Presentation to International Law Association on navigating conflicting requirements under Canadian and US law when investing in or trading with Cuba - October 2009

1. Between a Rock and a Hard Place: Navigating Conflicting U.S. and Canadian Trade Controls John W. Boscariol October 24, 2009 International Law Weekend 88 th Annual Meeting of the American Branch of the International Law Association Fordham University School of Law, New York City The Cuba Thaw – Implications for Transnational Companies

27. John W. Boscariol Partner McCarthy Tétrault LLP Suite 53 00 Toronto Dominion Bank Tower Toronto-Dominion Centre Toronto, Ontario M5K 1E6 www.mccarthy.ca Direct Line: 416-601-7835 E-mail: jboscariol @ mccarthy.ca

28. Examples of Conflicts Example 1: A U.S. company conducts export compliance training at its Canadian subsidiary. U.S. staff travel to Canada, provide employees and officers of the Canadian company with export control manuals and training sessions which identify Cuba, among other countries, as being subject to the OFAC rules. Is the Canadian company required to make a notification to the Attorney General?

29. Examples of Conflicts (cont’d) Example 2: A European-based company has a subsidiary in the United States and a subsidiary in Canada. The CEO of U.S. subsidiary advises her Canadian counterpart that her company should not be supplying products to Cuba. Is the Canadian subsidiary required to notify the Attorney General?

30. Examples of Conflicts (cont’d) Example 3: The Canadian subsidiary in Example 2 uses the systems of its U.S. sister company to process orders that it receives. In order to avoid penalties under the CACRs, the Canadian subsidiary develops a new order system that red flags Cuban orders so that they are processed in Canada. Has the Canadian company violated the non-compliance obligation?

31. Examples of Conflicts (cont’d) Example 4: An Asian multi-national has a subsidiary in the United States which in turn has a subsidiary in Canada. The Canadian company receives a request to provide engineering services to a Cuban mining project. The Canadian company refuses because the CACRs prevent U.S.-owned foreign subsidiaries from doing business with Cuba. However, another Canadian company, a direct subsidiary of the Asian parent, steps in to provide the services. Is there a requirement to notify the Attorney General of any directions that may have been given to the Canadian company that refused the order? Is there a violation of the non-compliance obligation?

32. Examples of Conflicts (cont’d) Example 5: A Canadian investor participating in an hotel project in Cuba backs out of the deal when she realizes that the financial terms are not worth the risk, and she fears exposure to Title III actions under Helms-Burton. Has the Canadian investor violated her non-compliance obligation?

33. Examples of Conflicts (cont’d) Example 6: A Canadian distributor sources widgets from the United States and receives an order to ship to Cuba. He applies for a U.S. re-export license, perhaps in the hope that they are considered medical supplies, but is refused. He advises his customer that he is unable to ship. Has he violated the non-compliance obligation?

34. Examples of Conflicts (cont’d) Example 7: A Canadian manufacturer uses U.S.-origin components to produce widgets. The components comprise over 50 percent of the value of the widgets. It refuses a purchase order for Cuba assuming the shipment would not qualify for a Canadian export permit. Could this constitute a violation of the non-compliance obligation?