Worldwide: Smoother Sailing Ahead For Shippers After OFAC Clarifies Cuba Sanctions

Last Updated: January 12 2017
Article by Leigh Hansson, David Myers, Jeffrey Orenstein and Jonathan A. Davey

On Friday, 6 January 2017, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) revised its Frequently Asked Questions (FAQs), adding five new FAQs (numbers 86-90) pertaining to vessel transactions with Cuba. The new FAQs come on the heels of a general licence issued by OFAC in October 2016 that significantly narrowed the scope of the so-called '180-day rule'— a restriction that prevents foreign-flag vessels from calling at U.S. ports for at least 180 days after calling at a Cuban port. See Reed Smith Client Alert, 17 October 2016. The five new FAQs discussed below provide clarity on several issues relevant to this and related rules.

FAQ No. 86: The 180-Day Rule and Goods/Passengers-on-Board Rule

FAQ No. 86 explains the nature of the so-called '180-day rule' and the 'goods/passengers-on-board rule'. OFAC stated that the 180-day rule is a "restriction prohibiting any vessel that enters a port or place in Cuba to engage in the trade of goods or the purchase or provision of services there from entering any U.S. port for the purpose of loading or unloading freight for 180 days after leaving Cuba, unless authorized by OFAC". Traditionally, this rule has applied "even if a vessel has stopped in Cuba solely to purchase services unrelated to the trade of goods, such as planned ship maintenance". A description of the 180-day rule can be found in 31 C.F.R. §515.207(a).

OFAC also explained the goods/passengers-on-board rule, which "prohibits any vessel carrying goods or passengers to or from Cuba or carrying goods in which Cuba or a Cuban national has an interest from entering a U.S. port with such goods or passengers on board, unless authorized or exempt". A description of the good/passengers-on-board rule can be found in 31 C.F.R. §515.207(b).

The general exceptions that apply can be found in 31 C.F.R. §§ 515.206 and 515.550.

FAQ No. 87: Exceptions to the Rules

There are exceptions to the 180-day rule and the goods/passengers-on-board rule, which OFAC addressed in the new FAQ 87. Specifically, OFAC explained that under the general licence issued by OFAC in 2016, a vessel will not be subject to the 180-day rule or the goods/passengers-on-board rule if the vessel is:

  • engaging in trade with Cuba that is not prohibited under U.S. regulations either because it is licensed or exempt from U.S. prohibitions (e.g., carrying goods from the U.S. that are licensed or otherwise authorised for export or re-export to Cuba);
  • engaging in the export or re-export from a third country to Cuba of agricultural commodities, medicines or medical devices that, were they subject to the Export Administration Regulations (EAR), would be classified as 'EAR99';
  • carrying persons between the United States and Cuba (or within Cuba) pursuant to OFAC's general licence for the provision of carrier services, or, in the case of a vessel used solely for personal travel (and not transporting passengers), pursuant to a licence or other authorisation issued by the Commerce Department for the exportation or re-exportation of the vessel to Cuba; or
  • a foreign vessel that has entered a port or place in Cuba while carrying students, faculty and staff that are authorised to travel to Cuba pursuant to the general licence for educational activities under U.S. regulations.

OFAC also clarified that a vessel will not be subject to the 180-day rule if the vessel's only transactions with Cuba are the exportation to Cuba from a third country of items that, were they subject to the EAR, would be designated as EAR99 or controlled on the Commerce Control List only for anti-terrorism reasons.

OFAC emphasised in FAQ No. 87 that exceptions to the 180-day rule do not apply to vessels that:

  • carry goods to Cuba that, were they subject to the EAR, would not be designated as EAR99 or controlled for only anti-terrorism reasons;
  • load goods in Cuba, unless the transactions involving those goods are authorised by OFAC or exempt from U.S. prohibitions; or
  • purchase or provide services in Cuba, other than docking, unloading or other services associated with normal shipping transactions.

FAQ No. 88: The Exceptions Distinguished from Authorisations

In FAQ No. 88, OFAC makes clear that the exceptions to the 180-day rule do not themselves authorise shipments to or from Cuba; they merely authorise certain vessels to enter a U.S. port without waiting 180 days after leaving a port or place in Cuba. However, shipments to or from Cuba may be separately authorised under other provisions of U.S. regulations. Most shipments from third countries to Cuba, for example, are not even subject to U.S. restrictions.

FAQ No. 89: U.S. Destination Cargo Aboard Vessels in Cuban Ports

FAQ No. 89 clarifies an issue of special importance to foreign vessels. It expressly states that the 180-day rule does not apply to foreign vessels travelling to the United States, via Cuba, with cargo destined for the United States, provided all goods destined for the United States remain aboard while the vessel is docked in a Cuban port.

Prior to OFAC issuing FAQ No. 89, there was some uncertainty regarding the scope of 31 C.F.R. § 515.204, which prohibits all persons subject to U.S. restrictions from purchasing, transporting, importing or otherwise dealing in merchandise if it has beaen "located in or transported from or through Cuba".

OFAC states expressly that "goods entering the U.S. that remained on board the ship while it docked in a Cuban port . . . are not considered goods that have been located in or transported through Cuba for the purposes of 31 C.F.R. § 515.204".

Nevertheless, OFAC notes that goods may not be unloaded in Cuba, other than goods that would be designated as EAR99 or controlled only for anti-terrorism reasons if they had been exported from the United States. Nor may merchandise be loaded in Cuba unless it is licensed or exempt.

FAQ No. 90: Code-Sharing Agreements

FAQ No. 90 addresses whether companies that use different ocean carriers as part of a broader shipping service utilising code-sharing agreements may take advantage of the exceptions to the 180-day rule.

OFAC advises that "any shipping company may deploy a vessel in a broader shipping arrangement and, so long as the vessel meets the terms of the general license, that vessel may enter a U.S. port accordingly. There is no requirement for authorization of the individual companies or the broader code-sharing arrangement." In short, OFAC stated, "code-sharing agreements do not affect the general license or its requirements".

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions