Contributing Lawyers


Cyndee Todgham Cherniak

United States

Susan Kohn Ross


Andrew Hudson

In-House Legal Counsel May Be Wise to Pass Iran Sanctions Questions to Outside Lawyers

There is a debate concerning the provision of legal advice to circumvent economic sanctions laws that raises concerns in the United States among both in-house counsel and outside counsel. With the new export controls and economic sanctions laws in Canada relating to Iran, the debate may be relevant in Canada.

Section 8 of the Special Economic Measures (Iran) Regulations provides that any person in Canada an any person outside Canada is prohibited from "doing anything that causes or assists or promotes, or is intended to cause, assist or promote, any act or thing" that is prohibited elsewhere in the regulations. This provision is contained in other Canadian economic sanctions legislation; however, Canada's business with Iran in the oil & gas sector (and other sectors) highlights the problem in a new light.

Does an in-house legal counsel risk a prosecution by being the one to interpret the law and provide guidance on how to engage in transactions with Iran? Possibly - it will depend upon the facts. It is possible that a prosecutor may lay charges if the in-house legal counsel blesses certain activities that could be viewed as prohibited. It is possible that in-house legal counsel will be more generous in their interpretation of the law in order to please the persons who sign their pay cheques. It is possible that prosecutors will make an example of an in-house legal counsel who did not exercise the most cautious approach.

This does not mean that outside counsel are immune from prosecution under the same provision. However, outside counsel may be more objective. Outside counsel may have different experience that could help. Outside counsel may be in a better position to discuss obvious concerns with higher management (or the sale force in an organization whose compensation is commission-based).

Yes, it should be that legal counsel should be entitled under the law to interpret the law - that is what legal counsel do. However, in this world and at this time in the history of the world, errors in judgement can have catastrophic effect. If something goes terribly wrong, governments will want someone to blame. As a result, the chill effect spills on to the activities of lawyers.

Cyndee Todgham Cherniak is an export controls and economic sanctions lawyer in Canada.  She can be reached at 416-307-4168.  Cyndee is a vice chair of the American Bar Association, Section of International Law, Export Controls & Economic Sanctions Committee and recently co-chaired and moderated a lunch program on economic sanctions against Iran.

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