The latest on Russia sanctions from the International Trade and Supply Chain Team
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In a February 27, 2024 opinion issued by Judge Gary S. Katzmann, the Court of International Trade held that Ninestar Corporation and its corporate affiliates (“Ninestar”), Chinese manufacturers and sellers of laser printers and printer-related products, were unlikely to succeed on the merits of a case challenging their placement on the Uyghur Forced Labor Prevention Act (UFLPA) entity list. The Court denied Ninestar’s preliminary injunction motion seeking to stay the listing decision and the embargo against Ninestar entered into force under the UFLPA.

In its opinion, the Court found that all four factors evaluated in deciding whether to grant a preliminary injunction (likelihood of success on the merits, irreparable harm, balance of hardships and public interest) favored the Government. For the likelihood of success factor,

the Court found that the interagency Forced Labor Enforcement Task Force (“FLETF”) had adequately explained its listing decision, pointing to a Department of Homeland Security memo in the administrative record describing corroborated information from an informant. The Court also found that FLEFT applied the correct “reasonable cause” burden of proof, and it rejected arguments that FLEFT exceeded its statutory authority by applying the UFLPA’s provisions retroactively, as the record supported a finding of post-enactment violations.

The Court also determined that Ninestar had not demonstrated irreparable harm, noting that the hardships it claimed (financial loss, reputational harm, etc.) were hardships that were “entirely predictable consequences that were likely foreseen by Congress, rather than unexpected or extraordinary byproducts, of an adverse listing.” Similarly, the Court found that the balance of hardships and public interest factors favored the Government in light of the “weight of the public interests of avoiding American complicity and denouncing forced labor.”

The Court’s ruling suggests that the importing community may face significant challenges contesting certain agency actions related to enforcing the UFLPA, particularly those involving the UFLPA entity list. However, the decision also recognizes the lack of transparency companies may face when subject to such actions, which may provide groundwork for other future challenges. Specifically, the Court found that Ninestar was not obligated to exhaust its administrative remedies before challenging its placement on the UFLPA entity list in court, because Ninestar did not receive “timely access to the confidential record” or even an explanation of why it was listed, and an administrative challenge would have been futile. 

Husch Blackwell continues to monitor developments relating to the UFLPA.  In the meantime, for guidance or questions relating to U.S. customs and trade laws, companies can contact Husch Blackwell’s International Trade and Supply Chain team.