorneys appearing by video conference that while there was no requirement to wear formal courtroom attire during the video conference, “You are, however, required to wear clothes.”

Recently, in a case involving alleged counterfeit unicorn drawings and knock-off elves, Judge Seeger of the Northern District of Illinois issued a remarkable order reprimanding a plaintiff who filed multiple emergency motions.  The plaintiff argued that defendants were infringing on its trademarks and sought multiple emergency temporary restraining orders. Denying plaintiff’s motions for emergency relief and hearings, the Court noted “[i]f there’s ever a time when emergency motions should be limited to genuine emergencies, now’s the time.” Judge Seeger stated “[t]he world is facing a real emergency. Plaintiff is not” and quipped “one wonders if the fake fantasy products are experiencing brisk sales at the moment.”

Other courts have taken a proactive approach in encouraging amicable resolution of procedural matters and settlement without requiring judicial intervention. In an order issued to all civil cases assigned to Judge Totenberg of the Northern District of Georgia, the Court gave the following directive: “Be kind to one another in this most stressful of times. Remember to maintain your perspective about legal disputes, given the larger life challenges now besetting our communities and world. Good luck to one and all.”

We join Judge Totenberg in wishing good luck and good health to all.

Judge Seeger’s Order can be viewed here. Judge Totenberg’s Order can be viewed here.

On Wednesday March 18, 2020, crude prices fell to their lowest levels in 18 years. As companies and industries around the world are bracing for an unknown global economic slowdown brought on by COVID-19, domestic oil companies and others are already looking towards policy shifts from the U.S. federal government to help adapt to this new global reality. Even before the swath of shelter-in-place orders, prohibitions on gatherings of more than 10 people, and tightening of international borders rolled out over the past week; U.S. based shale drillers were already worried about the inability to compete on production costs as Saudi Arabia and Russia flood the market with crude. Bahri, Saudi Arabia’s tanker company has been heavily chartering vessels, and has provisionally hired 25-30 VLCCs (with delivery over the coming weeks) to supply tens of millions of barrels of crude oil to the open market. In an effort to combat the price plunge and the unknown short-term and long-term economic realities caused by a world-wide pandemic, last Friday President Trump announced a plan to purchase enough crude oil to fill the U.S.’s Strategic Petroleum Reserve “right up to the top.” 

As we are all getting bombarded with messages about the Coronavirus pandemic and how closely everyone is monitoring developments, our primary concern is the health and well-being of our friends, colleagues and competitors.  We implore each of you to do your part to help stop the spread of the virus.

Please:

• stay in and work from home (you can do it… modern technology is terrific);
• practice frequent hand washing with soap and warm water for at least 20 seconds;
• avoid touching your eyes, nose, or mouth;
• cover your nose and mouth when coughing or sneezing with a tissue;
• avoid close contact with anyone with cold or flu-like symptoms;
• quarantine anyone who is sick;
• practice social distancing;
• do not attend events with more than 10 people; and
• clean and disinfect frequently touched surfaces.

Guidance from the CDC can be viewed at https://www.cdc.gov/coronavirus/2019-ncov/prepare/index.html.

We wish everyone good health and look forward to getting on the other side of this issue soonest.

Stay safe!

An article authored by George M. Chalos, Esq. is featured in the 27^th Issue of “The Arrest News,” published by shiparrested.com.  The article, titled “IMO 2020 Enactment & Enforcement in the United States,” discusses the importance of having compliant fuel oil onboard (0.5% sulfur content or less) and maintaining accurate records for port state control inspections.  It is expected that the U.S. Coast Guard and Department of Justice will aggressively pursue the failure to comply with the new Sulfur limits and all shipowners and operators should have good policies and procedures for IMO 2020 compliance in place.

For more information on the implementation of IMO 2020,  please do not hesitate to contact us with any questions at info@chaloslaw.com.

To read a copy of the article click here.