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Iranian Hacking Raises Issues about Gaps in International Legal Frameworks involving Cyber-Attacks

April 3, 2019 by Evan Schleicher Leave a Comment

In late March, Microsoft reported that it had taken down 99 websites which had been used by a company referred to as Phosphorus to target the computer systems of businesses and government agencies, as well as activists and journalists involved in advocacy and reporting on issues relating to unrest in the Middle East. Microsoft obtained a federal judge’s approval on March 15 to disable the websites that it detected and had been tracking for six years. Although multiple intelligence agencies and groups pointed to Iran as the culprit, the difficulty of attributing cyber-attacks and operations to particular state actors and the lack of international legal frameworks to deal with cyber issues makes it highly likely that Iran will escape international condemnation.

To begin, effective attribution of attacks to state actors is difficult, complex, and highly time consuming. Most hackers have the technical capability to cover their tracks extremely well and an attack, even if it can be connected to a computer or a facility, often cannot be connected indelibly to specific individuals or groups. Further, because the process of global investigation requires the investigator to follow official, and at times bureaucratic, legal channels to request assistance, investigations can end up being subordinated to political agendas or to the whims of particular states. Thus, while the ability to conceal the source of attacks does become imminently more difficult as the attacks increase in both sophistication and in scale, it is still possible for deception, deflection, and misinformation to make it unclear exactly who is responsible for cyber-attacks.

Even in seemingly clear-cut cases, there is often significant skepticism about the source of attacks. For example, after the Obama Administration pinned the 2014 Sony hack on the Democratic People’s Republic of Korea, a variety of academics and hackers expressed public skepticism, pointing to things like a seeming insider’s knowledge of Sony systems and the ability of IP addresses to be used across geographies as evidence that the DPRK was not the Sony hacker. This uncertainty was also present in a hack discovered by McAfee which spanned 72 networks globally, including the United Nations, governments, and corporations. In characterizing the source of this attack, an expert at the Center for Strategic and International Studies said that the attack was “very likely” undertaken by China, while the Chinese said nothing and the Defense Department said that “it is unknown who is perpetuating these intrusions,” although it is known that China has been pursuing similar capabilities. Even in cases with clear motives, state actors retain significant capacity for plausible deniability.

Another equally pressing issue regarding cyber warfare is the relative absence of international legal standards governing cyber actions. In February 2018, UN Secretary-General Antonio Guterres gave two speeches in which he argued that a lack of rules governing cyber warfare and cyber conduct constituted a global threat. While some sources have argued that international legal standards already apply to cyber warfare and conduct, the United Nations (“UN”) Group of Governmental Experts (“GGE”) on Developments in the Field of Information and Telecommunications in the Context of International Security stated in 2013 that “the application of norms derived from existing international law . . . is essential to reduce risks to international peace, security and stability.” Such derivation requires extensive debate, discussion and, eventually, agreement, and thus cannot be merely extrapolated from existing laws. Unfortunately, consensus has yet to emerge, as GGE talks broke down in 2017, leaving the international legal community without agreed upon standards for applying existing international law to the cyber domain.

There is a set of guidelines derived from existing international law and generally accepted (at least implicitly) by Western countries – the Tallinn Manual. It is not followed by many countries, most notably Russia, due to the perception of Western bias in the manual itself. Russia has thus developed a similar, but not exactly parallel, set of standards based on the UN Charter, which specifically emphasizes respect for national sovereignty and non-interference.

Unfortunately, as there is insufficient evidence to support claims of a distinct customary international law rule of territorial sovereignty applicable to cyberspace operations, current norms remain insufficient to parse out the legal space in which cyber-attacks and warfare exist. Further, because the principle of sovereignty is differentially applied to different domains (land, sea, air, space), there would have to be legal consensus on how it applies to the domain of cyberspace before the principle could hold any legal weight.

The lack of easy, universal application of current international legal norms to cyber warfare is compounded by the tendency of powerful states such as Russia and the United States to use the development of cyber norms as a conduit by which to score policy wins. In October 2018, it was reported that “Russia [was] planning to submit two UN resolutions, one on a code of conduct to regulate states behavior in cyberspace and one on a new UN cybercrime convention.” The US, in response, publicly announced Russian complicity in multiple hacks, using this revelation to damage Russian progress on its resolutions. This oppositional approach has been consistent between the two countries, making it unlikely that any comprehensive international legal norms on cyber warfare will be agreed upon anytime soon.

In the absence of agreed upon norms, rogue actors such as Iran and Russia will be able to use cyber warfare with relative impunity. For example, by exploiting the gaps in the existing international structure regarding cyber-attacks – the difficulty of attribution and the lack of international legal norms – Russia has been able to win significant strategic victories with very little pushback from the international community. In Estonia in 2007, in Georgia in 2008, and in Ukraine beginning in 2014, the Russian government used cyber weapons to attack infrastructure and to produce widespread confusion. Specifically, in Ukraine, there has been a significant number of attacks. On December 23, 2015, malicious actors opened breakers at some 30 distribution substations in the capital city Kiev and western Ivano-Frankivsk region, causing more than 200,000 consumers to lose power. Nearly a year later, another substation was rendered powerless. Explaining the Russian strategy regarding these sorts of cyber-attacks, Thomas Rid, a professor in the War Studies department at King’s College London, put it simply: “They’re testing out red lines, what they can get away with…You push and see if you’re pushed back. If not, you try the next step”.

Given the poor track record of the international community and the United States in responding strongly to Russian cyber-attacks, it seems highly likely that they will fail to respond politically to Iranian (and other state actors) actions as well.

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Evan Schleicher is an Editorial Intern with the International Enforcement Law Reporter. He is also an MA candidate in Security Policy Studies at George Washington University’s Elliott School of International Affairs.

New Article on the CLOUD Act in English and French

February 8, 2019 by Fred Davis Leave a Comment

My colleague Anna Gressel and I have written an article, published in the current ABA Litigation Journal, which attempts to make sense out of the CLOUD Act adopted by the US Congress last year. You will find it here. (For French-speakers, a copy in that language is here).

The Act addresses an intriguing and difficult issue: how should national criminal and privacy laws deal with so-called “deterritorialized” data? Traditionally, laws protecting privacy have been local: there is an intuitive connection between the place where I am or store things and the laws that protect me and my information. So to arrest me, or get access to my home or papers, the local police must turn to local procedures that restrain their conduct. But today, the physical location of data is often meaningless: sensitive, important information that I easily access and handle in my home or office may be stored in a distant country, or may have no identifiable location at all — some service providers automatically divide even simple emails into “shards” that are constantly redistributed among servers in different countries to achieve efficiency. So if my most precious personal and financial information is stored someplace “in the cloud,” what country’s laws protect it?

The Supreme Court was faced with this question in March 2018 in a case where Microsoft was ordered to turn over emails to which it could easily gain access in the US, but which were physically stored on a server in Ireland because the account holder was from there. The core question was whether Ireland had an interest in regulating police access to data stored on its territory, or whether US investigative authorities could simply go ahead and get an order for their production in the US without even informing Ireland. On this the parties and scores of amici curiae were starkly divided. Before the question could be decided, however, Congress passed the CLOUD Act, which mooted the pending case. The Act’s core provision is that if a service provider in the United States is appropriately ordered to turn over information to which it has access, it must do so no matter where the information is stored – unless it can show that the data involved is stored in a friendly country whose privacy laws would thereby be violated. The CLOUD Act‘s substitution of access location for storage location, coupled with international coordination, is certainly an innovative, and probably a positive, step forward. The key may be whether other countries ultimately pursue the invitation to work with US lawmakers and investigators, or come up with an alternative, so that an appropriate and internationally acceptable balance can be found.

I would be especially interested in thoughts any of you may have about whether this approach is likely to gain support in your own communities.

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Fred Davis is Of Counsel in the New York and Paris offices of Debevoise & Plimpton LLP, and a member of the New York and Paris Bars. He is also a Lecturer in Law at Columbia Law School where he teaches courses on comparative criminal procedures and cross-border criminal investigations. His book American Criminal Justice: An Introduction will be published soon by the Cambridge University Press.

A Holiday Retrospective from the Editors: The Year in International Enforcement Law

January 11, 2019 by Bruce Zagaris and Zarine Kharazian Leave a Comment

The IELR sends everyone best wishes for a warm and joyous holiday season. 2018 was momentous for the international enforcement community.

On bilateral enforcement cooperation, the IELR reported on the U.S. and Brazil starting a permanent forum on security, covering inter alia: drug and money laundering issues; alien smuggling, human trafficking, and illegal migration.

Among the stories we covered were also many battles in cybercrime. The IELR covered some U.S. indictments of Chinese state hackers, alleging stealing technology and a coordinated announcement by five governments condemning the cybercirmes and theft of IP. The U.S. imposed sanctions for Russian cyber interference with the 2016 U.S. elections and, and there were also developments on U.S. and international law on election interference. The Democratic National Committee sued the Russian government and the Trump campaign for election interference and related offenses.

Tax transparency and enforcement remained in the news with the EU proposal requiring reporting on tax intermediaries of aggressive tax planning and the OECD initiatives on mandatory disclosure rules to combat CRS avoidance and offshore structures and preventing abuse of RBI schemes to circumvent the CRS. The IELR covered several prosecutions arising out of the Paradise Papers. The U.S. revised Voluntary Disclosure rules at the end of the year and indicted professionals and a U.S. taxpayer for tax offenses arising from the Panama Papers. The OECD and World Bank published a guide for more effective cooperation between tax authorities and anti-corruption authorities in combating tax and corruption crimes. The German police conducted a search warrant of Deutsche Bank for tax crimes arising out of the Paradise Papers. Five countries formed the Joint Chiefs of Global (Tax) Enforcement (Jr), illustrating the emerging coordination strategy of minilateral alliances and a shift from treaties to informal, nonbinding soft-law accords and transnational governmental networks.

With respect to money laundering, bank secrecy, and transparency, the President lost on three decisions on the alleged violations of the emoluments clause. Meanwhile, FinCEN issued an advisory on human rights abuses by corruption senior political figures. The ICJ declared jurisdiction and adjudicated a suit brought by Equatorial Guinea against France. The IMF adopted a new framework for anti-corruption and good governance. Investigations in multiple countries against the Danish Bank for money laundering in its Estonian branch continued. The EU adopted 5^th AML/CFT Directive and the Directive on the Use of Financial and Other Information. The IELR also reported on the FATF report on intermediaries and beneficial ownership information and its report on professional money laundering. The FAFT-MENAFATF Joint Plenary focused on combating terrorism-financing, human trafficking, and AML enforcement.

On transnational corruption the independent counsel and the U.S. Department of Justice prosecuted many high-visibility cases involving violations of the Foreign Agents Registration Act (FARA), including ones involving former Trump campaign manager Paul Manafort and his assistant Rick Gates, and the DOJ released 50 advisory opinions on FARA. The IELR covered the progress of prosecutors in Malaysia, the U.S. and Switzerland on 1MDB cases, including ones in Malaysia, Switzerland. In Peru, the Supreme Court revoked Fujimori’s pardon and returned him to prison. The U.S. entered into many joint settlements with foreign governments, including on Keppel and Petrobras. The IELR covered the U.S. Justice policy on coordinated resolutions in corporate penalties. The World Bank Office of Suspension and Debarment published a new report.

The major focus of international enforcement of the Trump Administration continued to be on migration. Madeline Henshaw-Green covered many migration enforcement developments, such as the Attorney General Jeff Sessions’ elimination of the requirement of full hearings for asylum seekers, and the rise of xenophobic, anti-immigrant policies in American and European governments. The U.S. courts required that the executive branch dismiss an alien charged with a narcotics crime, while detained for deportation purposes. Prof. Plachta covered recent initiatives by international organizations, such as the UNODC and EU to tackle the problem of migrant smuggling. Zarine Kharazian reported on the UN General Assembly’s approval of a sweeping migration accord. A U.S. court sentenced a Bosnian Serb for concealing participation in war crimes.

On counter-terrorism, international organizations updated their counter-terrorism strategies. The IELR covered a case in which the U.S. appellate court barred the U.S. government from forcibly transferring a U.S. ISIS suspect. Prof. Plachta reported on a UN Secretary-General report on the threat posed by ISIL and the European Parliament’s recommendation on terrorism-financing.

With respect to human trafficking, the U.S. Congress enacted a law enabling civil and criminal liability for interactive computer services.

Economic sanctions continued to be a hot area. In particular, the Trump Administration announced its withdrawal from the JCPOA and re-imposition of unilateral Iran sanctions. In response the EU started a process to activate blacking statute against the unilateral sanctions and initiate a vehicle to fund Iran transactions to circumvent the unilateral U.S. sanctions. Maximilian Raileanu and I reported on the ICJ decision on Iran’s application to start proceedings against the U.S. for violating the Treaty of Amity, Economic Relations, and Consular Rights and subsequently I reported on the ICJ ‘s grant of provisions measures to Iran with respect to the U.S. sanctions. Treasury issued CAATSA reports on Russian senior foreign political officials. BIS published a notice requesting information on emerging technologies. The IELR covered Russia’s existing and anticipated measures in response to international economic sanctions against Russia. The U.S. armed and action against circumventions of North Korean sanctions. Pres. Trump reversed ZTE penalties in exchange for trade concessions with China. The U.S. and the Lima Group put diplomatic and financial pressure on the Maduro regime in Venezuela. The U.S. banned the Venezuela’s new crypto-currency.

Prof. Plachta reported on the Council of Europe’s resolution on the destruction and illegal trafficking of cultural heritage.

Maria O’Sullivan discussed the Organization for the Prohibition of Chemical Weapons (OPCW) decision to attribute blame for chemical weapons violations, setting the stage for accountability for the attacks on civilians in Syria and the Skripals and Sturgess cases in Britain. In this regard, I reported on Britain’s charges against two Russians in the attacks against the Skripals and on U.S. sanctions on Russia for violation of the Chemical and Biological Weapons Treaty.

On transnational organized crime, the Council of Europe adopted a resolution on fighting organized crime through confiscation. The U.S. charged four Chinese and six U.S. residents in international drug and laundering conspiracy involving opioids. Prof. Luz Nagle discussed how the jailing of Gustavo Villegas, a peacemaker, threatened Colombia’s demobilization of transborder criminal organizations and urban criminal gangs. I reported on Guatemala’s denial of visas to principal officials of the International Commission against Impunity in Guatemala (CICIG), the major body for prosecuting organized crime and corruption, as the U.S. stood silent.

With respect to international anti-trust, the U.S. Antitrust Division led discussions on achieving a multilateral framework in competition law investigation and enforcement. Société Général agreed to pay $1.3 billion to settle U.S.-French charges on bribes to Libya and Libor fixes.

On international environmental enforcement Henshaw-Green reported on the Chinese government’s reinstating the ban on the use of rhino and tiger parts after outcries from environmental groups. I covered INTERPOL’s coordinating international enforcement operations against marine pollution.

With respect to international securities enforcement, I reported on the actions by U.S. and U.K. enforcement and regulatory authorities against stock manipulation (i.e., pump and dump) scheme with the use of offshore entities.

Concerning extraterritorial jurisdiction I reported on the Pakistan-U.S. clash over a U.S. diplomat’s accidental killing of a motorcyclist. Kharazian reported on the suit brought by the parents of Otto Warmbier against N. Korea under the FSIA for their son’s torture and wrongful death.

With respect to international human rights, Prof. Plachta reported on the ECtHR decision in Krombach/Bamerski and the ECtHR Grand Chamber’s decision (Nait-Liman v. Switzerland), adopting a restrictive interpretation the right of access to a court in torture cases.

Extradition and extradition alternatives stories, including Ecuador’s conferring citizenship on Julian Assange, remained important. A major story was Canada’s arrest and granting bail to Meng Wanzhou, Huawei’s CFO, on a U.S. extradition request. The U.S. demanded the release of Americans forbidden from leaving China until a fugitive father Liu Changming returns. The U.S. sting operation snagged a Chinese intelligence officer in Belgium who was sent to the U.S. for conspiring and attempting to commit economic espionage and steal trade secrets from multiple U.S. aviation and aerospace companies. Prof. Michael Plachta, our correspondent in the EU, continued his coverage of efforts, including by the European Court of Human Rights, to hold accountable extralegal kidnapping in the war against terrorism. Plachta also covered the ne bis in idem principle as interpreted by the Court of Justice of the EU and the same courts allowing EU Members to refuse execution of European Arrest Warrants from Poland. Plachta reported on a case allowing a European Arrest Warrant to the UK despite Brexit.

Yurij Nemets covered INTERPOL’s trimming the individual right to access information in its files.

With respect to international organizations, INTERPOL and UNODC heads discussed measures to strengthen enforcement cooperation.

With respect to international evidence gathering, prior to the resolution by the U.S. Supreme Court of the Microsoft challenge to the warrant provisions of the Stored Electronic Communications Act, President Trump signed into law The Clarifying Lawful Overseas Use of Data (“CLOUD”) Act on March 23, 2018. It establishes processes and procedures for law enforcement requests for data in other countries. The Act may reach certain data located in other countries. The Act also allows certain foreign governments to enter into new bilateral agreements with the U.S. that will prequalify them to make foreign law-enforcement requests directly to U.S. service providers, rather than via the U.S. government under a mutual legal assistance treaty. Zarine Kharazian covered U.S. v. Microsoft Corp. She and I also covered the state of the playing field within and outside the U.S. after the enactment of the CLOUD Act.

With respect to international tribunals, Prof. Plachta discussed the Khmer Rouge Tribunal convicted two persons of genocide and the ICC Prosecutor’s requests for ruling on jurisdiction in order to start an investigation, and the recent developments in the Palestine situation before the ICC.

In the gap of actions by international tribunals, national courts in France, Germany, Sweden and the U.S. acted on alleged atrocities in Rwanda, Syria and elsewhere. Prof. Plachta discussed the MH17 joint investigation team’s interim report pointing at the Russian Federation for liability in the downing of Malaysian Airlines flight MH17 over the conflict zone in eastern Ukraine in 2014.

Non-governmental organizations continued to play major roles. Fair Trials and REDRESS released a report on how the use of evidence obtained by torture is still widespread in criminal trials across the world. Linda Ramirez reported on the case brought by the Center for Constitutional Rights against the Assad regime for the death of war reporter Marie Colvin.

Professor Michael Plachta contributed many articles on economic integration and international enforcement, including the outcomes of the meetings of the EU’s Justice and Home Affairs Council, including its non-cash fraud directive, cross-border access to e-evidence, and enforcement cooperation with external actors, including the U.S. and the Western Balkans. I covered the enforcement cooperation provisions in the Trans-Pacific Partnership.

Zarine Kharazian has continued her stellar work as the assistant editor. Her work on the blog has resulted in 6,155 visits as of December 23 and reached 378 visits on Dec. 22. She continues almost every weekend to play in bands. Our new intern Evan Schleicher has contributed a blog post on the Russian seizure of Ukrainian vessels and a decision by a German appellate court in a conviction of persons for atrocities in Rwanda.

In December William Hein and Co. started carrying the IELR and has archived the IELR back to its first publication in 1985. Hein joins LexisNexis, WestLaw, and EBSCO as databases carrying the IELR. Premium subscribers can use the IELR search engine to identify and read all the back issues on our website.

We hope you enjoyed reading the IELR in 2018 as much as we enjoyed publishing it!

Best wishes for the New Year,

The IELR Team

This retrospective will be published in Volume 35, Issue 1 of the International Enforcement Law Reporter.

“Pirates” Plundering World War II Shipwrecks for High Tech Demand

September 7, 2018 by Luz Nagle Leave a Comment

Naval and merchant marine shipwrecks from World War II rest on the ocean floor of the South Pacific and the South China and Java seas, bearing silent witness to extreme violence and catastrophic loss of life. The sense of nations has long been that sunken warships and the sailors who perished in them should be treated as sacrosanct war graves to be left undisturbed. But startling new reports assert that unscrupulous Chinese and Southeast Asian scrap metal dealers in league with modern-day pirates are desecrating and plundering shipwrecks at an alarming rate for the valuable materials from which the ships were made.

The clandestine breaking up and scrapping of underwater wrecks following violent conflicts is an age-old pursuit. In eras past, treasure hunters searched for sunken vessels engaged in commerce or privateering to recover their cargoes and historical artifacts of interest to collectors. When more robust salvaging became viable with technologies of the day, some parts of shipwrecks were recovered that were particularly valuable, such as bronze propellers or artillery pieces. Otherwise, the superstructures were thought to be of little value and sunken military ships and the crews that went to their eternal rest in them were left largely undisturbed for wont of “treasure”. The ushering in of the nuclear age and atomic testing changed that lack of interest in underwater wrecks from World War II.

Unlike post-World War II shipwrecks, mid-20^th century sunken vessels are particularly prized by metal scrappers for three reasons: (1) there are a lot of them waiting to be exploited and, with the exception of sunken submarines, the locations are well documented in naval records and on nautical charts; (2) the metallurgy used in building the ships is of a much higher quality than that used in ships during the late 19^th and early 20^th centuries; and (3) more importantly, the steel pre-dates atomic blasts, which makes the steel, known as “low background steel”, highly desirable for the fabrication of scientific instruments and medical equipment. Once the radiation-free steel and other metals enter the recycling pipeline, it is next to impossible to trace the origin of the metals or hold accountable the illegal scrappers and corrupt scrap metal brokers/dealers desecrating warship wreckage for commercial profit.

The Guardian newspaper reported in November 2017 that dozens of World War II shipwrecks have been illegally and irreparably desecrated by metal scrappers posing as fishermen operating off the coasts of Malaysia, Singapore, and Indonesia.[1] Monitoring efforts indicate that more than 40 ships containing the remains of more than 4,500 sailors and servicemen from Great Britain, the United States, Australia, the Netherlands, and Japan have been partially or totally destroyed.[2] The UK’s Daily Mail reported in August 2018 how Chinese-owned salvage barges drop massive anchors onto the wreck sites to smash the superstructures into pieces that can then be hauled to the surface, transported on to Indonesia where it is processed, and then sent on to China or disappears into the steel market.[3]

Some of the ships desecrated are storied vessels sunk during epic battles early in World War II. The HMS Exeter, HMS Encounter, and HMS Electra, lost during the Battle of the Java Sea in 1942 contain the remains of more than 150 sailors, and the battlecruiser HMS Repulse and the battleship HMS Prince of Wales, which Japanese aircraft sunk in the South China Sea off the coast of Malaysia on December 10, 1941 with the loss of more than 800 naval personnel, have been pilfered by scrappers. One Australian warship, the HMAS Perth, sunk by Japanese attacks in the Battle of Sundra Strait off Java early in 1942 with 353 killed, was discovered in 2013 to have lost much of its superstructure, turrets, decking, and munitions to salvagers from Indonesia that used explosives and barges mounted with crane grapplers to break up the wreck.[4]

Dutch and American warships lost in the Battle of the Java Sea with hundreds of sailors killed have also been partially damaged or have disappeared completely. In late 2016, researchers discovered that the Dutch cruisers HNLMS De Ruyter, HNLMS Java, and the destroyer HNLMS Kortenaer had been pilfered by unknown scrappers. Sonar readings indicated that “although the imprints of the three wrecks were there, two of the ships had completely vanished” and that while the Kortenaer was still present, a “huge chunk” of it had disappeared.[5] The American submarine USS Perch, which was scuttled without loss of crew, disappeared at the hands of illegal salvagers sometime between its rediscovery in 2006 and its confirmed disappearance in 2016, and the cruiser USS Houston, sunk in the Battle of Sundra Strait with the loss of some 650 sailors and marines, was discovered during a survey in October 2015 to have been extensively pilfered by illegal scrappers.[6]

Japan has also been victimized by illegal scrappers, including the pillaging of three cargo vessels, the Kokusei Maru, the Hiyori Maru, and the Higane Maru, all three torpedoed and sunk in the Java Sea on the same day in 1944 with the loss of 128 sailors.[7] Known for many years as the Usukan wrecks by recreational divers and treasured for their pristine condition and rich marine life, the wrecks have been illegally salvaged for their scrap metal and disappeared.[8]

Preservation and Protection under Domestic and International Law

Conventions, customary international law, bilateral treaties, and domestic legislation offer some protection and enforcement capacity for sunken warships, particularly those having human remains. The Geneva Convention on the High Seas established that under international law, “warships on the high seas have complete immunity from the jurisdiction of any State other than the flag State.”[9] Yet, preservation and protection of World War II shipwrecks pose challenging legal and practical issues for the nations affected. While some ships containing human remains are considered war graves and protected under domestic legislation, others containing human remains may not be so protected, and sunken warships not considered war graves may fall outside controlled protection, although they remain possessions of the nation under which the ships were flagged.

Under customary international law, sunken warships remain the possession of the flag nation until a formal abandonment of title occurs. For instance, in asserting possession over the wreck of the CSS Alabama, a Confederate States warship located in non-territorial waters, a federal court in the United States recognized that consistent with international law warships sunk during armed conflict and whose remains “are clearly identifiable as to the flag state of origin are clothed with sovereign immunity and therefore entitled to a presumption against an abandonment of title.”[10] Moreover, the court noted, under international law, warships “sunk during military hostilities are presumed not to be abandoned and are considered not subject to salvage in the absence of express consent,”[11] and legal title is not lost through the “mere passage of time in the absence of abandonment. They do not lose title during combat in the absence of an actual capture of the warships.”[12]

All nations are stakeholders in the enterprise of protecting sunken warships. It is hard to imagine a more noble obligation of nations to honor a shared historical legacy and the souls of service members who rest forever in the depths of the sea. Such a shared interest was articulated in the Sea Hunt case in which a United States court found that “protection of the sacred sites of other nations thus assists in preventing the disturbance and exploitation of our own.”[13] This solemn obligation among nations is based on the principle of comity. Comity in international law relies on the recognition and exercise of discretion and courtesy among and between states parties.[14] This aspiration toward mutual cooperation was conveyed in the Buenos Aires Draft Convention on the Protection of the Underwater Cultural Heritage of 1994 (later adopted by UNESCO in 2001), which acknowledged “the importance of the underwater cultural heritage as an integral part of the cultural heritage of humanity and a particularly important element in the history of peoples, nations, and their relations with each other concerning their shared heritage.”[15] The UNESCO Convention on the Protection of the Underwater Cultural Heritage, among other things, obliges States Parties to protect “all underwater traces of human existence” including sites and wrecks “such as a vessel, aircraft, other vehicles or any part thereof, its cargo or other contents, together with its archaeological and natural context.”[16] The Convention imposes on State Parties to take “appropriate measures in conformity with this Convention and with international law that are necessary to protect underwater cultural heritage, using for this purpose the best practical means at their disposal and in accordance with their capabilities.”[17] The Convention also states that underwater cultural heritage shall not be commercially exploited,[18] and that States Parties “shall ensure that proper respect is given to all human remains located in maritime waters.”[19]

This should protect warships from being torn apart by scrappers. But how can such protections be enforced? In addition to preserving underwater wrecks, the UNESCO Convention imposes on States Parties the duty to prevent their flagged vessels from engaging in illegal salvaging, seize illegal recovered underwater heritage, inform the States affected, secure the heritage recovered, participate in mutual assistance and information sharing, and impose sanctions on parties involved in illegal salvaging (articles 16-19). Unfortunately, nations involved in the illegal scrapping of World War II warships are conspicuously absent from the list of States Parties, specifically China, Malaysia, and Indonesia. Moreover, the United States, Great Britain and Australia are also non-parties to the Convention.

Domestic Legislation

The United States, Great Britain, and Australia have crafted domestic legislation to protect their sunken warships from disturbance and plunder. While all carry civil penalties in the form of fines, and in the case of the United States impoundment of the salvage vessel and equipment, none have criminal penalties that would involve imprisonment.

British Protection of Military Remains Act 1986

In 1986 Great Britain enacted the Protection of Military Remains Act[20] intended to protect warships and human remains from unlawful pillaging and disturbance. The Act makes no distinction between warships lost during conflict or peacetime. The primary intention is to treat sunken warships containing human remains as war graves. While all military aircraft are designated as protected under the act, warships, on the other hand, are designated as being under a protected status or a controlled status. Protected status is a less stringent oversight of sunken warships. Recreational diving and scientific study are generally permitted as long as no acts are taken to penetrate the wreck, disturb it in any way, or remove any objects.[21] Controlled status prohibits all activities involving warships that have been deemed war graves without express authority license or permission from the Secretary of State. In addition, an area around the site, the debris field, may also be designated as controlled. Controlled sites are designated as such on admiralty charts and a C buoy is placed at the side of the wreck. While one would assume that British warships sunk with the loss of life would be designated as controlled, such is not the case. In the case of British warships lost in the South China Sea and in the Java sea during World War II, the HMS Prince of Wales and the HMS Repulse have been designated as controlled sites, while other British warship wrecks containing human remains have yet to be designated as controlled. The British Act sets forth enforcement provisions that include penalties that seem hardly punitive: Conviction for violating the Act entails merely a fine and no imprisonment. Given that jail time is not a possibility for desecrating a war grave, the incentive to continue scrapping sunken warships in violation of British law far outweighs the penalty for being caught.

Australia Historic Shipwrecks Act of 1976

In 1976, Australia passed the Historic Shipwrecks Act. The Act seeks to protect the sovereignty of, among other vessels, Australian warships sunk in combat more than 75 years ago within Australian territorial waters and above the Australian continental shelf. Australian naval ships that were sunk in World War II include the light cruiser HMAS Sydney, sunk by a German raider on November 19, 1941. The Sydney is protected under the Historic Shipwrecks Act because it went down in territorial waters more than 75 years ago. But other storied Australian warships that went down in combat in the Java Sea are not protected under the Act. Though shipwrecks, like the HMAS Perth, which because it lies in international waters is dependent upon the cooperation of nations to protect it under customary international law.[22] Protection, however, is only as good as the ability of nations to monitor the sites in a vast sea. Monitoring is expensive, and it is difficult logistically to maintain patrol vessels on site for extended periods, or to respond to reports that illegal scrapping is occurring.

United States Sunken Military Craft Act of 2004 (SMCA)

The United States government enacted the Sunken Military Craft Act in 2004.[23] This Act is intended to protect and preserve warships in both international waters and in the maritime zones of foreign nations, and enforces the absolute sovereignty of the United States over its lost military vessels.[24] According to one legal scholar, the Act “protects ‘the remains and personal effects of the crew and passengers of a sunken military craft that are within its debris field.’ Thus, the SMCA offers protection to human remains, not on the basis of whether the remains are civilian or military, but by designation of the shipwreck as military or non-military, in a fashion consistent with the above discussed common law precedent.”[25]

While criminal penalties are not provided under the Act (only a civil fine), it does appear to have more teeth than the British Act. Section 1404 sets forth that in addition to a fine of up to $100,000 for each violation of the Act, any vessel engaged in violating the act can be held in rem, and in cases where there is eminent evidence or threat of disturbance of a protected shipwreck, any steps necessary to interdict or abate the disturbance or desecration may be taken. This could infer the use of force to protect the sovereignty of a warship and the remains of sailors within the wreckage or in the debris field.

Bilateral Treaties to Protect Sunken Warships and Mutual Cooperation

The protection of sunken warships is also covered under bilateral agreements between nations. For example, the 1902 Treaty of Friendship and General Relations between the United States and Spain provides that “[i]n cases of shipwreck . . . each party shall afford to the vessels of the other, whether belonging to the State or to individuals, the same assistance and protection and the same immunities which would have been granted to its own vessels in similar cases.”[26]

Impacted nations work continually outside the constraints of international conventions to take proactive and collaborative measures to protect sunken World War II warship. In October 2015, for instance, government, military and law enforcement officials from Australia, the UK, the United States, and Indonesia gathered to review current protections of sunken warships in the Java Sea and to seek ways to strengthen cooperation in preserving them. In addition to reviewing ways to protect the warships, the nations agreed to expand public relations efforts to create and sustain awareness about preserving the wreck sites as historical legacies. “The parties agreed to open a museum exhibit in Indonesia highlighting the history of the wrecks, which will help educate residents and foster a sense of joint responsibility for respecting the sanctity of those men lost in service.”[27] In addition to meetings, the participant navies conducted several dives to the HMAS Perth and the USS Houston to assess what damages had been done to the ships by illegal salvaging. Actions taken included placing buoys around the wreck sites and videotaping the conditions of the vessels for further monitoring and study.

Conclusions

The challenge facing nations trying to protect their sunken warships and the souls that rest in them is several-fold: (1) there is greater urgency than ever before to protect the warships from destruction by scrappers who want the valuable “pre-atomic” steel and other metals for high-tech uses; (2) there are no criminal penalties involving jail time for those who desecrate the sites, that would discourage some illegal plundering, (3) the option of use of force to protect the sites remains vague and ambiguous and should become part of the conversation about enforcement of foreign shipwrecks, and (4) more clear guidelines need to be articulated in how to respond and deal with scrappers when they are caught in flagrante at wreck sites. In addition, marking wreck sites on admiralty charts and placing buoys at sites do not protect the ships, but rather act as homing beacons for pirates to plunder. Just as the demand for the steel of their superstructures is driven by the needs of high tech industry for specific kinds of metals, high tech solutions to protect the warships from further desecration should be applied, such as the placement of sophisticated seismic and other monitoring technology around the wreckage sites that would alert authorities of disturbance by illegal scrappers, and where possible, deploying regular aerial surveillance over warship sites by unmanned aircraft. In the words of federal district court judge Steven Merryday writing about the desecration of the 19^th century Spanish warship Nuestra Señora de las Mercedes, “the ineffable truth” about the remains of the sunken warships, their contents and crews who remain with them, “are entitled in good conscience and in law to remain undisturbed in perpetuity . . . and despite any man’s aspiration to the contrary.”[28]

Luz E. Nagle is a Professor of Law at Stetson University College of Law where she teaches international law, international criminal law, international business transactions, and seminars on terrorism, human trafficking, and transborder crime. She is a former Colombian judge and worked in Microsoft Corporation’s Latin America Anti-Piracy Enforcement group. She holds an LL.D. from the Universidad Pontificia Bolivariana, a J.D. from the College of William & Mary, an LL.M. in international law from UCLA School of Law, an M.A. in Latin American Studies from the University of California Los Angeles, and two certifications in national security law from the University of Virginia Center for National Security Law.

[1] Oliver Holmes et al., The World’s Biggest Grave Robbery: Asia’s Disappearing WWII Shipwrecks, The Guardian, Nov. 2, 2017, https://www.theguardian.com/world/ng-interactive/2017/nov/03/worlds-biggest-grave-robbery-asias-disappearing-ww2-shipwrecks.

[2] Id.

[3] Abul Taher and Nick Craven, Desecration of British War Graves: Chinese PIRATES Plunder 10 Shipwrecks Carrying Remains of UK’s Second World War Heroes, Daily Mail.com, Aug. 18, 2018, http://www.dailymail.co.uk/news/article-6074441/British-war-graves-desecrated-Chinese-pirates-plundering-Second-World-War-shipwrecks.html.

[4] Linton Besser et al., HMAS Perth: WWII Warship Grave Stripped by Salvagers, ABC News Australia, Dec. 13, 2013, http://www.abc.net.au/news/2013-12-13/outrage-as-warship-grave-stripped-by-salvagers/5156320.

[5] Five WW2 Warships and A Submarine Have Vanished from the Seafloor, IFL Science, Nov. 17, 2106, https://www.iflscience.com/editors-blog/five-ww2-warships-submarine-vanished-seafloor/.

[6] Id., and Partner Nations Preserve, Protect Sunken WWII Wrecks, US Navy Public Affairs new release, Oct. 29, 2015, https://www.navy.mil/submit/display.asp?story_id=91776.

[7] Oliver Holmes et al., The World’s Biggest Grave Robbery: Asia’s Disappearing WWII Shipwrecks, The Guardian, Nov. 2, 2017, https://www.theguardian.com/world/ng-interactive/2017/nov/03/worlds-biggest-grave-robbery-asias-disappearing-ww2-shipwrecks.

[8] Id.

[9] Geneva Convention on the High Seas, Art. 8, April 29, 1958, 13 U.S.T. 2312, T.I.A. S. No. 5200. For an in-depth discussion of sovereign immunity of sunken warships, see Odyssey Marine Exploration, Inc. v. Unidentified Shipwrecked Vessel, 675 F.Supp.2d 1126, 1143 (M.D. Fl. 2009).

[10] U.S. v. Steinmetz, 763 F.Supp. 1293, 1299 (D.N.J. 1991).

[11] Id.

[12] Id.

[13] Sea Hunt, Inc. v. Unidentified Shipwrecked Vessel or Vessels, 221 F.3d 634, 647 (4^th Cir.2000).

[14] Restatement (Third) of Foreign Relations Law § 403 cmt. a (1987), see also 2 Thomas J. Shoenbaum, Admiralty and Maritime Law, § 16-7 at n. 27 (5^th ed. 2011).

[15] Buenos Aires Draft Convention on the Protection of the Underwater Cultural Heritage, International Law Association, August 1994, pmbl, 6 Benedict on Admiralty, Doc. 4-17.

[16] Convention on the Protection of the Underwater Cultural Heritage art. 1(1)(a), Nov. 2, 2001, 2562 U.N.T.S. 3 (entered into force Jan. 2, 2009).

[17] Id. art. 2(4).

[18] Id. art. 2(47).

[19] Id. art. 2(9).

[20] Protection of Military Remains Act, 1986, c. 35 (Eng.).

[21] Protection of Military Remains Act, 1986, c. 35 (Eng.) sec. 1(2)(b).

[22] Commemorating and Protecting HMAS Perth, Semaphore Issue 2, 2017, http://www.navy.gov.au/media-room/publications/semaphore-commemorating-and-protecting-hmas-perth-i.

[23] Sunken Military Craft Act, Pub. L. No. 108-375, 118 Stat. 181 (codified at 10 U.S.C. § 113 Note (2004)).

[24] The Act also “provides authority for the protection of foreign sunken military craft located in U.S. internal waters, territorial sea, and the contiguous zone” (quoting Ole Varmer, Closing the Gaps in the Law Protecting Underwater Cultural Heritage on the Outer Continental Shelf, 33 Stan. Envtl. L.J. 251, 277 (2014)).

[25] Ole Varmer, Closing the Gaps in the Law Protecting Underwater Cultural Heritage on the Outer Continental Shelf, 33 Stan. Envtl. L.J. 251, 277 (2014).

[26] Treaty of Friendship and General Relations, U.S.-Spain, Art. X, July 3, 1902, 33 Stat. 2105.

[27] Partner Nations Preserve, Protect Sunken WWII Wrecks, Navy.mil, story number : NNS151029-17, Oct. 289, 2015, https://www.navy.mil/submit/display.asp?story_id=91776.

[28] Odyssey Marine at 1129.

Our Contributors

Michael W. Plachta

Michael Plachta, Professor of law (Ph.D, Jagiellonian University, Cracow, Poland) served as the former Dean of the Faculty of Law of Gdansk University, Poland. He has also served as a research fellow at numerous institutions, including Max-Planck Gesellschaft zur Förderung der Wissenschaften, in Freiburg, Germany; and All Souls College, Oxford University, in the UK. He has served as an invited expert, lecturer, and chair at various academic and diplomatic conferences. He was a Member of the Polish delegation to the Diplomatic Conference for the establishment of the International Criminal Court (ICC) in June 1998 in Rome.

In addition, Professor Plachta is the author of more than 700 publications, in Polish, English and German, including: TRANSFER OF PRISONERS UNDER INTERNATIONAL INSTRUMENTS AND DOMESTIC LEGISLATION. A COMPARATIVE STUDY, published by the Max-Planck Institute for Foreign and International Criminal Law, Freiburg (Germany) (1993), 600 pages.

Yuriy Nemets

Yuriy Nemets is the managing member at NEMETS, a law firm based in Washington, DC. Yuriy has practiced law for over fifteen years. He specializes in domestic and international litigation and arbitration, international extradition, INTERPOL defense, corporate, banking, transportation, international trade and investments, and intellectual property law. He has authored publications about INTERPOL, international extradition, corporate, banking, and intellectual property law. Yuriy received his Juris Doctor (JD) and Master of Laws (LLM) degrees from Northwestern University School of Law and LLB and PhD in law degrees from Moscow State Law Academy (Russia). Prior to starting his own practice, Yuriy worked in one of the most prominent litigation law firms in the United States, ranked top 30 by Vault Law 100, and in one of the most reputable litigation law firms in Russia. In addition, Yuriy worked as an in-house counsel at YUKOS, one of the world’s largest privately owned energy companies at the time, where he headed the company’s litigation and recoveries department.

Peter Hardy

Peter Hardy is a partner in the white collar defense/internal investigations group at the Philadelphia office of Ballard Spahr LLP, and is the head of the firm’s Anti-Money Laundering team. Peter spent more than a decade as a federal prosecutor before entering private practice, serving as an Assistant U.S. Attorney in Philadelphia working on financial crime cases, and serving as a trial attorney for the Criminal Section of the Department of Justice’s Tax Division in Washington, D.C. He is the author of Criminal Tax, Money Laundering, and Bank Secrecy Act Litigation, a well-reviewed and comprehensive legal treatise published by Bloomberg BNA. He is also the curator of Ballard Spahr’s blog on financial crime, Money Laundering Watch.

Peter Bowal

Peter is a Professor of Business Law at the University of Calgary. He has served as Fulbright Fellow (Arizona State University) and Fulbright Research Chair (Michigan State University) as well as Judicial Fellow to the Chief Justice of the United States Supreme Court. His primary academic interest is in corruption, whistleblowing and Rule of Law issues. He has served as a Justice of the Peace for 12 years in Canada, and has taught law and conducted research in many countries around the world.

Luz E. Nagle

Konstantinos D. Magliveras

Konstantinos D Magliveras holds a D. Phil from Oxford University in International Law. He is Professor in the Law of International Organizations, Department of Mediterranean Studies, University of the Aegean, Greece. He is also a practicing lawyer in Athens. His interests include international criminal law, regional human rights protection, and transnational migration. In these areas he has published extensively. He is also a Member of the International Law Association’s Committee on nuclear weapons, non proliferation & contemporary international law. He may be contacted at: kmagliveras@rhodes.aegean.gr.

The CLOUD Act: Arguments For and Against

April 10, 2018 by Zarine Kharazian Leave a Comment

The DOJ and Microsoft have both filed motions to dismiss as moot the seminal data privacy case before the Supreme Court this term, United States v. Microsoft Corp. At issue in the case is whether the warrant provisions of the Stored Communications Act (SCA) apply extraterritorially, such that they compel Microsoft, an electronic service provider to produce private electronic communications stored on servers in Ireland for the United States government.

In their respective motions, the two parties agree that there was no longer a “live case or controversy” with respect to the question presented, due to a piece of recently-enacted legislation called the Clarifying Lawful Overseas Use of Data Act (CLOUD Act). Congress attached the bipartisan legislation to an omnibus spending bill, and it was signed into law on March 23, 2018. The act states as follows:

“A provider of electronic communication service or remote computing service shall comply with the obligations of this chapter to preserve, backup, or disclose the contents of a wire or electronic communication and any record or other information pertaining to a customer or subscriber within such provider’s possession, custody, or control, regardless of whether such communication, record, or other information is located within or outside of the United States.”

The CLOUD Act also includes provisions governing foreign governments’ access to U.S.-held data. Human rights and privacy organizations have opposed this part of the act the most. The CLOUD Act authorizes the president to enter into reciprocal data-sharing “executive agreements” with foreign governments. Human rights and privacy organizations like the ACLU, EFF and Amnesty International have denounced the executive agreement mechanism for giving unfettered access to U.S.-held data to foreign governments.

It is worth noting, however, that the act puts forth significant requirements that foreign governments must meet in order to be considered a “qualifying foreign government” under the CLOUD Act. Among other requirements, the government in question must:

Have domestic law that “affords robust substantive and procedural protections for privacy and civil liberties in light of the data collection and activities of the foreign government that will be subject to the agreement;” and
Have instituted “appropriate procedures to minimize the acquisition, retention, and dissemination of information concerning United States persons subject to the agreement;” as well as that;
The government adopts procedures that guard against targeting, either direct or indirect, of a U.S. citizen or person located in the United States.

Furthermore, the act specifies further criteria for what constitutes a qualifying order for the disclosure of U.S.-held data to a foreign government. In particular, the order must:

Be for the purpose of “obtaining information relating to the prevention, detection, investigation, or prosecution of serious crime, including terrorism;”
Identify a “specific person” or other “specific identifier” as the object of the order;
Comply with the requesting country’s domestic law;
Be subject to independent oversight by a judge, court, magistrate, or other legal authority; among other qualifications.

One of the best dialogues on the act unfolded in a series of response essays on Lawfare.

Jennifer Daskal and Peter Swire argued in an initial essay posted on Lawfare that the CLOUD Act will enhance, rather than dilute, privacy and human rights protections on balance. They note that the status quo for requesting evidentiary data across borders – the MLAT process – is a cumbersome diplomatic channel ill-equipped for the sheer number of crossborder data requests currently in the system. As a result, countries are growing more and more frustrated with the MLAT process, which they view as not only cumbersome, but “imperialistic,” since it often requires getting a warrant from a U.S- based judge even if the data requested concerns a local criminal investigation.

Countries are thus turning to alternative measures to bypass the MLAT system, such as data localization laws that require that data be stored within the country. Data localization laws have been accused by critics of veiling anti-democratic motivations on the part of the instituting government – such as allowing for closer surveillance and identification of the local political dissidents. Furthermore, data localization laws lead to data decentralization, which in turn leads to multiple points of vulnerability in data providers’ security and privacy infrastructure.

Daskal and Swire also note that the CLOUD Act subjects foreign governments to regular compliance reviews by U.S. officials, which they praise as a novel opportunity for the U.S. to monitor how foreign governments use the data and guard against abuse.

Neema Singh Guliani from the ACLU and Naureen Shah from Amnesty International argue in a response essay that the CLOUD Act puts the privacy and security of individuals, particularly human rights activists at risk. “The very premise of the current CLOUD Act,” they write, “the idea that countries can effectively be safe-listed as human-rights compliant, such that their individual data requests need no further human rights vetting—is wrong.” Guliani and Shah argue that the CLOUD Act has inadequate safeguards for wide range of scenarios, such as when a country experiences a “rapid deterioration in human rights,” like Turkey did in mid-2016 following a coup attempt.

For the IELR Blog’s past coverage of the U.S. v Microsoft case, see here. For the full text of the Cloud Act, see here.

Iranian Hacking Raises Issues about Gaps in International Legal Frameworks involving Cyber-Attacks

New Article on the CLOUD Act in English and French

A Holiday Retrospective from the Editors: The Year in International Enforcement Law

“Pirates” Plundering World War II Shipwrecks for High Tech Demand

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The CLOUD Act: Arguments For and Against

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