The International Sanctions Regime and its Application to Malaysia

Introduction [1] Sanctions are commonly seen as “measures taken by countries to restrict trade and official contact with a country that has broken international law”. The Oxford Dictionary defines sanctions as an official order that limits trade, contact, etc. with a particular country, in order to make it do something, such as obeying international law. Thus, sanctions are often used as a tool of governments in the changing geo politics regime which affects international trade and shipping. [2] The United States (“US”) sanctions regime is particularly wide and is administered by the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”). [3] The international sanctions regime can be grouped into the following categories: • The US sanctions, issued by OFAC; • United Nations sanctions; and • European Union (“EU”) sanctions. [4] For instance, breach of the OFAC sanctions may result in costly implications for importers and exporters:1 • Importers may have payments for goods blocked and never receive the goods because of “non-payment.” Additionally, the importer may be subject to thousands of dollars in fines for violating Executive Orders or Acts of Congress. • Exporters may have property blocked and may be fined in accordance with the Trading with the Enemy Act or the International Emergency Economic Powers Act for sending goods to a Specially Designated National (“SDN”) or to a blocked country. * Partner and Head of Practice, Shipping, International Trade and Arbitration, Azmi & Associates. 1 See the US OFAC Sanctions resource at https://ofac.treasury.gov/. [2025] LR 185 • Exported items may be blocked and an exporter may be required to pay a significant fine if documents show the products are intended for re-exportation to a blocked country. • A company that charters a shipping vessel may be subject to civil or criminal penalties if the vessel and/or vessel owner are listed as SDNs. • An importer is considered to be in violation of OFAC sanctions if the imported products were shipped from a non-blocked country using a vessel owned by a blocked government or entity on the SDN list. [5] Thus, OFAC violations may lead to blocked property, fines, and civil and criminal penalties. [6] The US sanctions are imposed by Presidential decrees, the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014 (SSIDES), the Ukraine Freedom Support Act of 2014 (UFSA). [7] A certain list of entities being subject to sanctions (SDN list) is officially published at the OFAC website. The list includes, inter alia, the State Unitary Enterprise of the Crimean Republic “Crimean Sea Ports”, jointly with its branch, Kerch Commercial Sea Port. [8] It should be noted that the US sanctions usually have no extraterritorial effect, while prohibitions imposed by the sanction regime shall apply to the US persons only unless they are designated as a SDN. [9] The term “US person” means any citizen of the United States of America, a foreigner having permanent residence in the US, an entity incorporated under the US law or under any jurisdiction within the US (including foreign branches), and all persons physically located within the US. [10] With regards to the aforesaid, there is no direct jurisdiction of the US/OFAC regarding foreign persons (i.e. citizens of a foreign country, entities incorporated under the laws of foreign states, etc.). But it is a well-known fact that each transaction with a US financial institution engaged shall be governed by OFAC rules and shall be subject to review of sanctions. [11] Since the US financial institutions are strictly regulated and are subject to periodic inspections, almost all US banks support sanction compliance programs that include a review of sanctions against customers and transactions. [12] If the US correspondent bank that conducts a transaction knows or has reason to know that a certain person or entity engaged in bank transfer or referring thereto is subject to the US sanctions, such bank shall be responsible if it fails to take appropriate measures in order to make sure that cost remittance was blocked. 186 The Law Review 2025 [2025] LR [13] Thereafter, the US bank shall notify OFAC on the blocked/rejected transactions as soon as possible. [14] As a result of the Ukraine war, the US, EU and the United Kingdom (“UK”) have imposed sanctions on Russia.2 With the commencement of attacks on February 24, 2022, a large number of countries began applying wide-ranging sanctions against Russia. The sanctions targeted individuals, banks, businesses, monetary exchanges, bank transfers, exports, and imports. The sanctions included cutting off major Russian banks from SWIFT, the global messaging network for international payments. There were already sanctions in place on Russia since the country’s 2014 incursions into Ukraine, cyberattacks, malign influence, use of chemical weapons, and election meddling.3 [15] Shipping companies are a particular subject of such sanctions, as they may not be direct entities of the US or EU sanctions, although the aforesaid restrictions will anyway affect their interests. [16] In an interview given in February 2025,4 Edward Fishman, a former US sanctions official, the author of the forthcoming book Chokepoints: American Power in the Age of Economic Warfare said: Sanctions, tariffs, export controls – they've become the most prominent way that great powers compete with each other. Well, a data point that I find pretty enlightening is that Barack Obama imposed twice as many sanctions during his time in the White House as George W. Bush did. And then Trump imposed twice as many sanctions that Obama did. And then Biden doubled the number of sanctions that Trump imposed. I think the big difference with Trump is that he’s wielding these tools not just against adversaries, like China and Russia, but against our friends. European sanctions regime [17] The EU has imposed massive and unprecedented sanctions against Russia in response to the military aggression against Ukraine. Sanctions have also been imposed in relation to human rights violations and hybrid threats.5 2 See “What are the Sanctions on Russia and Have They Affected its Economy?”, BBC (February 23, 2024), available at https://www.bbc.com/news/world-europe-60125659 (accessed May 25, 2025). 3 See “Tracking Sanctions Against Russia”, Reuters (March 9, 2022), available at https:// graphics.reuters.com/UKRAINE-CRISIS/SANCTIONS/byvrjenzmve/ (accessed May 25, 2025). 4 “What Have US Sanctions on Russia Achieved Since the War in Ukraine Began?” (February 19, 2025), available at https://www.npr.org/2025/02/19/nx-s1-5290058/whathave-u-s-sanctions-on-russia-achieved-since-the-war-in-ukraine-began (accessed May 25, 2025). 5 See “EU Sanctions Against Russia Explained”, available at https://www.consilium. europa.eu/en/policies/sanctions-against-russia-explained/#sanctions (accessed May 25, 2025) The International Sanctions Regime [2025] LR and its Application to Malaysia 187 [18] The sanctions include targeted restrictive measures (individual sanctions), economic sanctions, diplomatic measures and visa measures. The aim of the economic sanctions is to impose severe consequences on Russia for its actions and to effectively thwart Russia’s ability to continue its aggression. The individual sanctions target people responsible for supporting, financing or implementing actions which undermine the territorial integrity, sovereignty and independence of Ukraine or those who benefit from such actions. The EU has also adopted sanctions against Belarus, Iran and North Korea in response to their support for Russia in the military aggression against Ukraine.6 [19] The EU restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine apply to a total of over 2,400 individuals and entities.7 The United Kingdom [20] Following Brexit, the UK have set up their own sanctions regime. [21] On July 28, 2020, the UK was the first jurisdiction to follow the path paved by the US in delivering comprehensive guidance in respect of sanctions in maritime trade. In issuing The Maritime Guidance: Financial Sanctions Guidance for Entities and Individuals, the Office of Financial Sanctions Implementation (“OFSI”) is targeting all companies, banks, and individuals that are involved in maritime trade.8 The guidance highlights some of the key risks of sanctions evasion in maritime trade, sets out “red flags” and gives its recommendations on how best to safeguard against these risks. [22] This advisory also addresses the problem of dark fleets which are vessels carrying sanctioned cargo in contravention of sanctions. The term “dark fleet” emerged when tankers started turning off their vessel-tracking transponders to conceal the origin and destination of the US-sanctioned oil. This evasive tactic, known as “going dark,” quickly became associated with the growing fleet of tankers involved in shipping Iranian and Venezuelan oil. However, “going dark” is just one of several deceptive shipping practices identified.9 [23] The following are some of the red flags, highlighted in the guidance, for potential sanctions evasion in the maritime sector:10 6 Ibid. 7 Ibid. 8 Available at https://www.gov.uk/government/publications/financial-sanctions-guidan ce-for-maritime-shipping/financial-sanctions-guidance-for-maritime-shipping (accessed May 25, 2025). 9 See “The Dark Fleet Explained”, available at https://maritime-professionals.com/thedark-fleet-explained/ (accessed May 25, 2025). 10 The UK Office of Financial Sanctions Implementation (OFSI), see n 8 above. 188 The Law Review 2025 [2025] LR Automatic Identification System (“AIS”) manipulation • The guidance recommends the use of AIS screening services to ensure that a vessel’s AIS was not turned off manually, or if AIS was lost during a period of time, to check that this occurred for legitimate reasons (e.g. protection from piracy risk). These services combine location data with other information to assess if a vessel may have “gone dark” for suspicious reasons. • The guidance also recommends the use of “switch off” clauses in trading contracts, which would stipulate that switching off AIS is a breach of the contract. Forged/tampered with documentation • The guidance recommends that companies and individuals always verify the validity of documents they receive in maritime transactions with the issuing institution. United Nations sanctions [24] The UN sanctions are sanctions issued by the Security Council (“UNSC”).11 These sanctions have taken a number of different forms, in pursuit of a variety of goals. The measures have ranged from comprehensive economic and trade sanctions to more targeted measures such as arms embargoes, travel bans, and financial or commodity restrictions. The UNSC has applied sanctions to support peaceful transitions, deter nonconstitutional changes, constrain terrorism, protect human rights and promote non-proliferation.12 [25] Today, there are 14 ongoing sanctions regimes which focus on supporting political settlement of conflicts, nuclear non-proliferation, and counter-terrorism. Each regime is administered by a sanctions committee chaired by a non-permanent member of the UNSC. There are nine monitoring groups, teams and panels that support the work of 10 of the 14 sanctions committees.13 11 The UNSC can take action to maintain or restore international peace and security under Chapter VII of the United Nations Charter. Sanctions measures, under Article 41, encompass a broad range of enforcement options that do not involve the use of armed force. Since 1966, the UNSC has established 31 sanctions regimes, in Southern Rhodesia, South Africa, the Former Yugoslavia (2), Haiti (2), Angola, Liberia (3), Eritrea/Ethiopia, Rwanda, Sierra Leone, Côte d’Ivoire, Iran, Somalia/Eritrea, ISIL (Da’esh) and Al-Qaida, Iraq (2), Democratic Republic of the Congo, Sudan, Lebanon, Democratic People’s Republic of Korea, Libya (2), the Taliban, Guinea-Bissau, Central African Republic, Yemen, South Sudan and Mali. See “Sanction”, available at https://main.un.org/securitycouncil/ en/sanctions/information (accessed May 25, 2025). 12 Ibid. 13 Ibid. The International Sanctions Regime [2025] LR and its Application to Malaysia 189 Malaysia [26] Malaysia implements domestic legislation to give effect to various UN sanctions. [27] Generally, sanctions imposed by Malaysia through relevant legislation and ministerial orders take various forms such as embargoes which prohibits export, transhipment or transit of strategic items or unlisted strategic items, freezing, seizure and forfeiture of funds and other financial assets, funds or economic resources, travel bans to or through Malaysia and prohibition of the provisions of financial measures or other related services. [28] The Malaysian Central Bank gives effect to the UN sanctions through the implementation of Targeted Financial Sanctions (“TFS”). TFS are the measures of asset freezing and prohibitions to prevent funds or other assets from being made available, directly or indirectly, for the benefit of specified entities or designated persons who are being sanctioned, without delay.14 [29] The objective of the TFS is to prevent:15 • Terrorists, terrorist organisations and terrorist financiers; • Persons and entities involved in the proliferation of weapons of mass destructions; from raising, moving and using funds, consistent with the relevant United Nations Security Council Resolutions (UNSCRs). [30] The Strategic Trade Act 2010 (“STA 2010”),16 is the legislation that controls the export, transshipment, transit and brokering of strategic items and technology, including arms and related material, as well as activities that will or may facilitate the design, development, production and delivery of weapons of mass destruction. [31] In 2004, the UNSC passed a resolution which requested member states to establish an export control system for the purpose of non-proliferation of weapons of mass destruction. As a member state, Malaysia is obligated to control exports of strategic products which may be used for proliferation of weapons of mass destruction activities. The STA 2010 was passed for this 14 See “Sanctions Related to TF, PF and Other Sanctions”, available at https://amlcft. bnm.gov.my/sanctions-related-to-tf-pf-and-other-sanctions (accessed May 25, 2025). 15 Ibid. 16 Act 708. STA 2010 was gazetted on June 21, 2017 and has come into operation on September 8, 2017. The key changes introduced under the STA Amendment Act include a significantly narrower definition of “brokering” and the exclusion of persons providing “ancillary services” from the requirements to obtain broker registration and permits; “end-use” statements no longer being mandatory when applying for a permit or special permit to export, tranship or bring in transit strategic items; and the introduction of new powers to compound offences under the STA 2010. 190 The Law Review 2025 [2025] LR purpose. The target of the STA 2010 is persons who engage in the activities of export, transhipment, bringing in transit or brokering of strategic items. This includes exporters, traders, manufacturers, brokers and others who have ownership of the product when it is exported. It also includes the activity of a person who either on his own behalf or acting as an agent on behalf of another person and is directly involved in the negotiation, purchase, financing, conveying, buying, selling and supply of such items.17 [32] The STA 2010 regulates the export, trans-shipment, transit and brokering of certain strategic items as specified in Ministerial Orders issued under the STA 2010 namely the Strategic Trade (Restricted End-Users and Prohibited End-Users) Order 2010 (as amended in 2011, 2014 and 2016) and the Strategic Trade (Strategic Items) Order 2010 (as amended in 2014, 2017 and 2018). The Ministry of Investment, Trade and Industry has a list of strategic items covered under the Act.18 [33] Additionally, the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (“AMLA 2001”)19 gives power to the Minister of Home Affairs to make orders for the implementation of measures to give effect to resolutions adopted by the UNSC and to obtain information on possession or control of terrorist property.20 [34] In line with powers conferred by the AMLA 2001, the Minister of Home Affairs has drafted the Anti-Money Laundering and Anti-Terrorism Financing (Security Council Resolutions) (Al-Qaida and Taliban) Order 2011 (as amended in 2013 and 2014) which incorporated the Al-Qaida Sanctions List and the Taliban Sanctions List made pursuant to Resolution 1267 (1999) and Resolution 1988 (2011) of the UNSC respectively, to implement measures decided by UNSC to give effect to the freezing of 17 See “FAQ”, available at https://www.miti.gov.my/index.php/pages/view/8701 (accessed May 25, 2025). 18 The strategic items list can be found at https://www.miti.gov.my/index.php/pages/ view/8702 (accessed May 25, 2025). 19 Act 613. 20 The Malaysian Minister of Home Affairs may issue orders in line with his powers under the AMLA 2001 declaring individuals and entities whom he is satisfied to have knowingly committed, attempted to commit, participated in committing or facilitated the commission of a terrorist act or is knowingly acting on behalf of, at the direction of, or in association with such individuals or entities, to be specified entities. Specified entities are reported under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities (Declaration of Specified Entities and Reporting Requirements) Order 2014 (as amended in 2014, 2016 and 2019). Malaysian citizens and body corporates incorporated in Malaysia are prohibited from certain acts relating to specified entities, including knowingly providing or making available property or financial services to the specified entities. For more information, see https://ezine.eversheds-sutherland.com/global-sanc tions-guide/malaysia (accessed May 25, 2025). The International Sanctions Regime [2025] LR and its Application to Malaysia 191 assets and measures imposed by the UNSC against Al-Qaida, Osama bin Laden and the Taliban.21 [35] Additionally, the Malaysian Minister of International Trade and Industry has also designated certain individuals, entities, and countries as restricted or prohibited end-users. These are currently reported under the Strategic Trade (Restricted End-Users and Prohibited End-Users) Order 2010 (as amended in 2011, 2014 and 2016), which includes any person or country that is subject to any proliferation of weapons of mass destruction-related sanctions imposed pursuant to a decision of the UNSC.22 Case law [36] The Malaysian Admiralty Court addressed the application of the US OFAC sanctions on Venezuela in the case of Orin Energy Investments Ltd v Futura Asia.23 [37] The case concerned a dispute over a fuel oil sales contract. Orin Energy alleged that Futura breached the agreement by delivering fuel oil of Venezuelan origin, which they claimed was sanctioned under the US OFAC sanctions regime, and that Futura fraudulently concealed its origin. This led to a breach of Orin Energy’s charterparty agreement when the vessel MT “Nordic Sirius” refused to accept the fuel oil upon discovery of its origin. Orin Energy also alleged that the Fuel Oil did not meet the contracted specifications and was subject to US sanctions, leading to the termination of the contract. [38] Futura denied these claims, asserting that Orin Energy was aware of the fuel oil’s origin from the beginning and that it was not sanctioned. Futura counterclaimed for unpaid balances, losses on undelivered parcels, demurrage, and wasted costs caused by the aborted ship-to-ship transfer. [39] The court found that Orin Energy had accepted the cargo and engaged in further transactions involving the fuel oil, which undermined its claims of being misled about the oil’s origin. Evidence indicated that Orin Energy was aware of the risks associated with purchasing Venezuelan oil and had taken steps to mitigate those risks. 21 Further information on the individuals and entities sanctioned under the AMLA 2001 is available at www.moha.gov.my/index.php/en/menu-utama (accessed May 25, 2025). 22 A list of individuals, entities and countries designated by the Malaysian Minister of International Trade and Industry as restricted end-users and prohibited end-users is available at https://www.miti.gov.my/index.php/pages/view/sta2010#Strategic%20 Items%20List (accessed May 25, 2025). 23 Orin Energy Investments Ltd v Futura Asia Ltd [2024] AMEJ 2104; [2024] MLJU 2347, HC. The author acted for Futura in this case. 192 The Law Review 2025 [2025] LR Sanctions risk [40] The court dismissed Orin Energy’s claims, finding that they were aware of the fuel oil’s origin and accepting Futura’s expert evidence that it was not sanctioned. The court also noted that the US sanctions laws apply only when the property of a specially designated national (SDN) is in the possession or control of a US person, rendering the property blocked. Since neither Orin Energy nor Futura were US persons or entities with US nexus, and the transactions did not involve US persons, the fuel oil was not considered blocked or sanctioned property under the US sanctions laws. Therefore, Orin Energy was not justified in suspending payment for the fuel oil. [41] The judge addressed Orin Energy’s claims regarding the risks tied to purchasing Venezuelan-origin oil but found them without merit. The court concluded that under the relevant Executive Orders (“EOs”), US sanctions laws only apply when the property of a SDN is in the possession or control of a US person, making it blocked property. Since the sale of the fuel oil from PdVSA (an SDN) to Futura involved a non-US person, it did not become sanctioned or blocked property. Similarly, the subsequent sale from Futura to Orin Energy was not subject to US sanctions. As a result, the court held that Orin Energy was not justified in suspending payment for the fuel oil. [42] The issue of sanctions was also a major part of this trial in the admiralty court, with both parties calling experts on sanctions law to testify on the scope and application of the US sanctions, including the definition of SDNs under OFAC. This examination of sanctions law is relatively novel in Malaysian courts and was thoroughly analysed during the trial. [43] Furthermore, while the plaintiff alleged that the Fuel Oil was blocked by the US sanctions due to its Venezuelan origin, the court sided with the defendant’s expert testimony, concluding that the Fuel Oil was not subject to the US sanctions as it was no longer blocked once sold to a non-US entity like Futura. [44] The admiralty judge made the following comments on the issue of sanctions: [105] The main authority that issues directives and regulations pertaining to sanctions under the United States laws and system is the Office of Foreign Asset Control (“OFAC”). In this regard, written opinions and oral testimonies were provided by both experts at the trial and the Court has also been provided with the applicable sanctions and/or appropriate Executive Orders (“EO/EOs”) issued by OFAC. [106] The Court can interpret these EOs not constrained by the interpretation of either sanction experts. Conversely, the Court can also be guided and choose to follow the view of any of the experts if the Court finds the reasoning in line with what the Court interprets. The International Sanctions Regime [2025] LR and its Application to Malaysia 193 [107] This approach is supported in the English case of Bahamas International Trust Co Ltd v Threadgold [1974] 1 WLR 1514 which was also cited in the Malaysian case of Padiberas Nasional Bhd v Kontena Nasional Bhd [2010] 3 MLJ 134 stating that: “In a case which turns, as this one does, on the construction to be given to a written document, a court called on to construe the document in the absence of any claim to rectification, cannot be bound by any concession made by any of the parties as to what its language means. That is so even in the court before which the concession is made; a fortiori in the court to which an appeal from the judgment of the court is brought. The reason is that the construction of written document is a question of law. It is for the judge to decide for himself what the law is, not to accept it from any or even all of the parties to the suit; having so decided it is his duty to apply it to the facts of the case. He would be acting contrary to his judicial oath if he were to determine the case by applying what the parties conceived to be the law, if in his own opinion it were erroneous.” (Emphasis added.) [108] The two main Executive Orders relevant to the Sanctions issues are EO 13850 and EO 13884. The relevant provisions of the EOs are as follows: “Executive Order 13850 – Blocking Property of Additional Persons Contributing to the Situation in Venezuela Section 1 (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State: (i) to operate in the gold sector of the Venezuelan economy or in any other sector of the Venezuelan economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State; (ii) to be responsible for or complicit in, or to have directly or indirectly engaged in, any transaction or series of transactions involving deceptive practices or corruption and the Government of Venezuela or projects or programs administered by the Government of Venezuela, or to be an immediate adult family member of such a person; (iii) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity or transaction described in subsection (a)(ii) of this 194 The Law Review 2025 [2025] LR section, or any person whose property and interests in property are blocked pursuant to this order; or (iv) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order. Sec. 4. The prohibitions in section 1 of this order include: (a) the making or any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order; and (b) the receipt of any contribution or provision of funds, goods, or service from any such person. … Sec. 5. (a) Any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order is prohibited. (b) any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited.” (Emphasis added.) [109] For our present purpose, I understand the EO 13850 to mean that once the Secretary of the Treasury, in consultation with the Secretary of State, makes a “determination” that: a) a person is found to operate in “any other sector” of the Venezuelan economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State; b) a person is found to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of a person determined by the Secretary of the Treasury, in consultation with the Secretary of State to be responsible for or complicit in, or to have directly or indirectly engaged in, any transaction or series of transactions involving deceptive practices or corruption and the Government of Venezuela or projects or programs administered by the Government of Venezuela, or to be an immediate adult family member of such a person; or c) a person is found to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order; The International Sanctions Regime [2025] LR and its Application to Malaysia 195 then all property and interests in property of the aforesaid person that come within the possession or control of a U.S. person are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt with. In other words, such property become “blocked property” in the hands of the U.S. person. [110] Executive Order 13884 provides: “Executive Order 13884 – Blocking Property of the Government of Venezuela Section 1 (a) All property and interests in property of the Government of Venezuela that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in. (b) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State: (i) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person included on the list of Specially Designated Nationals and Blocked Persons maintained by the Office of Foreign Assets Control whose property and interests in property are blocked pursuant to this order; or (ii) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order. … Sec. 3 The prohibitions in section 1 of this order include: the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order; and the receipt of any contribution or provision of funds goods, or services from any such person. … 196 The Law Review 2025 [2025] LR Sec. 4. Any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order is prohibited. Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited person.” (Emphasis added.) [111] EO 13884 has the same effects as EO 13850 save that it applies to all property or interest in property of any person included on the list of Specially Designated Nationals and Blocked Persons maintained by the OFAC whose property and interests in property are blocked pursuant to the order, which come into the possession or control of a U.S person are similarly blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in. [112] In short, once it is determined by the Secretary of the Treasury in consultation with the Secretary of State that an entity is caught under the EO 13850, then all property and interests in property of the said entity that come within the possession or control of a U.S. person are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt with. In other words, the property and interests in property of such a person will only be blocked when they come under the possession or control of a U.S. person. [113] It is undisputed that PdVSA is on the SDN list. Hence, its properties are blocked property when they come within the possession or control of a U.S. person. Both the experts agree on this point. [114] However, the parties’ experts differ on the position where both the seller and buyer are non-U.S. persons, whether in such circumstances, the mere origin of the commodity from Venezuela would make the transaction subject to sanctions. This of course refers to the sale by PdSVA of the Fuel Oil to Futura, a non-U.S. person, and the subsequent sale by Futura to Orin Energy, both non-U.S. persons. [115] In this regard, Mr Skoufalos’ opinion is that if the Fuel Oil is property of the Government of Venezuela or PdVSA (both being SDNs), then the Fuel Oil would be considered blocked property immediately and even non-U.S. persons would be prohibited from entering into any transactions or activities involving the Fuel Oil. [116] Mr Skoufalos held the view that Futura, being a non-U.S. person, when it purchased the Fuel Oil from PdVSA would be exposed under the EOs to secondary sanctions, in particular, under E.O. 13884, at paragraph 1(b), which provides for the blocking of property or property interests of “any person” who “(1) providing material assistance (including financial, material or technological support) to sanctioned entities, including The International Sanctions Regime [2025] LR and its Application to Malaysia 197 PdVSA and (2) owned or controlled, or acting on behalf of a designated entity, including PdVSA”. [117] Mr Skoufalos further opined that a blocked property, by reason of its being owned by a sanctioned entity, remained a blocked property despite having been sold to a subsequent non-sanctioned entity or entities. This is because the transfer of a blocked property is "null and void", namely, the subsequent sale to a non-sanction entity is incapable of transferring an interest in the block property to the buyer. Reference was made to sections 581.201, 591.202 and 591.310 of 31 CFR 591, Venezuela Sanction Regulations. The subsequent buyers could still be exposed to secondary sanctions for flouting EO 13850 "for operating within the sector" or for "material support of a blocked entity" in dealing with the blocked property. [118] To be clear, Mr Skoufalos is saying that Futura, by purchasing the Fuel Oil from PdVSA, being a sanctioned or blocked entity, is subject to secondary sanctions by OFAC by the mere fact that it had purchased the Fuel Oil from a sanctioned or blocked entity. This is because the “purchase” constitutes a “financial or material support” and or an operation in the oil sector of Venezuela under EO 13850. [119] On the other hand, Mr Bravo opined that the mere purchase of the Fuel Oil without more cannot amount to providing “material or financial” support, nor can it constitute treating Futura as operating in the oil sector of Venezuela. [120] In any case and more significantly, it is Mr Bravo’s opinion that the Secretary of the Treasury, in consultation with the Secretary of State had not made any such determination at all in the present case. According to Mr Bravo, the secondary sanctions against non-U.S. persons come in the form of OFAC placing the said persons in the SDN list upon the determination made. Until this is done, there is no secondary sanctions at all against the non-U.S. person which means that the said non-U.S. person could deal with anyone including a U.S person as regards the property purchased from PdVSA. [121] Thus, Mr Bravo opined that there is no prohibition for Futura, a non-U.S. person to purchase Fuel Oil from PdVSA, a sanctioned entity and there is also no prohibition for Futura to thereafter deal with the Fuel Oil with any third party including a U.S. person since OFAC had not designated Futura as an SDN as a form of secondary sanctions. [122] Mr Bravo also disagreed with Mr Skoufalos’ view that the status of the blocked property would not change even with the transfer of the same to a third party by sale. According to Mr Bravo, once a sanctioned entity sells its property to a non-U.S. person, the property is no longer blocked property. The blocked status of the property ends when the sanctioned entity transfers the property to a non-U.S. third party. This means that once PdVSA sold the Fuel Oil to Futura, the Fuel Oil which he opined was blocked property was no longer treated as blocked property. Thereafter 198 The Law Review 2025 [2025] LR when Futura sold the Fuel Oil to Orin Energy, the parties were in fact not dealing with blocked property. In other words, even a U.S person may thereafter deal with the Fuel Oil without any exposure to the U.S sanction laws. [123] With respect to Mr Skoufalos, I am unable to agree with his interpretation of the EOs and its application to the facts of this case. I also do not agree with both the experts’ opinion that the Fuel Oil was considered as blocked property merely because PdVSA was at the material times designated as an SDN. [124] To begin, I am not persuaded that Futura, by its purchase of the Fuel Oil from PdVSA, is to be treated as having “materially assisted, sponsored, or provided financial, material, or technological support” to PdVSA. In this regard, I am more inclined to the view expressed by Mr Bravo that although there is no specific threshold as to what could be considered as “materially assisted” or “provided financial, material support”, one mere commercial transaction cannot be equated to “materially” assisting or “providing financial, material support” to the Government of Venezuela or PdVSA. [125] I agree with Mr Bravo that a mere purchase of PdVSA products is not “supporting” as there must be an overact (more than merely purchasing of the products). This is clear when one considers the examples of designated entities and individuals provided by Mr Skoufalos as having been found to have “materially assisted” or “provided financial or material support” to PdVSA. The circumstances in these examples can be distinguished from the facts in the present case. More particularly: (a) In the case of Elemento – it was listed as an SDN by OFAC as the entity had been purchasing oil directly from PdVSA and reselling it to third-party customers on behalf of another SDN (i.e. Bazzoni). Elemento was involved in multiple transactions of such nature, therefore falling under the definition of materially assisted, sponsored, or provided financial, material or technological support for PdVSA; (b) In the case of Swissoil – it was an entity based in Geneva, Switzerland which had participated in a scheme by assisting in the sale and shipping of Venezuelan-origin crude oil to buyers in Asia. Swissoil often acted as the consignee for the receipt of oil shipments brokered by Elemento, who is a designated entity; (c) The designation of D’Agostino (a Spanish-Venezuelan citizen), Bazzoni (Italian citizen), and Apikian (Swiss citizen) were the consequence of their roles involving Swissoil and oil from PdVSA. D’Agostino had been involved in the Venezuelan oil sector since 2012 and involved in several projects in the Venezuelan oil sector; Bazzoni is a core facilitator of the network connecting Elemento and Swissoil; Apikian is the director of Swissoil. These individuals play a significant role in the Venezuelan oil sector. [126] I agree with Mr Bravo that it would be disproportionate to compare the present commercial transactions with the transactions by the various The International Sanctions Regime [2025] LR and its Application to Malaysia 199 entities cited above. The entities and individuals above clearly worked for the benefit of PdVSA and the Government of Venezuela. There were multiple transactions and most, if not all, of the transactions were done for the benefit of PdVSA. The transactions were also done by way of a scheme which would amount to deceptive transactions and conspiracy to avoid sanctions. This should be distinguished from the present facts of the case where it is not shown that Futura did play a significant role in the Venezuelan oil sector and or was involved in a scheme or network related to the Venezuelan oil sector. [127] The reference to OFAC’s FAQ number 629, to my mind, is instructive: “… OFAC expects to use its discretion to target those who operate corruptly in the identified sectors of the Venezuela economy, and not those who are operating legitimately in such sectors. This includes, for example, persons engaging in dishonest or fraudulent conduct, illicit activity, or deceptive transactions within identified Venezuela sectors, with the purpose or effect of misappropriating Venezuelan resources in those sectors for personal, professional, or political gain.” (Emphasis added.) [128] The sale of Fuel Oil between Futura and PdVSA and the subsequent sale of the Fuel Oil between Orin Energy and Futura in this current action do not contain any of the characteristics in the EOs above. It is merely a commercial transaction between two non-U.S. parties. [129] I accept Mr Bravo’s distinction between the OFAC’s country-based sanctions and secondary sanctions. OFAC’s Venezuelan Sanctions Program falls under the category of country-based sanctions whereby the primary sanctions target a designated country like Venezuela. [130] OFAC’s secondary sanctions, on the other hand, target non-U.S. persons that aid, help or materially assist a sanctioned entity or SDNs. The U.S. sanctions against Venezuela is not an open sanction. The entity or individual needs to be specified and determined by OFAC or by an executive order to be placed under the SDN list before a U.S. person is prohibited from dealing with them. [131] A determination by the Department of Treasury would have to be made whereby there should first be a subjective evaluation of the transaction(s) in question. One of the deciding factors that the Department of Treasury would take into account is whether an entity or individual has materially assisted PdVSA and or the Venezuelan Government. The interpretation of “materially assisted” remains subjective and fully up to the discretion of the Department of Treasury. [132] As such, not every non-U.S. person conducting business with the Venezuelan market is automatically subject to secondary sanctions as contended by Mr Skoufalos. I agree with Mr Bravo that Mr Skoufalos’ assertion that simply engaging in any business activity of a Venezuelan 200 The Law Review 2025 [2025] LR entity will automatically equate to materially assisting PdVSA and or the Government of Venezuela is overly simplistic. [133] In fact, it is only after the determination has been made by the Secretary of the Treasury, in consultation with the Secretary of State, that a person has violated the EOs 13884 and 13850 that OFAC would enforce the violation by designating the person or entity as an SDN, which effectively cuts off the person or entity from a major portion of international business and financial transactions as no U.S. person could deal with the entity and it is cut-off from the US dollar denominated financial system. This position is shared by Mr Skoufalos: “12.8 As discussed in Paragraph 10.19 above, enforcement action against non-U.S. persons will vary. However, from a commercial standpoint, among the harshest actions OFAC can take is to designate a person/entity as a Specially Designated National (SDN) and add the person/entity to OFAC’s SDN List. 12.9 A person/entity placed on OFAC’s SDN List will be effectively cut off from a major portion of international business and financial transactions, access to most bank accounts and restrictions on international travel. U.S. nationals are prohibited from transactions of any kind with SDNs, and OFAC will act to block a designated person/entity’s assets in the U.S. Furthermore, all U.S. persons (including companies and financial institutions) are prohibited from engaging in transactions or conducting business with a designated party anywhere in the world, and the targeted party is cut off from the dollar-denominated U.S. financial system. All U.S. persons (including companies and financial institutions) would also be prohibited from engaging in transactions or conducting business with any subsidiary owned or controlled more than 50 percent by the listed/sanctioned person or entity”. (Emphasis added.) [134] Of importance for the present case is that the sanctions are only applicable to U.S. persons who trade with SDNs. The wording in the EOs itself mentioned “U.S. persons.” As mentioned above and as agreed by both Orin Energy’s and Futura’s experts, neither Orin Energy nor Futura is a U.S. person nor an entity that has been determined by the Department of Treasury. Neither do the parties have any U.S. nexus. If one is not placed under the SDN list, there is no risk as the blocking sanction only applies when one deals with another entity or individual designated under the SDN list. [135] Thus, it is my judgment that based on the EOs, it is only when the property of an SDN is in the possession or control of the U.S. person that the property is blocked, namely, the property may not be transferred, paid, exported, withdrawn, or otherwise dealt with. For this reason, I found that Section 71 of the BPGTC was never triggered since the sale of the Fuel Oil from PdVSA to Futura was a sale from an SDN to a non-U.S person, and The International Sanctions Regime [2025] LR and its Application to Malaysia 201 hence did not become blocked or sanctioned property. Similarly, the sale from Futura to Orin Energy also did not attract the U.S. Sanction laws at all. [136] In fact, this was the reason why Orin Energy could take delivery of the 1st Lot from the Nordic Sirius and thereafter sell the same to its Chinese buyers. When the 1st Lot was loaded onto Nordic Sirius from the Eser K, it was a transfer from a non-U.S person and a non-SDN i.e. Futura to a U.S. person, i.e. Nordic Sirius. Such a transaction does not attract the U.S. Sanction laws at all. [137] Orin Energy had sought to refer this Court to the case of Unicious Energy Pte Ltd v The Owners and/or Demise Charterers of the Ship or Vessel “Alpine Mathilde” [2023] CLJU 2516 (“Unicious”) on the status of “blocked property”. In that case, I had said as follows: “[58] Once property is blocked, it cannot be unblocked by the sanctioned owner (like the Plaintiff in this case) by selling the property to a non-sanctioned third party. [See: 31 C.F.R. § 560.211(c)] This was made clear in the case of Zarmach Oil Services., Inc. v U.S. Department of Treasury, 750 F. Supp. 2d 150 (D.D.C. 2010).” (Emphasis added.) [138] It was contended that because both experts had opined that the Fuel Oil was considered “blocked property” because it had originated from PdVSA, the Fuel Oil remained blocked property and could not be unblocked. [139] With respect, I do not agree that the Fuel Oil is blocked property merely because it had originated from PdVSA. “Blocked property” means that it cannot be transferred, paid, exported, withdrawn, or otherwise dealt with. This is so only when the property is in the control or possession of a U.S. person. To hold that the Fuel Oil is blocked property by reason only of its origin from PdVSA would mean that OFAC has put a total embargo or ban on all products from PdVSA, prohibiting the whole world from dealing with its products. [140] To accept the aforesaid position would mean that the entire world will not be able to engage in any oil trade with the Government of Venezuela or PdVSA. It is not only a position that is inconsistent with the existing facts, since there are still some countries that continue to trade with Venezuela, but is also an impermissible exercise by a country of extraterritorial coercive powers which in any case can hardly be enforced. [141] The facts in Unicious are easily distinguishable. The plaintiff, Unicious Energy Pte Ltd was designated an SDN by OFAC and the owner of the vessel, Alpine Mathilde being a U.S. person was prohibited from dealing with the cargo belonging to the plaintiff which had come to its possession or control. In other words, by reason of the plaintiff being an SDN and the owner of Alpine Mathilde being a U.S. person, the cargo had become a “blocked property”. The plaintiff had sought to “unblock” the blocked cargo by seeking to sell the same to a third party so that the said third party 202 The Law Review 2025 [2025] LR could claim possession of the cargo from the master of the vessel. The remark that “once property is blocked, it cannot be unblocked by the sanctioned owner” was made in that context. [142] What this means is that the Master of Nordic Sirius had no legal basis to cease the STS operation on 18.9.2020 on the ground that the Fuel Oil had originated from Venezuela. This is because at the time when the Fuel Oil was being discharged into Nordic Sirius, the Fuel Oil was not a blocked property at all. Neither Orin Energy nor Futura was listed as an SDN by OFAC at the time. [143] In fact, if indeed the Fuel Oil was deemed as blocked property as contended by Mr Skoufalos, the cargo that was loaded onboard Nordic Sirius from the STS operation would have been treated as coming within the possession and or control of the owner of Nordic Sirius, who is undisputedly a U.S person. This must mean that it was not open to the owner of Nordic Sirius to deal with the cargo onboard without the licence from OFAC. However, what had transpired after the cessation of the STS operation was that a settlement agreement was reached between the owner of Nordic Sirius with Orin Energy where the cargo onboard the vessel was released to Orin Energy. [144] Accordingly, it is my judgment that Futura was never in breach of Section 71 of the BPGTC since the Fuel Oil was never sanctioned property at all material times. Orin Energy was never entitled to suspend payment for the Fuel Oil at all. [145] In the premises, it is the judgment of this Court that Orin Energy’s claims in this action seeking inter alia various declaratory reliefs and claiming damages (general, special, aggravated and exemplary) against Futura, premised on Futura’s breach of the express and fundamental term of the Sales Contract in delivering sanctioned oil of Venezuelan origin and premised on Futura’s fraudulent misrepresentation in concealing the true origin of the Fuel Oil from Orin Energy, are without any merits and must be dismissed. [45] After determining that Orin Energy’s claims were without merit, the judge considered Futura’s counterclaims for the balance purchase price of the cargo, loss of profits, and other wasted costs incurred due to Orin Energy's refusal to take delivery of the remaining lots. The judge allowed Futura's counterclaims partially on the findings that Orin Energy had breached the sales contract by failing to pay for the balance purchase price and take delivery of the remaining lots. [46] The case clarifies the obligations of parties in a sales contract concerning the origin of goods and the implications of knowledge regarding such origin. Sanctions clauses [47] Shipping contracts may have a sanctions clause which allows parties to invoke if one of the parties acts in contravention of sanctions. In the case of The International Sanctions Regime [2025] LR and its Application to Malaysia 203 Orin Energy Investments Ltd v Futura Asia Ltd. 24 There was such a clause in the Charter of the Vessel Nordic Sirius but not in the charter of the carrying vessel Eser K. [48] BIMCO has published the BIMCO Sanctions Clause for Time Charter Parties 2020 which is worded as follows:25 (a) For the purposes of this clause: “Sanctioned Activity” means any activity, service, carriage, trade or voyage subject to sanctions imposed by a Sanctioning Authority. “Sanctioning Authority” means the United Nations, European Union, United Kingdom, United States of America or any other applicable competent authority or government. “Sanctioned Party” means any persons, entities, bodies, or vessels designated by a Sanctioning Authority. (b) Owners warrant that at the date of this Charter Party and throughout its duration they, the registered owners, bareboat charterers, intermediate disponent owners, managers, the Vessel and any substitute are not a Sanctioned Party. (c) Charterers warrant that at the date of this Charter Party and throughout its duration they and any subcharterers, shippers, receivers and cargo interests are not a Sanctioned Party. (d) If at any time either party is in breach of subclause (b) or (c) above then the party not in breach may terminate and/or claim damages resulting from the breach. (e) Charterers shall not give any orders for the employment of the Vessel which involves a Sanctioned Party or a Sanctioned Activity. (f) If the Vessel is already performing an employment which involves a Sanctioned Party or is a Sanctioned Activity, without prejudice to any other rights that may be available in subclause (d) above, Owners shall have the right to refuse to proceed with the employment and Charterers shall be obliged to issue alternative voyage orders within forty-eight (48) hours of receipt of Owners’ notification of their refusal to proceed. If Charterers do not issue such alternative voyage orders Owners may discharge any cargo already loaded at any safe port or place (including the port or place of loading). The Vessel shall remain on hire throughout and Charterers shall be responsible for all additional costs and expenses. 24 [2024] AMEJ 2104; [2024] MLJU 2347, HC. 25 The clause can be found at https://www.bimco.org/contractual-affairs/bimco-clauses/ current-clauses/sanctions_clause_for_time_charter_parties_2020/ (accessed May 25, 2025). 204 The Law Review 2025 [2025] LR (g) If in compliance with subclause (f) above anything is done or not done, such shall not be deemed a deviation, but shall be considered due fulfilment of this Charter Party. (h) Charterers shall indemnify Owners against any and all claims brought by the owners of the cargo and/or the holders of bills of lading, waybills or other documents evidencing contracts of carriage and/or subcharterers against Owners by reason of Owners’ compliance with such alternative voyage orders or discharge of the cargo in accordance with subclause (f) above. (i) Charterers shall procure that this Clause shall be incorporated into all sub-charters and bills of lading, waybills or other documents evidencing contracts of carriage issued pursuant to this Charter Party. [49] The BIMCO Sanctions Clause for Time Charter Parties 2020 is intended to address two scenarios. The first scenario is where the owners or charterers (or the third parties they are responsible for under the clause) are listed by a sanctioning authority or government and become subject to sanctions restrictions. In this scenario, the innocent party has the right to terminate the charter party and claim damages. The second scenario is where the trade or activity itself is or becomes subject to sanctions restrictions in which case the owners have the right to refuse to perform. [50] The Singapore case of Kuvera Resources Pte Ltd v JP Morgan Chase Bank, NA26 involved a sanctions clause in a documentary letter of credit. In this case, Kuvera advanced funds to a seller for the purpose of funding the shipment of coal to a buyer. It was agreed that the buyer was to make payment by issuing two letters of credit (“LCs”) naming Kuvera as the beneficiary. Upon the request of Kuvera, JPMorgan Chase Bank’s Singapore branch agreed to be the confirming bank of both LCs. [51] However, subsequently, JPMorgan prepared a “sanctions screening” of Kuvera’s documents and informed Kuvera that it would not pay out on the LCs as the transaction fell within the US Office of Foreign Assets Control (OFAC) sanctions regime with respect to Syria as the vessel in this case was owned by a Syrian company. [52] JPMorgan’s confirmations contained a “sanctions clause” providing that the bank had to comply with the US sanctions, even though the transaction was being carried out by the bank’s Singapore branch. [53] JPMorgan was requested and agreed as the advising and nominated bank for the LCs, and added its confirmations thereto in September 2019 which contained a sanctions clause (“sanctions clause”) that provided that: [JPM] must comply with all sanctions, embargo and other laws and regulations of the U.S. and of other applicable jurisdictions to the extent 26 [2022] SGHC 213; [2023] SGCA 28. The International Sanctions Regime [2025] LR and its Application to Malaysia 205 they do not conflict with such U.S. laws and regulations (“applicable restrictions”). Should documents be presented involving any country, entity, vessel or individual listed in or otherwise subject to any applicable restriction, we shall not be liable for any delay or failure to pay, process or return such documents or for any related disclosure of information. [54] The Singapore High Court decided that the foreign sanctions clause was valid and enforceable and thus, JPMorgan’s refusal to make payment under the letter of credit was justified in this case. [55] Following Kuvera’s appeal, the Court ofAppeal reversed the decision of the High Court in part and found that JPMorgan had not discharged its burden of proof to entitle it to rely on its sanctions clause to deny payment to Kuvera. In coming to its decision, the Court ofAppeal also endorsed the High Court’s analysis of the underlying nature of documentary credit transactions and confirmations. [56] The Court of Appeal agreed with the High Court that the sanctions clause could be and was incorporated by JPMorgan as a term of its confirmations. It then went on to consider the following three questions: (1) What was the true effect and meaning of the sanctions clause? (2) Was the sanctions clause fundamentally inconsistent with the commercial purpose of the confirmations? (3) Did JPMorgan discharge its burden of proof in order to rely on the sanctions clause? [57] On the first question, the Court of Appeal held that the sanctions clause should be construed objectively, and that the relevant inquiry into the ownership of the Omnia ought to be determined on an objective basis. [58] It was undisputed that the Omnia was not listed in the US Treasury’s Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons List (“OFAC list”). As the party seeking to rely on the sanctions clause, the burden was on JPMorgan to prove, on a balance of probabilities, that the Omnia was “subject to any applicable restriction” as envisaged by the sanctions clause. [59] Contrary to the High Court’s findings, the Court of Appeal held that JPMorgan had not in fact discharged its burden in this regard. Amongst other things, the Court of Appeal noted that: (1) JPMorgan had undertaken its own risk-based approach in deciding that the Omnia was likely to be Syrian-owned. In choosing to rely on its internal list (as opposed to the OFAC list) as part of its internal sanctions screening procedure, JPMorgan had to accept the risk that such reliance may not be sufficient to demonstrate its burden of proof. 206 The Law Review 2025 [2025] LR (2) After refusing to make payment to Kuvera, JPMorgan exchanged correspondence with OFAC that sought to seek retrospective justification for its refusal to pay. OFAC responded stating that an apparent violation of OFAC regulations would have resulted had payment been made to Kuvera on the basis of JPMorgan’s research. However, the Court of Appeal noted that this exercise would require the parties and the court to extrapolate what finding OFAC may arrive at based on largely circumstantial evidence. Such an approach, which reflected JPMorgan’s risk management considerations, was unsatisfactory and unfair. (3) There was no objective evidence that supported JPMorgan’s determination that the Omnia was Syrian-owned in 2019. Notably, JPMorgan had itself acknowledged that the circumstantial evidence it had detected in its due diligence as pointing towards the continued Syrian beneficial ownership of the Omnia in 2019 was “inconclusive”. [60] Accordingly, the Court of Appeal held that JPMorgan was not entitled to invoke the sanctions clause to deny payment to Kuvera upon a complying presentation of documents.