The unprecedented speed of the collapse of the former Afghan central government is a humanitarian tragedy. The magnitude of which rightly sidetracks immediate short- and long-term legal issues that those who have supported coalition efforts in Afghanistan are compelled to tackle as immediate human concerns fade from the spotlight.

In particular, US Government Contractors (USGs) will face various legal implications of the events unfolding in Afghanistan, which will vary depending on the existence of assets, facilities, contracts or personnel in Afghanistan. . This article discusses several common issues that arose early in the withdrawal when assisting clients who had operations in Afghanistan. This article is by no means exhaustive of the issues that will be faced by those with assets, facilities, contracts, or personnel related to US government affairs in Afghanistan.

American sanctions

The United States is likely to enact very short-term economic sanctions based on the likelihood of widespread human rights violations and atrocities. U.S. sanctions are likely to be imposed on the Taliban, known Taliban leaders, and entities owned or controlled by the Taliban – including former private companies under Taliban control. Typically, there is a permitted reduction / extraction period, but such a grace period may not be granted with possible sanctions against Afghanistan based on the terrorist history of the Taliban. As a result, U.S. government contractors should consider ending business and contact with Afghan entities so that they can comply with U.S. sanctions if or when imposed.

Investment recovery

Based on the swift departure of the president and other key officials from the now displaced Afghan central government, it is likely that former officials will claim they remain the legitimate government of Afghanistan in exile (although the Biden administration already proposes to recognize the Taliban if they respect women’s rights, which is unlikely). It is also likely that these officials will use such claims to assert control over assets transferred out of Afghanistan or otherwise held for the benefit of the Afghan “government”. The Taliban have already made competing claims on these funds, so there will be multiple competing claims against limited assets. As a result, it may be necessary to work to recover as soon as possible any funds, capitalization or guarantees related to any Afghan entity.

Closure of Afghan entities

At the last check, the Afghan Embassy in Washington, DC was operational and reportedly used electronic platforms to continue consular processes. The US State Department also indicates that its interactions with the Afghan Embassy in Washington on trade matters continue, although it is likely that these operations and processes will be affected or even interrupted due to Taliban control over it. Afghanistan. As a result, the ability to “legally” shut down an Afghan legal entity through the US embassy in Afghanistan will become increasingly difficult or unlikely.

US government contractors who had no personnel, facilities or assets in Afghanistan may be forced to shut down Afghan operations through actions in the United States and document them for the purposes of US sanctions and export control. Such documentation can also be useful for U.S. government reimbursement claims (which might be offered for those who support U.S. government directives in Afghanistan if the Afghan presence were to support U.S. government actions). Such documentation can be useful in justifying US tax deductions for losses or costs associated with the “forced” closure of Afghanistan.

To effect and document the termination of Afghan operations through actions in the United States, it may be necessary for the board of directors of any Afghan subsidiary and its direct U.S. parent company to decide to shut down the Afghan business, regardless of the ability to carry out such an operation in Afghanistan. or with the Afghan Embassy in DC. It will be important to keep records of such documents to document compliance with possible future US sanctions or changes in US export control requirements.

US export controls

U.S. government contractors should also determine if there are U.S. export licenses or technical assistance agreements (TAAs) in place. If this is the case, it may be necessary to terminate them. If the items of U.S. origin or the information covered by these licenses or TAA are in Afghanistan and are either unrecoverable or otherwise compromised, the U.S. exporter may need to voluntarily disclose them. We recommend retaining the services of an external lawyer to perform an appropriate attorney-client privileged assessment of the specific facts related to the exporter’s situation and the elements covered, as well as a possible voluntary disclosure based on the act of war. of the Taliban.

As noted, other issues and considerations are likely to arise as more and more information becomes available on the immediate short and long term situation in Afghanistan. Subcontractors to the U.S. government and other U.S. entities with activities, operations, or ties to Afghanistan will need to be attentive to real-time changes in Afghanistan and U.S. and international responses, and be prepared to adapt and implement policies, procedures and controls to address them.

Republished with permission. This article, “Guest Column: For Alabama Companies Doing Business in Afghanistan, Some Legal Thoughts,” was published in Alabama Business September 16, 2021.


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