BIS Announces Settlement of Antiboycott Violations with Airbus Space and Defense Subsidiary

On June 3, 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced the resolution of an administrative enforcement action brought against Airbus DS Government Solutions (“Airbus DSGS”)—a subsidiary of defense giant Airbus U.S. Space & Defense—for multiple violations of longstanding antiboycott regulations that effectively prohibit U.S. Persons from engaging in any activity that would constitute the support of unauthorized foreign boycotts. 

According to an administrative order and related documents released by the Office of Antiboycott Compliance (“OAC”), Airbus DSGS committed three (3) separate violations of the Export Administration Regulations (“EAR”), when it supplied information concerning its business relationships with boycotted countries or blacklisted persons and failed to report the request as required by 15 C.F.R Section 760.5. More specifically, the order and accompanying charing letter alleges that in 2019, Airbus DSGS furnished its freight forwarder with a commercial invoice and packing list that certified that “no labor, capital, parts or raw materials of Israeli origin” had been used in the “printing, publishing or manufacture” of goods tendered for transport to the popular Gulf Defense and Aerospace (“GDA”) exhibition. Airbus DSGS further violated the EAR’s antiboycott proscriptions when it agreed that none of the firms involved in the manufacture or provision of the commodities under transport were included on the “Israeli boycott blacklist.” Finally, the order contends that Airbus DSGS violated the EAR’s express reporting requirements related to the receipt of boycott requests by U.S. Persons when it failed to notify OAC within the time prescribed by law. 

In exchange for the wholesale resolution of the underlying administrative enforcement action, Airbus DSGS stipulated to the payment of a $44,750 civil penalty to the Commerce Department and undertook remedial measures designed to mitigate the potential that additional violations will occur in the future. In announcing the Airbus DSGS settlement, Assistant Secretary for Export Enforcement Matthew Axelrod highlighted the importance of proper vigilance in “examining all transaction documents, regardless of their source, to ensure that the terms and conditions comply with [U.S.] antiboycott rules.” 

The latest antiboycott resolution comes on the heels of several other notable proceedings initiated by OAC in recent years against a myriad of companies for engaging in activities that constitute support for unauthorized foreign boycotts—particularly as it relates to the Arab League’s long-standing prohibition on any business dealings with the State of Israel. While historically, antiboycott enforcement actions have been relatively rare, a 2022 policy memorandum issued by BIS heralded that agency’s intention to significantly enhance its enforcement activities by, among other things, seeking higher administrative penalties for illegal activity, and requiring full admissions by complicit entities as a condition of entering into settlement agreements. As with all antiboycott enforcement actions, the most recent settlement should serve as a prescient reminder to entities conducting any business in the Middle East of the importance of vetting all documents related to a specific business transaction—including but not limited to, standard terms and conditions pertaining to the transport of items abroad, which tend to incorporate restrictive terms that run afoul of U.S. antiboycott regulations.

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