TNAG-2029-FCO40-2891-Hong-Kong-freezing-of-Kuwaiti-and-Iraqi-assets-1990 — Page 44

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CHANGE THEIR VIEWS IF SANCTIONS APPEARED LIKELY TO BE LIFTED AT SOME FUTURE DATE. NOR DID HE KNOW HOW THE ADMINISTRATION WOULD RESPOND IN THIS EVENT. CHANGES IN THE LAW GOVERNING PERFORMANCE BONDS AND LETTERS OF CREDIT COULD NOT BE RULED OUT, BUT THEY WERE NOT UNDER CONSIDERATION AT PRESENT. THERE WAS IN ANY CASE UNLIKELY TO BE ANYTHING AS SIMPLE AS A STRAIGHT CHOICE BETWEEN CHANGES IN THE LAW AND A RETURN TO THE STATUS QUO. THERE MIGHT WELL NEED INSTEAD TO BE SOME KIND OF CLAIMS TRIBUNAL, AS IN THE CASE OF IRAN. HE RECALLED THAT THE TERMS OF THE US/IRAN CLAIMS TRIBUNAL HAD ALLOWED CLAIMS AGAINST THE US GOVERNMENT, BUT NOT AGAINST US COMPANIES, EVEN THOUGH US COMPANIES THEMSELVES WERE ALLOWED TO FILE CLAIMS. HE ADDED HOWEVER THAT, IN SOME CASES AT LEAST, US COMPANIES HAD CHOSEN NOT TO FILE CLAIMS BECAUSE THE ACT OF FILING A CLAIM WOULD HAVE EXPOSED THEM TO COUNTER-CLAIMS IN RESPECT OF PERFORMANCE BONDS AND LETTERS OF CREDIT. 5.

THIS LED TO A BRIEF DISCUSSION OF QUOTE FORCE MAJEURE UNQUOTE CLAUSES IN CONTRACTS. NEWCOMB SAID THAT ANY FORM OF CLAIMS TRIBUNAL OR ARBITRATION WAS LIKELY QUOTE TO LEAVE THE PARTIES WITH THE BARGAINS THEY HAD MADE UNQUOTE. ARBITRATION ON A US/LIBYAN CONTRACT MADE UNDER LIBYAN LAW HAD PRODUCED THE VIEW THAT US SANCTIONS DID NOT CONSTITUTE QUOTE FORCE MAJEURE UNQUOTE. OFAC'S CHIEF COUNSEL SAID HOWEVER THAT US COURTS WOULD PROBABLY CONCLUDE THAT THEY DID, WHERE CONTRACTS HAD BEEN MADE UNDER US LAW. BUT HE ADDED THAT IT ALL DEPENDED ON THE TERMS OF INDIVIDUAL CONTRACTS.

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AS FOR EXTENSIONS, NEWCOMB SAID THAT THEY WERE COMMONLY MADE ON THE BASIS OF A DEMAND TO QUOTE PAY OR EXTEND UNQUOTE. A SERIES OF EXTENSIONS MIGHT THEREFORE OUT-LAST SANCTIONS AND ALLOW A CONTACT TO BE COMPLETED WITHOUT A BOND BEING CALLED. AGAIN, IT ALL DEPENDED ON THE TERMS OF INDIVIDUAL CONTRACTS: HE DID NOT KNOW HOW MUCH USE WAS BEING MADE OF EXTENSIONS. TO OUR SURPRISE, HE INDICATED THAT FEES INCIDENTAL TO EXTENSION COULD BE PAID TO THE RELEVANT BANK EVEN IF IT WAS AN IRAQI INSTITUTION.

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