Tag: Global

FBI and DHS Warn of Russian Cyberattacks Against Critical Infrastructure

U.S. officials this week warned government agencies, cybersecurity personnel, and operators of critical infrastructure that Russia might launch cyber-attacks against Ukrainian and U.S. networks at the same time it launches its military offensive against Ukraine.

The FBI and the Department of Homeland Security (DHS) warned law enforcement, military personnel, and operators of critical infrastructure to be vigilant in searching for Russian activity on their networks and to report any suspicious activity, as they are seeing an increase in Russian scanning of U.S. networks. U.S. officials are also seeing increased disinformation and misinformation generated by Russia about Ukraine.

The FBI and DHS urged timely patching of systems and reporting of any Russian activity on networks, so U.S. officials can assess the threat, assist with a response, and prevent further activity.

For more information on cyber incident reporting, click here.

Even though a war may be starting halfway across the world, Russia’s cyber capabilities are global. Russia has the capability to bring us all into its war by attacking U.S. government agencies and companies. We are all an important part of preventing attacks and assisting others from becoming a victim of Russia’s attacks. Closely watch your network for any suspicious activity and report it, no matter how small you think it is.

Article By Linn F. Freedman of Robinson & Cole LLP

For more cybersecurity legal news, click here to visit the National Law Review. 

Copyright © 2022 Robinson & Cole LLP. All rights reserved.

US to Expand Vaccination Requirement for Foreign National Travelers to Include All Land Border Crossers from Canada and Mexico in January

Starting Jan. 22, 2022, the Biden administration will require foreign national travelers engaged in essential travel to be fully vaccinated when crossing U.S. land borders or ferry terminals. Essential travel includes travel for work or study in the United States, emergency response, and public health. The new rules apply to foreign nationals; U.S. citizens and permanent residents may still enter the United States regardless of their vaccination status but are subject to additional testing requirements.

The new rules for essential travelers are in line with those that took effect Nov. 8, 2021, when the Biden administration lifted travel restrictions to allow fully vaccinated travelers engaged in non-essential (leisure) travel to enter the United States.

While much cross-border traffic was shut down in the early days of the COVID-19 pandemic, essential travelers have been able to travel unimpeded via land borders or ferry terminals. Starting Jan. 22, 2022, however, all foreign national travelers crossing U.S. land borders or ferry terminals – traveling for essential and non-essential reasons – must be fully vaccinated for COVID-19 and provide related proof of vaccination. Any exceptions to the vaccination requirement available to travelers at U.S. land borders are expected to be limited, just as exceptions currently available for air travel have been limited. See CDC guidance for details.

©2021 Greenberg Traurig, LLP. All rights reserved.
For more on vaccine requirements, visit the NLR Coronavirus News section.

Game Changing Reform to NSW Environment Protection Laws

The NSW Government has introduced the Environment Legislation Amendment Bill 2021 (NSW) (Bill) which proposes wide ranging reforms to NSW environmental laws to enable the NSW Environment Protection Authority (EPA) to “crack down” on environmental offenders.

The Bill makes good on Minister Matt Kean’s commitment to ensure that “the book [is] thrown at anyone who has done the wrong thing”. While the EPA has made it clear that the reforms are “aimed solely at those who deliberately choose to circumvent the law”, the amendments proposed by the Bill will materially increase environmental liabilities for all NSW operators.

This article outlines the key reforms proposed by the Bill which will amend a raft of environmental legislation, including the Protection of the Environment Operations Act 1997 (NSW) (POEO Act) and Contaminated Land Management Act 1997 (NSW) (CLM Act) and include:

  • the creation of new environmental offences;
  • increasing the penalties for a number of existing offences;
  • increasing the powers of the EPA and other environment regulators to hold to account those perceived to be responsible for pollution or contamination and to enforce environment protection licence conditions;
  • enabling the EPA to recover profits arising from the commission of environmental offences and the cost of remediating contaminated land from related bodies corporate and directors and managers of offending corporations; and
  • making it easier for the EPA to prove certain environmental offences.

The Bill is expected to be debated by Parliament in early 2022 and, if passed, will result in the largest overhaul of NSW environmental laws in over five years.

KEY REFORMS

Description Analysis
Greater Liability for Directors, Managers and Related Bodies Corporate
  • New power for the EPA and other environment regulators to issue clean-up notices and prevention notices to:
    • current and former directors and persons concerned in management; and
    • related bodies corporate, of companies responsible pollution or contamination, if the company does not comply with notices issued to it.
  • Making it an offence for a:
    • director or person concerned in management;
    • related body corporate; or
    • director or person concerned in management of a related body corporate,

to receive or accrue a monetary benefit as a result of certain proven environmental offences by a company.

  • New and expanded powers for the EPA and other prosecutors to obtain monetary benefit orders requiring:
    • directors or persons concerned in management;
    • related bodies corporate; and
    • directors or persons concerned in management of related bodies corporate,

to repay monetary benefits accrued as a result of certain proven environmental offences by a company.

If passed, the Bill will significantly increase potential liability of those concerned in the management of companies (including related bodies corporate) who commit environmental offences or fail to comply with environment protection notices in NSW.

Managers, directors and related bodies corporate could be put on the hook:

  • to clean up pollution or contamination caused by a company;
  • to carry out works required by a prevention notice to ensure that activities of the corporation are carried on in future in an environmentally satisfactory manner; and
  • to repay “monetary benefits” received as a result of any proven offence.

The proposed measures are not entirely unique to NSW. Queensland passed “chain of responsibility” environment legislation in 2016 and put it to use in the long-running Linc Energy matter.

However, the proposal for directors and related bodies corporate to be automatically liable for an offence if they profit from a proven offence of a corporation under environment protection legislation is likely to be the source of significant concern. This is especially the case as the Bill does not propose any defences. This means that a director or person concerned in management could potentially be liable even if they have taken all due diligence to prevent the commission of the offence by the company, although the EPA is unlikely to commence a prosecution in such circumstances.
New EPA Powers to Regulate Contaminated Land
  • New powers for the EPA to issue clean-up notices and prevention notices as soon as the EPA is notified of contamination of land, even before the EPA has determined that the land is “significantly contaminated”.
  • New power for the EPA to require financial assurances to ensure compliance with under ongoing maintenance orders, restrictions and public positive covenants.
 The new reforms demonstrate the importance on engaging with the EPA at an early stage and on an ongoing basis in relation to contaminated land.

If passed, the Bill would enable the EPA to take strong and proactive action without agreement even before it determines that the land is “significantly contaminated” and warrants contamination.
New Offence of Giving False or Misleading Information to the EPA
  • The Bill includes a new general offence of giving information to the EPA that is false or misleading in a material respect.
  • A defence applies where the person took all reasonable steps to ensure the information was not false or misleading in a material respect.
  • Greater penalties apply where the false or misleading information is provided knowingly.
  • Directors and other persons involved in the management of the corporation will be liable for any offence committed by the company under the new provision if they ought reasonably to know that the offence would be committed and failed to take all reasonable steps to prevent the provision of false and misleading information.

This new false and misleading information offence is significant because it applies regardless of whether the information was provided:

  1. voluntarily; or
  2. in circumstances where the information was known to be false or misleading.

The new offence is an apparent response to the decision in Environment Protection Authority v Eastern Creek Operations Pty Limited [2020] NSWLEC 182, where the defendant successfully resisted an EPA prosecution which alleged that the provision of false or misleading information by establishing that the notice in response to which the information was provided was legally invalid.

The new offence would create material new risks for entities regulated by the EPA, and highlights the need to take great care in taking “all reasonable steps” to ensure that information provided to the EPA is not false or misleading.
Higher Maximum Penalties for Some Environmental Offences
  • Substantial increases to some maximum penalties for offences under environment protection legislation, including the CLM Act, to more than double the current maximum penalties.
 The Second Reading Speech states that maximum penalties have been increased so that “they reflect the true cost of the crime”
Increased Liability for Suspected “Contributors” to Pollution
  • New power for the EPA and other environmental regulators to issue a clean-up notice to persons who is “reasonably suspected of contributing”, to any extent, to a pollution incident.
  • New powers for public authorities to recover costs and expenses of taking clean-up action from persons the authority “reasonably suspects contributed” to the pollution incident, in addition to occupiers and persons the authority reasonably suspects caused the pollution incident.
  • New right for person issued a clean-up notice to recover costs from others who caused or contributed to pollution incidents as a debt.

These new provisions are likely to be of significant concern, as they enable the EPA to issue clean-up notices requiring alleged contributors to pollution incidents to clean-up all of the pollution, at its cost. This has the potential to lead to the unintended result that:

  •  suspected contributors could be made liable for clean-up costs far exceeding their actual contribution; and
  • the EPA may seek to regulate the potential contributor with the “deepest pockets” – rather than the person most directly responsible.

While the Bill includes a right for a contributor to recover costs from others who caused or contributed to the pollution incident as a debt, this offers very limited protection to suspected contributors issued a clean-up notice, particularly if the person responsible or other persons responsible have limited financial capacity.
Expanded Environmental Licensing Powers
  • The Bill includes a new power for the EPA to require restrictions on the use of land or pubic positive covenants to enforcing environment protection licence conditions (including conditions imposed on the suspension, revocation or surrender of the licence). In line with this, the Bill also includes new provisions to enable a person other than the holder, or former holder, of a licence, to apply to vary the conditions of the suspension, revocation or surrender of the licence.
  • New ability for the EPA to deny environment protection licences to corporations where current or former directors of the corporation, related bodies corporate or for current or former directors of related bodies corporate have contravened relevant legislation.
 The proposed power to impose restrictions on use and public positive covenants to enforce licence conditions is material as, currently, licence condition only bind the holder of the environment protection licence. The changes proposed will enable the EPA to legally enforce conditions against land owners or occupiers, even if the activity regulated by the environment protection licence was conducted by a former land owner or tenant.

The EPA will now be able to take a deeper look at the overall environmental compliance history of an entity in licensing decisions, meaning that it will be even more important for corporations, directors and managers to maintain a strong environmental compliance history.
Consistent Court Powers including for Cost Recovery
  • Additional powers for public authorities including the EPA or other persons to recover costs, expenses and compensation from offenders in the Land and Environment Court.
  • Additional powers for the Land and Environment Court to make specific kinds of orders where environment offences are proven.
 The Bill proposes to have more consistent provisions across environment protection legislation in terms of the orders a court can make in relation to offenders, and the cost recovery that the EPA can seek from the Court.
New Offence to Delay Authorised Officers
  • The Bill contains a new offence of delaying, obstructing, assaulting, threatening or intimidating an authorised officer in the exercise of the officer’s powers, in addition to the existing offence of wilfully delaying or obstructing an authorised office.

This is an apparent response to the McClelland and Turnbull matters which involved the assault or delay of environment protection officers. The new offence is significant because the EPA would not be required to prove that the relevant delay or obstruction was willful, and so a person could be held liable for unintentional delays or obstructions.
Expanded Prohibition Notice Powers
  • Expanded power for the Minister to issue prohibition notices to occupiers of a class of premises or to a class of persons.
  • Expanded power to issue prohibition notices to directors, former directors or related bodies corporate of a corporation who has not complied with a prohibition notice.
 Currently, the Minister can only issue prohibition notices requiring occupiers or persons to cease carrying on an activity.

The Bill proposes to enable the Minister to prohibit occupiers of a class of premises or a class of persons from carrying on an activity. This would enable the Minister to shut down all of the premises of so-called “rogue operators”, if recommended to do so by the EPA. While it is likely to be rarely (if ever) used, the expanded power could potentially be relied on by the Minister where a pattern of non-compliance is identified across a specific industry or across multiple premises of one organisation.
Administrative Reforms to EPA
  • The Bill also proposes a range of administrative The most notable reform is to considerably reduce the Minister’s control of the EPA so that the EPA is no longer subject to the control or direction of the Minister, and that the Minister only has a limited power to issue directions of a general nature to the EPA.
 The EPA is generally regarded as an “independent” regulator, and the proposed reform formally reduces Ministerial control of the EPA thereby increasing its independence.

The Bill also includes some additional measures regarding board appointments to achieve greater diversity of collective skills, including expertise in human health and Aboriginal cultural values.

PUBLIC CONSULTATION ON POEO ACT REGULATIONS

In addition to the reforms contemplated by the Bill, the EPA is currently consulting on the following regulations under the POEO Act:

  • Protection of the Environment Operations (Clean Air) Regulation 2021 (NSW); and
  • Protection of the Environment Operations (General) Regulation 2021 (NSW).

Each of these regulations:

  • were remade with only minor amendments earlier this year, to avoid automatic repeal under the Subordinate Legislation Act 1989 (NSW); and
  • will be substantively amended in 2022. The EPA has committed to carrying out consultation on the proposed changes in 2022.

IMPLICATIONS

The reforms contained in the Bill demonstrate how important it is for all businesses which operate in NSW, and their related bodies corporate, directors and managers to:

  • take environmental compliance very seriously; and
  • work effectively with the EPA to address any pollution and contamination issues.

Copyright 2021 K & L Gates

Article by Kirstie Richards and Luke Salem with K&L Gates.

For more articles on climate change initiatives, visit the NLR Environmental & Energy section.

Hirst Spot Print Turned into Spots by MSCHF, Courtroom Artists Face New Challenge, Banksy Pays Homage to Hospital Workers

Still No LOVE in Robert Indiana’s Estate Battle

In the ongoing suit over the rights to Robert Indiana’s artworks, defendant Michael McKenzie, the founder of American Image Art, filed new counterclaims against the Morgan Art Foundation alleging that Morgan orchestrated “one of the most massive art frauds in history.” McKenzie argues that intellectual property rights were abandoned by Indiana decades ago and that the artist’s famous LOVE artwork is in the public domain. McKenzie further alleges that Morgan “fraudulently affixed” copyright to more than 1,000 sculptures worth more than $100 million and an additional million items valued at least $50 million in retail sales – Indiana did not affix a copyright symbol to his work when it was first published. McKenzie also seeks to invalidate two federal trademarks that Morgan registered for the design and reproduction of LOVE. Notably, several other counterclaims made by McKenzie and Indiana’s estate were dismissed in 2019. Morgan maintains that it has the rights to all images and sculptures that Indiana produced between 1960 and 2004, as well as the exclusive right to fabricate and sell certain sculptures, including LOVE, pursuant to agreements dating back to 1999. Morgan’s direct claim against McKenzie is over the sale of works it alleges were falsely attributed to Indiana.

As SCOTUS Moves Oral Arguments Online, Courtroom Artists Forced to Use Their Ears – and Imaginations – for Illustrations of Oral Arguments

The U.S. Supreme Court’s justices and their staffs are not the only people in the courtroom having to adapt. Court-appointed artists still capture the oral arguments, but must now rely on their ears and imaginations rather than their eyes to create the illustrations. The inability to be inside the courtroom during the arguments not only makes it difficult to paint a picture but also leaves lawyers in the dark as to the justices’ reactions to their arguments.

The Most Expensive Game of (Dis)Connect the Dots: A $30,000 Hirst Print Sold Off Spot by Spot

Damien Hirst created a spot print titled L-Isoleucine T-Butyl Ester. Now, MSCHF, a Brooklyn-based art collective, cut out each of the print’s 88 spots as part of the project called Severed Spots, created in protest against the practice of fractionizing the ownership of artworks. MSCHF sold off each of the spots for $480, generating a profit of about $12,000 over the $30,000 purchase price; in yet another example of an artwork’s value apparently growing as a result of its destruction (think Banksy’s Love Is in the Bin), they stand to gain even more as bidders line up to purchase leftover white paper. Our readers will remember MSCHF for auctioning off The Persistence of Chaos, a computer with the world’s most malicious viruses last year, among other news-making stunts/artworks. MSCHF also sold Jesus Shoes, custom Nike Air Max 97s with holy water from the River Jordan in the soles. Damien Hirst’s studio has not yet responded to this latest stunt by the collective.

Founder of Napster Involved in Suit Over Ownership of an Old Master Painting

Auction house Christie’s recent court filings to enforce an arbitration award reveal that art collector Sean Parker, founder of Napster and first president of Facebook, was embroiled in a dispute over a sale of Peter Paul Rubens’s A Satyr Holding a Basket of Grapes and Quinces with a Nymph (1620). In 2018, Parker acquired the artwork at a Christie’s auction for his foundation, after which the consignor of the artwork inexplicably sought to cancel the sale, despite making more than $1 million in profit. The consignor claimed that she tried to withdraw the painting before the auction took place. When the parties were unable to amicably resolve the dispute, it was submitted to arbitration. The arbitrator ruled that Christie’s complied with its contractual obligations and that Parker lawfully acquired the painting. The case highlights the legal and financial responsibilities of the parties involved in consigning an artwork to an auction house.

Former Paddle8 CEO Sued for Alleged Misappropriation of Funds

A group of creditors brought suit in the Southern District of New York, accusing former Paddle8 CEO Valentine Uhovski of engaging in acts of gross mismanagement and disloyalty, including alleged misappropriation of funds from the auctions to pay the company’s operating expenses. Uhovski has denied the allegations. Paddle8 filed for bankruptcy in March, following a separate suit by a nonprofit cinema group that alleged misappropriation of funds from a charity auction.

Mail Art Experiencing Revitalization

In recent months, Mail Art – a 1950s art movement centered around sending small-scale artworks via the postal service – has regained popularity. Artists have been reaching out via social media for submissions, and to date, hundreds of individuals have answered the call. The original idea was to create a form of artistic production that bypasses the traditional channels of art dissemination. The reborn interest in Mail Art is “creating a sense of connectivity” while allowing for people stuck in their homes to take a break from their screens.

EUROPE

INTERPOL Recovers 19,000+ Artifacts in a Massive Operation Spanning 103 Countries

More than 300 INTERPOL investigations coordinated between 103 countries resulted in recovery of more than 19,000 artifacts. Recalling the work of the Monuments Men – unlikely World War II heroes who saved many of Europe’s art treasures – the investigations were focused on criminal networks that deal in artworks looted from war-torn countries as well as artifacts stolen from archeological excavations and museums. The success of the mission highlights the need for global cooperation in fighting the trafficking of cultural goods.

MoMA Voices Concerns Over Norway’s Handling of Picasso Murals

The Norwegian government is in the process of demolishing a government building in Oslo that features Pablo Picasso’s murals sandblasted onto the concrete walls. While plans have been made to relocate the artworks, many are concerned that once moved, the murals will crack. The MoMA letter, published in the Norwegian press, expresses grave concerns over the preservation of the murals and emphasizes their significance to the art community. In addition, the petition to preserve the building holding the murals has garnered more than 47,000 signatures.

Van Eyck Exhibition Organizers Argue Coronavirus Triggers Cancellation Policy

Organizers of the largest exhibition ever dedicated to the Flemish Old Master Jan Van Eyck will distribute refunds to 144,000 ticket holders who were unable to attend due to early closure following the coronavirus outbreak. The organizers are seeking coverage from their cancellation insurer for the refunds of more than €3.5 million.

Counterfeit Artwork Seized at Heathrow Airport Part of a Larger Problem

The British Museum’s inspection revealed that hundreds of what looked to be Middle Eastern artifacts intercepted last July by an officer at Heathrow Airport were fakes. While the items were discovered to be counterfeit, they had the potential to be sold for thousands of dollars to unsuspecting buyers.

Croatia Rushes to Save Valuable Pieces of Art

While the world deals with the ongoing coronavirus pandemic, Croatia experienced a 5.4 magnitude earthquake in its capital, Zagreb. The earthquake damaged some 26,000 buildings, palaces, university buildings and hospitals. The Museum of Decorative Arts, which planned on celebrating its 140th anniversary, suffered a roof collapse during the earthquake. While the building has been classified as unsafe for use, the Museum has been expeditiously removing many fragile objects, even while the aftershocks continued. Many other pre–20th century buildings also sustained damage.

Banksy Pays Homage to Hospital Workers

As a tribute to the National Health Service and health care workers during this pandemic, renowned street artist Banksy created an artwork titled Game Changer (2020), which he donated to England’s Southampton General Hospital. The piece came with a note to the health care workers that read: “Thanks for all you’re doing. I hope this brightens the place up a bit, even if it’s only black and white.” Just days after the artwork was installed, an opportunistic thief wearing a hazmat suit and armed with a drill was caught attempting to steal it.

ASIA

Archaeologists Uncover Further Evidence of Vital Role of Women in Ancient Mongolian Society

Archaeologists discovered 1,500-year-old skeletons of women warriors in northern Mongolia, near China – recalling the story of Hua Mulan, originally described in the Ballad (Ode) of Mulan composed in the fifth or sixth century CE, and appearing as the main character in the 1998 animated Disney film. A study of the skeletons revealed the two women to be skilled in archery and horseback riding. The skeletons were found in a cemetery at the Airagiin Gozgor archeological site. Disney has been planning to release a live-action adaptation of Mulan, currently scheduled for July 24, social distancing guidelines permitting.

 

© 2020 Wilson Elser

Historic Worldwide Deal Ends Oil Price War

Oil-producing nations around the world reached an unprecedented agreement over the weekend that will cut world oil output by nearly 10 percent in an effort to end the devastating price war waged worldwide this year over the price of oil. That price war had threatened to break the so-called OPEC+ alliance between members of the Organization of Petroleum Exporting Countries (OPEC), including Saudi Arabia and Iraq, and allied producer states such as Russia and Mexico; just a few weeks ago, that partnership appeared to be on life support.

But now, a deal has been struck between the OPEC+ nations and other leading producer nations, including the United States, Canada, and Brazil, under which OPEC+ nations will cut production by 9.7 million barrels a day, while the non-OPEC+ nations will consider, but have not committed to, further cuts in production. Talks had reportedly stalled at times over the last seven days, but the involvement of the non-OPEC+ nations in the agreement showed the lengths to which producer nations were willing to go to end the oil price war and is politically significant since nations like the United States have historically criticized OPEC+ production policies.

© Steptoe & Johnson PLLC. All Rights Reserved.

Preparing Your Workplace to Address Coronavirus Risks: FAQs for Employers

Employers in the United States should continue to prepare for a widespread outbreak of COVID-19, commonly referred to as the coronavirus, as new cases are confirmed daily. These preparations include assessing work-related travel (as well as employee personal travel) and implementing more expansive work-from-home policies.

Although COVID-19 is new, the steps employers should take are not unlike the approaches recommended to address the annual flu season as well as prior outbreaks such as H1N1 (the “Swine Flu”), Severe Acute Respiratory Syndrome (“SARs”) or Ebola.

Employers should carefully monitor recommendations from the U.S. Centers for Disease Control and Prevention (“CDC”) and other public health agencies in connection with the creation of workplace plans and strategies. As this is an evolving situation, best practices for the workplace will continue to develop as conditions change. Carefully tailoring an employer’s plan so as to act consistently with current public health guidance will help keep employees, patients, customers and clients safe as well as reduce an employer’s legal risks. If an employer has an on-site medical professional, partnering with such an expert regarding the implementation of such a plan is strongly advised.

What is the coronavirus and how does it spread?

The novel coronavirus causes coronavirus disease 2019 or COVID-19. Reported cases include respiratory illness with symptoms of fever, cough and shortness of breath. It is spread mainly from person to person either in close contact with each other or through the transmission of respiratory droplets when an infected person coughs or sneezes. The number of cases continues to grow, but for now, most cases continue to be mild.

What steps should employers take to reduce the risk of the coronavirus spreading in their workplaces?

There is no vaccine to prevent the coronavirus. The best way to prevent the spread of any respiratory illness in the workplace is to exercise commonsense measures. Health officials, including the CDC, recommend the following preventive measures:

  • Sick employees should stay home from work until they are free of fever, signs of a fever, or any other symptoms for at least 24 hours without the use of fever-reducing or symptom-altering medicine.
  • Wash hands vigorously with soap and water or an alcohol-based hand rub for at least 20 seconds.
  • Avoid touching one’s face, especially eyes, nose and mouth.
  • Exercise respiratory etiquette and cover one’s mouth when coughing or sneezing.
  • Clean frequently touched surfaces.
  • Maintain at least three feet of distance between oneself and others, including those who are coughing, sneezing or have a fever.

What steps should employers take to prepare for employee communications?

Employers should take steps to be prepared for communicating important health and safety information to all their employees whenever such information needs to be shared. Employers may need to reach employees while outside the workplace and outside regular working hours. Employers should ensure that they have up-to-date contact information for all employees in case health and safety updates need to be communicated. Messaging regarding the coronavirus should come from a dedicated workplace representative to avoid the sharing of conflicting information and to prevent employee confusion and undue alarm.

What employment laws should employers consider when making decisions regarding the coronavirus?

Employers should consider the Occupational Safety and Health Act (“OSH Act”), the Americans with Disabilities Act (“ADA”), Title VII of the Civil Rights Act (“Title VII”), the Pregnancy Discrimination Act (“PDA”), the Family and Medical Leave Act (“FMLA”), state workers’ compensation laws and any federal or state anti-discrimination or disability laws as employers develop plans regarding the coronavirus.

Employers have a legal obligation to provide a safe and healthy working environment free from serious recognized hazards under the OSH Act. Taking reasonable steps to prevent the spread of communicable diseases, like COVID-19, may fall under this requirement. Employers should consider potential discrimination claims that could arise under the ADA, Title VII or the PDA. The ADA protects individuals who are disabled or who are regarded as disabled. The Equal Employment Opportunity Commission (“EEOC”) has stated that while the ADA’s requirements continue to apply, they do not interfere with or prevent employers from following CDC guidelines and recommendations regarding the coronavirus. The EEOC also has indicated that its previously issued guidance regarding the H1N1 pandemic is applicable here. Similar to the EEOC’s approach during the H1N1 pandemic, employer actions that might be viewed as discriminatory under other circumstances (such as requiring an employee to remain at home for a period of time upon returning from travel to certain countries) would not run afoul of the ADA when taken to limit workplace exposure to the coronavirus. This is because either COVID-19 will not be considered a disability because the resulting illness is mild or, alternatively, if COVID-19 becomes more severe and/or widespread, an employer’s actions to limit the spread of the coronavirus will likely be deemed justified given the direct threat posed to other employees, customers, patients or the public at large.

Employers should also take care not to discriminate against employees based on their national origin. Accordingly, employers should establish consistently applied and clearly communicated practices with regard to self-quarantining of employees. For instance, consistent and science-based practices should be followed when employees return from travel to certain countries facing significant outbreaks, rather than singling out employees on an ad hoc basis who may have visited their countries of origin. Recent reports suggest a heightened concern regarding possible workplace discrimination against employees of Asian descent.

While pregnant women may be more susceptible to viral respiratory infections or severe illness, the CDC has released no guidance establishing that such individuals are more susceptible to COVID-19 than the general population. Employers should thus ensure they are not engaging in disparate treatment of pregnant employees.

In addition to discrimination concerns, employers should consider what reasonable accommodations they may need to provide employees under the ADA or the PDA.

Employers also should be prepared to grant FMLA leave to employees who test positive for (or display symptoms of) COVID-19 or who require leave to care for an individual with COVID-19.

Lastly, employees who contract COVID-19 in the scope of their employment may be entitled to make claims under their employers’ workers’ compensation policies.

Should employers cancel work-related travel?

As of March 6, 2020, the CDC recommends avoiding all nonessential travel to China, Iran, Italy and South Korea and has issued travel alerts recommending that travelers practice enhanced precautions in Japan. These travel advisories extend to layovers in the affected areas. Moreover, entries into the United States of foreign nationals who have been in China or Iran in the 14 days prior to entering the United States have been suspended in many circumstances.

Employers should consider these travel advisories when formulating their business travel plans. Many employers are suspending all business travel to the affected areas. Employers face potential risk when requiring employees to travel to areas where the CDC and other federal agencies have advised against non-essential travel. Other employers are limiting or suspending all non-essential travel or canceling in-person attendance at conferences or meetings in light of the potential spread of the coronavirus.

In assessing work-related travel plans, employers should ensure that they do not single out certain groups (e.g., limiting a pregnant employee’s travel due to the risk of exposure to the coronavirus, but allowing other employees to travel).

Should employers cancel large conferences or other community events?

Employers planning events should stay informed about local coronavirus risks. The CDC is recommending event organizers and staff review existing emergency operations plans and focus on prevention strategies, such as frequent handwashing and encouraging both staff and patrons who are sick to stay home. If events are proceeding, the implementation of flexible refund policies may help encourage sick individuals to stay home. And organizers should have supplies that help prevent the spread of viruses such as soap, hand sanitizer and facial tissue available to employees and attendees. Organizers should also establish criteria with the venue and local public health officials to determine under what specific circumstances events will be postponed or canceled.

What should employers do when they suspect an employee was exposed to the coronavirus and is symptomatic?

An employer should send such an employee home and advise him or her to seek immediate medical attention. The employee should be required to remain at home until he or she no longer displays symptoms and is not contagious. The decision to discontinue home isolation should be made on a case-by-case basis, in consultation with health care providers and state and local health departments.

Are employees sent home due to exposure to the coronavirus (self-quarantined) entitled to paid leave?

Employers typically are not legally obligated to provide paid leave to employees who are sent home due to suspected COVID-19 infection or exposure unless state or local paid sick leave laws apply. However, employers should consider allowing employees to utilize paid leave under any available employer leave policies. If the employee is able to perform his or her job remotely, and is physically able to work, employers should consider allowing remote work during such self-quarantine period, even if such remote work is not consistent with the employer’s regular practices. Employers should consult with counsel to determine whether and when to offer paid or unpaid leave to employees facing quarantine situations. And any modification of an employer’s routine policies and practices to address this unique circumstance should be implemented consistently.

What should employers do if employees travel to affected areas (currently China, Iran, Italy, South Korea and Japan ) but do not display any symptoms upon return?

Many employers are encouraging (but not requiring) self-quarantining regardless of whether the employee is symptomatic. Others are requiring employees to self-quarantine for up to 14 days (the commonly presumed incubation period for the coronavirus) after returning from these areas. As the list of affected countries continues to expand and risk levels continue to change, employers should carefully monitor and reevaluate their practices.

Requiring self-quarantining protects other employees. On the other hand, requiring self-quarantining for those who have traveled to affected areas may expose an employer to potential claims under the ADA, Title VII, or other anti-discrimination statutes, especially where a forced quarantine situation results in the employee’s loss of income or other benefits. Such legal risks may be reduced where an employee is able to work remotely and thus is compensated during the quarantine period.

When employees work from home, are they entitled to a reasonable accommodation under the ADA, the PDA or other equal employment opportunity laws?

Employees are entitled to reasonable accommodations that will enable them to perform the essential functions of their positions. For example, if an employee has been provided the accommodation of a low-vision screen reader on his or her work computer, that employee should have access to such a screen reader as a reasonable accommodation when required to work at home.

Can employers ask employees if they have traveled to one of the affected areas?

Yes. Given the ongoing travel advisories and the recommendations of the CDC and other federal agencies regarding travel to affected areas and self-quarantining to limit the spread of the coronavirus, there is likely low risk in requiring employees to disclose their recent travel destinations.

Can employers require a return to work or fitness for duty exam to allow employees to return to work?

Employees who have been diagnosed with COVID-19 should only discontinue isolation after consulting health care providers and state and local health departments. Employers may require the employee to provide proof that isolation can be discontinued before the employee returns to work.

But for employees who have not been diagnosed with COVID-19, it practically may be difficult to receive a return to work exam given that there has been a shortage of testing kits to test for COVID-19. The CDC has also recognized that health care offices may be busy and it may be difficult for an employee with acute respiratory illness to validate their illness or return to work. Employers must take care to treat employees with similar symptoms in a consistent manner.

What should an employer do if an employee fears coming to work due to possible exposure in the workplace?

Creating and implementing consistent plans for preventing and addressing potential workplace exposure and communicating such measures clearly and effectively will go a long way to reducing employee fears of workplace exposure. Employers should assess the specific risk in the workplace on a case-by-case basis. Currently, federal guidance is focused on encouraging those who are sick (or may have been exposed to the coronavirus) to stay home. In the event of a more particularized risk, such as an actual case of exposure to the coronavirus in the workplace, employers may wish to encourage (or require) working from home or offer more lenient work from home options to its employees.

Should employers inform employees if there is an identified case of COVID-19 in the workplace?

Yes. Employees should be informed of confirmed cases in the workplace. But employers must ensure that employee confidentiality is maintained as required under the ADA, the Health Insurance Portability and Accountability Act (“HIPAA”) and any other state or federal law.

Should employees be encouraged to wear face masks?

The CDC has not recommended that healthy persons wear face masks. Face masks are reported to have no benefit for a healthy person in preventing their exposure to the coronavirus, although masks may provide some benefit if worn by sick persons in limiting their spread of the virus to others. The CDC has urged people to stop buying masks because such consumer behavior is depleting necessary resources from health care professionals who need them.

What about specific guidance for health care employers?

The CDC has issued specific guidance to try to prevent the spread of the coronavirus into, among, and between health care facilities, including monitoring patients and employees for fever or respiratory systems, encouraging employees to stay home if they have symptoms of respiratory infection and identifying which employees will care for patients with COVID-19. It is critical for health care facilities to have a plan in place to respond to any outbreak. There are potentially severe risks to patients facing health challenges if they are being cared for by employees who have been exposed to the coronavirus.

Is there a special risk for employees who handle packages or products shipped from an affected area?

The CDC has issued guidance that it is unlikely that the coronavirus can spread vis-à-vis products or packaging. Some employers may nevertheless decide to offer specific personal protective equipment (“PPE”) to those employees handling packages or products from affected areas, simply in an effort to mitigate employee fear or concern. In such cases, employees should be properly trained on the use and disposal of the PPE.

What other issues may employees working abroad face?

Consular offices may be closed due to the coronavirus outbreak. Currently, field offices in Beijing and Guangzhou are closed. Such closures may delay any communications with immigration officials

© 2020 Vedder Price

For more on the coronavirus, see the National Law Review’s New Coronavirus News section.

Coronavirus – Further Updates on Travel Impact

As the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO) continue to monitor the current and potential impact of the coronavirus (COVID-19) in the United States and worldwide, the CDC and the Department of State (DOS) have updated their travel guidance by issuing warnings about new countries and raising the threat levels of previously named countries. Further, President Trump has issued a proclamation that temporarily suspends entry to the United States for foreign nationals who have been physically present in Iran within the last 14 days. We outline below the current travel advisories and will continue to provide updates as new information becomes available.

Iran:

The CDC issued a Travel Advisory alert on Iran at the Warning—Level 3 category, recommending that travelers avoid all nonessential travel.

On February 29, 2020, through a Presidential Proclamation, the U.S. government announced that effective today, March 2, 2020, at 5:00 p.m. eastern time, that it was suspending entry of foreign nationals, both immigrants and nonimmigrants, who were physically present in Iran within the last 14 days preceding their entry into the United States.

Italy:

The CDC issued a Travel Advisory alert on Italy at the Warning—Level 3 category, recommending that travelers avoid all nonessential travel. DOS maintains a Level 3 Advisory for Italy as well.

The most affected regions are Lombardy and Veneto (North Italy, Milan consular district). On February 23, 2020, the U.S. Embassy in Rome issued a Health Alert, stating that the U.S. Consulate General in Milan has suspended routine visa services until March 2, 2020. Given the continued health concerns, we expect an updated advisory shortly. However, at this time, full consular services are available at the U.S. Embassy in Rome and the U.S. Consulates General in Florence and Naples.

China:

The CDC has raised the Travel Advisory level for China to a Warning—Level 3 category, recommending that travelers avoid all nonessential travel. DOS has raised the Travel Advisory to Level 4 advising that individuals not travel to China, and to be prepared for the possibility of travel restrictions with little to no advanced notice.

The previous warnings related to China under the Presidential Proclamation, effective February 2, 2020, remain in effect. Foreign nationals who have visited China in the last 14 days may not enter the United States, and American citizens and lawful permanent residents who have been to China in the past 14 days will undergo health screenings at a prescribed list of airports. Depending on their history, individuals may receive additional travel prescriptions.

South Korea:

The CDC has raised the Travel Advisory level for South Korea to a Warning—Level 3 category, recommending that travelers avoid all nonessential travel. DOS maintains a Level 3 Advisory for South Korea as well.

Japan:

The CDC added Japan to the Travel Advisory alerts at Alert—Level 2. The CDC recommends that high-risk travelers practice enhanced precautions. As of February 21, 2020, the U.S. Embassy in Tokyo continues to provide all consular services.

Hong Kong:

The CDC has maintained a Travel Advisory level of Watch—Level 1 (Practice Usual Precautions) for Hong Kong. DOS increased the Hong Kong Travel Advisory to Level 2 (Exercise Increased Caution). Further, the U.S. Consulates in Hong Kong and Macau recommend that anyone with a pending consular appointment who resides in China, has traveled to China recently, or intends to travel to China prior to their planned trip to the United States, postpone their visa interview appointment until 14 days subsequent to their departure from China.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

ARTICLE BY Danielle A. Porter of Mintz.
For more on coronavirus developments see the National Law Review Health Law & Managed Care section.

Coronavirus: Employers Should Plan, Not Panic

Coronavirus, whose formal name is COVID-19, has been the subject of much media attention since the first outbreak in Wuhan, China, late last year.  Just like recent outbreaks of the swine flu, the avian flu, SARS and the West Nile virus, each new “bug” creates fear surrounding a previously unknown threat.  While there are tens of thousands of cases in China, as of February 19, 2020, according to the U.S. Centers for Disease Control and Prevention (CDC), there were 15 confirmed cases of coronavirus in the U.S.  The confirmed cases were limited to seven states located on the perimeter of the country.

According to the CDC, coronaviruses are a large family of viruses that are common in many different species of animals, including camels, cattle, cats and bats. Rarely, animal coronaviruses can infect and then spread between people.

To put the current coronavirus outbreak in context, the CDC estimates there have been between 26 MILLION and 36 MILLION cases of flu in the U.S. this season and an estimated 15,000 to 36,000 deaths.  In fact, this year’s flu season is the worst in almost 20 years.  While the majority of these deaths and hospitalizations have occurred in people over age 65, this year’s flu has impacted children and younger adults in greater numbers than usual.

While no one knows for sure the extent to which the coronavirus will take hold in the U.S., employers should take steps now to plan ahead so that they will be able to maintain normal business operations.  The challenges for any business facing coronavirus or any other disease outbreak involve a multitude of conflicting legal obligations.  Under the Occupational Safety and Health Act (OSHA) and similar state laws, employers have a general duty and obligation to provide a safe and healthy work environment, even when the work occurs outside the employer’s physical premises. Furthermore, under these health and safety laws, employers must not place their employees in situations that are likely to cause serious physical harm or death.

Conversely, overreacting by implementing broad-based bans and making business decisions about employees that are not based on statistical realities could get an employer sued under laws that prohibit discrimination based upon disability (perceived or real) and national origin discrimination, among others.

Properly planning for and implementing plans to deal with the coronavirus is legally and operationally complex.  Listing all of the considerations for such plans are too numerous for this brief blog article. By way of example, employers who have operations in Hubei Province in China, the epicenter of the coronavirus outbreak, will face far more difficult and complex challenges than an employer with a single facility in the middle of the U.S.  However, at a minimum here are some things every business should be doing:

  • If you have not already done so, institute a ban on all business travel to China.  This may be a moot point given the cancellation of most flights into and out of mainland China.  Under the circumstances, it is also totally appropriate to require that any of your employees who choose to travel to China for personal reasons notify a designated company official and let the official know of their plans.

  • If employees must use a company-designated travel agent to arrange business travel, get the agent to provide reports on all international business travel.  But don’t overreact and implement a broad-based travel ban to countries that do not pose a risk of harm.  However, if an employee expresses fear of any international travel, have a rational discussion and review the relevant outbreak statistics to see if those fears are real or inflated.  Even if fears are irrational, consider the negative impact on employee morale by forcing someone to travel.

  • Designate a management official to check the CDC website daily to see the latest tracking of the virus’ spread.  This person should be the in-house resource and should be involved in ban or no-ban decisions.

  • If an employee has been to a real coronavirus “hotspot,” consider making him or her stay home for the full 14-day incubation period.  Whether employees work remotely or do not work, the decision whether they should be paid to stay home during this time is an individualized determination.  However, employers need to be flexible and should consider bending the rules if they want to appear humane and seriously concerned about health issues.  If employers force someone to stay home for two weeks without pay or make them use precious PTO, they may push people to hide where they have been, which will defeat planning to ensure that management is taking all reasonable steps to prevent the spread through the workplace.

  • Do not panic or overreact but rather engage in sound business contingency planning.  Begin by developing contingency plans based upon the industry you are in, the size of your business and how you will operate in the event absenteeism rates greatly exceed those of a normal flu season.

  • Use this opportunity to communicate with your employees about seasonal flu prevention strategies, such as minimizing contact and engaging in sound hygiene and sanitation.  As the statistics above demonstrate, seasonal flu poses a far greater and more immediate threat to your employees’ health than does the coronavirus.

  • Develop a plan for communicating with your employees if a major pandemic breaks out, regardless of where they are located, including the workplace, at home or on the road.
    Regardless of how bad things may get, it is important that management not panic or overreact.  Plan for worst case scenarios now so you can effectively respond to what will likely be a rapidly changing situation. To do this, your management should anticipate and prepare for how you will answer the plethora of questions that will almost certainly be raised.

Proper planning for and dealing with individualized employee situations implicates a whole range of employment laws, such as ADA, GINA, OSHA, Title VII, ERISA, as does the nature of your business.  To deal with these legal issues, you should consult with your attorney.

Finally, there are a variety of web-based resources available to assist you in planning, preparation, and monitoring the spread of the coronavirus on a global basis, including the CDC at www.cdc.gov, OSHA at https://www.osha.gov/SLTC/covid-19/, and the World Health Organization https://www.who.int/emergencies/diseases/novel-coronavirus-2019.

© 2020 Foley & Lardner LLP

For more on the coronavirus see the National Law Review Health Law & Managed Care section.

National Security vs. Investment: Are we striking the right balance?

The U.S. Treasury Department’s final regulations, giving it more power to scrutinize any national security risks that may arise from deals between U.S. and foreign companies, are scheduled to go into effect this week, Feb. 13, 2020.

CFIUS New Regulations

The regs implement the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) and provide the interagency Committee on Foreign Investment in the United States (CFIUS) broader authority over certain investments and real estate transactions. Critics say the regs will change cross-border M&A deal-making for years to come, and advance increasingly protectionist U.S. policy.

Treasury Secretary Steven T. Mnuchin said the regs will strengthen national security and “modernize the investment review process,” while maintaining “our nation’s open investment policy by encouraging investment in American businesses and workers, and by providing clarity and certainty regarding the types of transactions that are covered.”

We have previously described in the MoginRubin Blog how not everyone shares the Treasury Secretary’s respect for CFIUS.

Financial writer and author Robert Teitelman described it in an article for Barron’s as “a creature from the shadows of the administrative state” that “defines obscurity in the federal government.” He said it “encourages the very practices the administration condemns in China.” Hernan Cristerna, co-head of global mergers and acquisitions at JPMorgan Chase, told the New York Times that CFIUS is the “No. 1 weapon in the Trump administration’s protectionist arsenal” and called it “the ultimate regulatory bazooka.”

Enacted in August 2018, FIRRMA gives CFIUS much greater reach into deals where national security is a potential issue. Specifically, the law extends CFIUS’s jurisdiction over “certain non-controlling investments into U.S. businesses involved in critical technology, critical infrastructure, or sensitive personal data. Big data, artificial intelligence, nanotechnology, and biotechnology are among the specific technologies the law was designed to protect. It also establishes CFIUS’s jurisdiction over real estate deals.

The regulations limit CFIUS’s application of its expanded jurisdiction to “certain categories of foreign persons,” and has “initially” designated a handful of countries as “excepted foreign states.” They are Australia, Canada, and the U.K., countries with which the U.S. has “robust intelligence sharing and defense industrial base integration mechanisms.” The list may be expanded in the future, according to the regs.

‘Controlling interest’ redefined.

Attorneys, in-house counsel and other professionals deeply involved in cross-border transactions are already experiencing some nuts and bolts changes that other professionals want to be aware of.

For example, deals that would give foreign companies “controlling interest” are no longer the only deals the committee will examine; it is now interested in deals that would transfer non-controlling but “substantial interest” when critical technologies, critical infrastructure, or the private data of U.S. citizens are involved. Deals that fall into these categories now require filing; previously they were optional. Deals that would once have sailed through scrutiny may now be delayed by investigations. CFIUS also has more time to review transactions. The initial stage ends within 45 days and the second phase can last from 45 to 60 days. Filing fees are set but cannot be more than 1% of the value of the transaction or $300,000, whichever figure is lower. And, of course, there is increased risk that they be ultimately be blocked.

The regs include a new definition of “principal place of business” as the “primary location where an entity’s management directs, controls, or coordinates the entity’s activities, or, in the case of an investment fund, where the fund’s activities and investments are primarily directed, controlled, or coordinated by or on behalf of the general partner, managing member, or equivalent.” If the entity is determined to be in the U.S. and has represented in its most recent submission or filing to a U.S. or foreign government that if either its principal place of business, principal office and place of business, address of principal executive offices, address of headquarters, or equivalent, is outside the U.S. then that location is deemed the entity’s principal place of business unless it can prove that the location has changed since the filing.

These new regulations will impact many purely private cross-border transactions, especially in the areas of critical infrastructure, sensitive personal data, and real estate.

Early consideration important.

M&A counsel must now consider CFIUS implications early-on, not only to avoid delay and frustration, but to account for CFIUS clearance in deal timing and closing deadlines. Fines may be levied if CFIUS notices are not timely filed.

Fund managers who make large investments in U.S. companies can also expect to be asked to represent in deal documents that their funds or investors do not require a mandatory CFIUS filing.

For more background and additional insights, please read our previous post, CFIUS: A Guardian of National Security or a Protectionist Tool? Also, you can download the regulations from the MoginRubin website:  Part-800-Final-Rule-Jan-17-2020  & Part-802-Final-Rule-Jan-17-2020

© MoginRubin LLP

ARTICLE BY Dan Mogin and  Jennifer M. Oliver of MoginRubin.
For more on CFIUS regulations, see the National Law Review Global Law section.

Can U.S. Companies Insure Against A Trade War?

The recent trade deal between the U.S. and China was welcome news for U.S. companies with investments in China.  The tenuous relationship between the countries, however, continues to cause substantial uncertainty for U.S. investors.  Their concerns are not unique to China—the Trump Administration has taken an aggressive trade stance even with nations usually considered friendly, including Brazil, Argentina, and France.

A growing number of companies are turning to political risk insurance to protect their foreign investments.  Such policies typically cover a variety of commercial losses stemming from political events, including expropriation, political violence, or currency conversion restrictions.

Are political risk policies a valuable tool in a company’s arsenal for mitigating the uncertainties of doing business in China or other countries embroiled in a trade war with the United States?  The answer depends, in large part, on the specific wording of the policy at issue.  There is no standard political risk policy form, and jurisprudence on such policies is extremely limited.  Potential policyholders must evaluate their needs carefully and be strategic during policy placement to ensure they are maximizing potential coverage.  For example:

Expropriation:  Political risk policies may cover losses stemming not only from a government’s outright nationalization or expropriation of a policyholder’s assets, but also from more subtle forms of unlawful discrimination against foreign entities.  The bounds of such coverage, however, are not always clear.  Many policies exclude incidental damages arising from lawful or legitimate acts of governance, which may give rise to disputes between policyholders and insurers as to the nature and motivation of a particular governmental act.

For example, the Chinese Government imposed tariffs and restrictions on U.S. companies doing business in China throughout 2019.  A policyholder seeking coverage for losses suffered due to these measures would argue that the restrictions were retaliatory acts in response to the U.S.-China trade war, meaning that its damages arose from covered acts of discrimination in violation of international law.  An insurer seeking to limit its coverage obligations may argue that China imposed these restrictions based on its view that the companies had violated market rules or otherwise damaged the interests of Chinese companies for noncommercial reasons—in other words, that these were legitimate act of governance taken in the public interest.

Given the lack of case law on the intended scope of expropriation coverage and the fact-intensive nature of disputes over the legitimacy of a particular governmental act, companies should seek to include the broadest possible definition of “expropriation” in their policy and to clarify the bounds of any exclusions.

Political Violence:  In addition to coverage for expropriation and related governmental acts, political risk policies also may provide coverage for losses stemming from physical damage to property due to protests, riots, or other acts of violence intended to achieve a political objective.  While U.S. investors may not commonly associate trade wars with physical violence, recent protests and riots over economic issues in countries such as Chile and Ecuador demonstrate the potential for severe economic turmoil (a common result of any trade war) to cause such violence.  As a result, U.S. companies with warehouses, offices, or other property in countries facing aggressive trade restrictions by the U.S., or in any nation suffering from substantial economic uncertainty, may find such coverage appealing.

The potential benefit of political violence coverage may depend, in large part, on how a policy proposes to determine the value of any damaged property or resulting financial losses.  Potential policyholders should ensure, for example, that a loss is valued pursuant to objective accounting standards and/or by a neutral third-party, as opposed to the insurer, who may have an interest in minimizing its liability.

Currency Inconvertibility:  A third component of political risk insurance is currency inconvertibility coverage—i.e., coverage for losses arising from a policyholder’s inability to convert currency due to exchange restrictions posed by a foreign government.  For example, such coverage might apply if a policyholder is unable to obtain repayment of a loan to a Chinese entity because of new restrictions by the Chinese Government on conversion of local currency to U.S. dollars or the transfer of funds to U.S. banks.  U.S. companies with investments in countries facing particularly extreme economic instability, such as Venezuela, may benefit most from such coverage, as those countries are most at risk for collapse of their currency exchange system.

As with political violence coverage, a policy’s proposed standards for valuing a currency inconvertibility loss are once again crucial to maximizing a policyholder’s protection.  Policies often calculate the value of a policyholder’s loss using the foreign country’s exchange rate on the date of loss.  In such scenarios, policyholders may benefit from defining the “date of loss” as occurring the first time the policyholder is unable to convert currency, as opposed to after a waiting period has occurred or after the insured has made multiple conversion attempts.  This may minimize the risk that the value of a covered loss decreases if the exchange rate in the country plummets while the insured fulfills other conditions for coverage.

Political risk policies likely cannot insulate U.S. companies from the full impact of a global trade war or other politically-inspired disruptions.  However, U.S. businesses can maximize the benefits of such coverage through careful policy drafting and strategic evaluation of their individual risk profile.

© 2020 Gilbert LLP

ARTICLE BY Emily P. Grim of Gilbert LLP.
More on recent US trade negotiations on the National Law Review Antitrust Law and Trade Regulation page.