Niagara International Moot Court Competition 2012-2013 Canada (Applicant) v.

United States (Respondent) The Case Concerning “The Terrorist List”
Competition organizers’ note: The “facts” set forth below are purely fictional and are designed only for educational use in the context of the Niagara Moot Court Competition. 1. Founded in 1990, Hamoukar, LLC. (in Arabic, ‫ )حموق ار‬is a Syrian corporation, principally engaged in the manufacture and sale of surgical and other hospital supplies. While all of its factories are located in Syria, Hamoukar maintains sales offices and warehouses in Egypt, Iraq, Jordan, and Saudi Arabia. In fiscal year 2009, Hamoukar employed over 15,000 workers in Syria and about 500 abroad, and reported sales in excess of US$150 million. 2. Hamoukar’s founder, president and chief executive officer is Mr. Hadi Kuzbari (‫هادي‬ ‫ري‬ ). Born in Damascus, Syria, in 1963, Kuzbari received a medical degree from the University of Damascus and a Masters in Business Administration from Wilfrid Laurier University in Waterloo, Ontario. All equity shares of Hamoukar are owned by Kuzbari and members of his immediate family. 3. Founded in 1993, Purcell Operations Corporation (POCo) is an Ontario corporation, principally engaged in the sale of medical equipment to private hospitals and clinics. Purcell’s founder and chief executive officer is Steven Purcell, a Canadian citizen, who was a friend and classmate of Kuzbari at WLU; the two men have worked closely together since graduation. 4. In 1995, POCo and Hamoukar entered a business arrangement whereby POCo sells Hamoukar-manufactured equipment to Canadian hospitals. Under this arrangement, Hamoukar receives 70 percent of the proceeds of any Hamoukar goods sold by POCo. Hamoukar bears the expenses of shipping and importing the goods into Canada, while POCo bears expenses related to marketing and storage in Canada. The arrangement has been very profitable for both companies; in 2005, POCo sold over Can$20 million of Hamoukar merchandise to Canadian purchasers. 1

5. POCo stores its inventory – including Hamoukar-manufactured equipment – in leased warehouse space in three locations: one in Port Coquitlam, British Columbia; one in SainteJulie, Quebec; and one in Detroit, Michigan. POCo leases the facilities in its own name from local owners under year-to-year leases. 6. On October 21, 2006, the Al-Qaida and Taliban Sanctions Committee announced that it had added Hamoukar, LLC, and Mr. Hadi Kuzbari to the consolidated list (Al-Qaida section) of the list of sanctioned individuals and entities associated with Al-Qaida established and maintained pursuant to Security Council Resolution 1267 (1999) and subsequent resolutions (the “UN Sanctions List.”). Both Hamoukar and Kuzbari remain on the list to this date. 7. According to the Committee’s official Narrative Summary of Reasons for Listing (subsequently made public pursuant to paragraph 19 of Security Council Resolution 1989 (2011), “Hamoukar, LLC, had significant financial ties to Al-Qaida financier Wa’el Hamza Abd al-Fatah Julaidan (QI.J.79.02) and provided financial support to several Al-Qaida associated entities included on the [UN Sanctions List]. Hamoukar, LLC, was one of the principal for-profit corporations active in Syria and Egypt providing support for the AlQaida network. Hamoukar customarily received funds intended for Al-Qaida associated entities in the form of fraudulent payments for goods and services, intermingled these funds with its own capital accounts, and then disbursed the funds to Al-Qaida associated entities in the form of fraudulent payments for consulting services. In addition, Hamoukar routinely hired and employed individuals included on the [UN Sanctions List] under assumed names in order to facilitate their travel, ostensibly for business purposes, across international borders. “Hamoukar and its founder and CEO, Mr. Hadi Kuzbari, have provided financial, material, and/or technological support to the Al-Qaida network. Associated entities received funding from Hamoukar and used Hamoukar as a front for fundraising and operational activities.” 8. On October 22, 2006, the U.S. Office of Foreign Assets Control announced that it had added Hadi Kuzbari and Hamoukar, LLC, to its Specially Designated Nationals (SDN) list. Pursuant to Executive Order 13224, this action had the effect of blocking all property and interests in property of Kuzbari and Hamoukar “that are in the United States, or that hereafter come within the possession or control of United States persons” and of prohibiting “any transaction or dealing by United States persons or within the United States” in such blocked property. As of January 1, 2011, OFAC had received no reports of property or transactions involving Kuzbari or Hamoukar. 9. On October 23, 2006, the Office of the Superintendent of Financial Institutions Canada issued a press release notifying Canadian financial institutions that Kuzbari and Hamoukar had been added to the UN Sanctions List, and directing all recipients to: • Freeze any assets of Kuzbari or Hamoukar in their possession or control; 2

Report immediately to the Anti-Terrorist Financing Group of the Royal Canadian Mounted Police (RCMP) and to the Financing Unit of the Canadian Security Intelligence Service (CSIS) any property of Hamoukar or Kuzbari in their possession or control that has been frozen; and Report monthly to the relevant regulator, which, in the case of federally regulated financial institutions, is the Office of the Superintendent of Financial Institutions (OSFI) on the aggregated value of frozen property in its possession.”

10. Toronto-Dominion Bank, a federally-regulated Canadian bank which is headquartered in Toronto, promptly reported that it held one account in the name of Hamoukar, LLC. It promptly froze the account, allowing neither deposits nor withdrawals from any of the accounts. Hamoukar and POCo accountants have explained that the account, which was opened in 1997, was used in connection with the long-standing Hamoukar/POCo sales arrangement. Once a month, POCo would deposit Hamoukar’s share of the proceeds of sales into the account; Hamoukar officials would then transfer most of the money to company accounts elsewhere in the world, leaving some balance to pay for local expenses relating to customs and importation. At the time of the freezing of the account, it contained Can$35 million. 11. On October 25, 2006, Public Safety Minister Stockwell Day announced that Canada had designated Hamoukar, LLC, as a terrorist group pursuant to the Criminal Code of Canada. In a Public Safety Canada press release, it was explained: “The objective of the listing is to help combat terrorist activities, including impeding terrorist financing. For example, the listing prohibits all persons in Canada as well as every Canadian abroad from knowingly dealing with assets owned or controlled by the Hamoukar, LLC. In addition, it is an offence to knowingly participate in, contribute to, or facilitate certain activities of a listed entity. Other related offences are set out in the Criminal Code.” 12. At Mr. Purcell’s request, on October 27, 2006, POCo’s attorney contacted Public Safety Canada. He described the Hamoukar/POCo sales arrangement, and explained that POCo currently held approximately $25 million worth of inventory subject to the agreement in its three warehouses. He then forwarded to Public Safety Canada, the RCMP, and the CSIS an itemized list of all inventory in POCo’s warehouses subject to the Hamoukar/POCo sales arrangement. 13. On October 30, 2006, Purcell contacted Kuzbari and informed him that POCo would need to terminate the Hamoukar/POCo sales arrangement. On advice of counsel – and with Kuzbari’s permission – Purcell recorded the conversation. The transcript in part reads as follows:
KUZBARI: PURCELL: KUZBARI: PURCELL: What about my inventory that you already have? Can you send it back to me? My counsel says no. That would be an illegal export. Can you sell it, and then hold onto my share until this all blows over? [laughing] Nope. I can’t sell it, I can’t use it, I can’t transfer you any proceeds. I can’t even destroy it.

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KUZBARI: PURCELL:

KUZBARI:

Well... that’s a pickle. I’m applying for a permit to allow me to at least store the equipment in my warehouses. But I need you to understand that you’re going to need to renounce any interest in the property or the proceeds of the property, now or in the future. What choice do we have? It sounds like the Canadian government has already taken care of that. Send me what you need me to sign.

On behalf of their companies, the two CEOs signed an agreement terminating the sales arrangement and, in particular, stipulating that Hamoukar would receive no proceeds from the merchandise presently in POCo’s inventory. 14. On November 1, 2006, the Canadian Minister of Foreign Affairs granted a permit to POCo “to maintain inventory specified in Schedule A at the respective locations specified in that Schedule, but not to sell, use, or otherwise dispose of said equipment.” Schedule A consisted of the itemized list of inventory described in paragraph 13. 15. On December 5, 2006, agents of the U.S. Federal Bureau of Investigation (FBI) arrived at the Detroit, Michigan, warehouse and seized all POCo property contained therein. In a press conference following the seizure, Daniel Roberts, the Special Agent in Charge of the FBI’s Detroit Field Office, explained: “This morning, our agents seized over $2 million in property controlled by Hamoukar, LLC, an organization identified by the United Nations Security Council and the United States government as having ties to Al-Qaeda. Acting on information received from our Canadian counterparts, and on the authority of a Blocking Order issued by the U.S. Office of Foreign Assets Control, the Detroit Field Office was able to identify and locate these assets. We have seized them pursuant to Section 981(a)(1)(G) of Title 18 of the United States Code.” 16. Purcell was notified of the seizure by POCo’s agent in Detroit. Through his attorney, he contacted the FBI field office in Detroit, which provided him with an inventory of the assets seized. 17. On December 6, 2006, Purcell contacted officials at the Canadian Department of Foreign Affairs and International Trade, informing them of the seizure. Later that week, POCo filed a complaint in the U.S. District Court for the District of Columbia against the United States, the U.S. Departments of Justice and of the Treasury, and, in their official capacities, against U.S. Secretary of the Treasury Henry Paulsen and Attorney General Alberto Gonzales. The complaint in Purcell Operations Corp. v. Paulsen alleged that the assets were improperly identified as “controlled by” Hamoukar, and requested an order unblocking the inventory. 18. On February 10, 2007, the U.S. District Court granted the defendant’s motion to dismiss, on the grounds that the assets had been properly designated by OFAC. POCo appealed the decision to the U.S. Court of Appeals for the D.C. Circuit, which summarily denied the appeal; the U.S. Supreme Court subsequently denied POCo’s petition for certiorari. 4

19. The Canadian ambassador in Washington protested the seizure, and high-level U.S. and Canadian government officials have discussed the matter sporadically since 2006, but no remedy for POCo has been suggested or adopted. 20. In the meantime, Kuzbari protested the sanctions against him and his company in all available forums. He routinely gave interviews to the international print and television media, and made his personal and corporate financial records available to foreign intelligence services. On two separate occasions, Kuzbari met with undercover American intelligence officers in attempts to persuade them of his innocence. As of the date of this Compromis, he and Hamoukar remain on the terrorist lists of Canada, the United States, and the UN Security Council. 21. In March 2011, Kuzbari presented himself at the Canadian Embassy in Beirut. He alleged that he had sneaked across the Syrian-Lebanese border under a false identity, fleeing government persecution in the wake of the January-February anti-Assad protests across Syria. Kuzbari claimed that, as a result of his meetings with foreign intelligence officials and the international media, Syrian President Bashar Assad had named him a “co-conspirator and key organizer” of the January-February anti-Assad protests across Syria. He claimed that Syrian security forces had arrested and interrogated members of his family and that several of Hamoukar’s key officers had disappeared. He formally applied for political asylum and asked to be permitted to move to Canada. Canadian and American intelligence officers have subsequently confirmed all material elements of Kuzbari’s story. 22. The Canadian consular official assigned to review the petition determined that Kuzbari satisfied all of the elements of a Convention Refugee under the Canadian Immigration and Refugee Protection Regulations, but in referring the matter for further proceedings, expressed concern that Kuzbari’s and Hamoukar’s inclusion on the UN’s terrorism lists might render him an excludable person under Article 1F of the 1951 Refugee Convention. 23. Upon receiving notice that Kuzbari had applied for asylum, the U.S. Ambassador in Ottawa lodged an oral protest with Jason Kenney, PC, MP, the Canadian Minister of Citizenship and Immigration. Ambassador Jacobson stated, “Mr. Kuzbari is listed in his official and personal capacity on the Security Council’s terrorism roster. It is inconsistent with Canada’s obligations under the United Nations Charter and to the United States under our bilateral security arrangements to grant him admission to Canada.” Kenney noted the objection, but made no formal or recorded reply. 24. The Refugee Protection Division of the Canadian Immigration and Refugee Board (IRB) proceeded under its fast-track process and, since the Article 1F exclusion issue was not raised during the hearing, on July 10, 2011, granted Kuzbari Convention Refugee status and granted admission to Canada. During the entire proceedings, Canada lodged Mr. Kuzbari in comfortable guest quarters in its Beirut embassy, where he remains to this day. 25. During a press conference on July 11, a reporter for Fox News asked Canadian Prime Minister Stephen Harper about the Kuzbari decision. He replied, “Canada has international obligations under the Refugee Convention. The IRB determined that Mr. Kuzbari – who is, after 5

all, not a terrorist, but a businessman whose organization was tied to terrorist funding. While that meets the standards for assets blocking, it does not rise to the level of individual conduct that would exclude him from the protection of international human rights afforded to refugees.” 26. U.S. Secretary of State Hillary Rodham Clinton lodged a formal complaint with her Canadian counterpart, asserting that the IRB’s decision violated Canada’s obligations under Security Council Resolutions 1267 and 1989. Both states assembled negotiating teams to discuss the issue and consider mutually acceptable solutions. In January 2012, having mutually agreed that further negotiations would be fruitless, the Canadian and American delegations recommended to their superiors in Washington and Ottawa that the matters be referred for arbitration or judicial determination. 27. After several months of talks, the Canadian and American governments agreed that the International Court of Justice would be the most appropriate forum for these issues, and began negotiation of the present Compromis. The parties have agreed that Canada will be designated Applicant and the United States will be designated Respondent for purposes of written and oral pleadings. 28. Canada respectfully requests that this Court: (a) DETERMINE that the United States seizure of POCo property violates international law; and (b) DETERMINE that Canada has not violated international law by granting refugee status to Mr. Kuzbari. 29. The United States of America respectfully requests that this Court: (a) DETERMINE that the United States’s actions vis-à-vis POCo property located within the United States was consistent with its obligations under international law; and (b) DETERMINE that Canada may not, consistent with its obligations owed to the United States under international law, grant refugee status to Mr. Kuzbari. 30. The United States and Canada have agreed to take no further action to enforce their positions with respect to this dispute pending the outcome of this case. Both States have agreed to fully and immediately implement whatever decision the ICJ renders in the case. IN WITNESS WHEREOF, the undersigned, being duly authorized thereto by their respective Governments, have signed this Agreement. Done in Washington this twenty-ninth day of August 2012. FOR CANADA /S/ John Baird Minister of Foreign Affairs FOR THE UNITED STATES OF AMERICA /S/ Hilary Rodham Clinton Secretary of State

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2013 Niagara International Law Moot Court Competition
CORRECTIONS AND CLARIFICATIONS TO THE COMPROMIS The following clarifications have been agreed to by the parties, and the Compromis should be considered amended accordingly. The Registrar of the Court reminds all parties of the following: a. The Compromis is, in essence, a stipulation of facts. Its words have been carefully chosen, and are the result of extensive negotiation. The parties decline to “clarify” matters about which they are unlikely to agree. The parties will not stipulate as to which legal principles are relevant, or which arguments are acceptable or unacceptable. b. Any request for clarification not addressed in the following paragraphs has been considered by the parties to be redundant, inappropriate, or immaterial, or the parties were unable to reach agreement on a mutually acceptable answer. CORRECTIONS/CLARIFICATIONS 1. Paragraph 13 of the Compromis is hereby revised to add the following additional language (addition in bold): … On behalf of their companies, the two CEOs signed an agreement, terminating the sales arrangement and, in particular, stipulating that Hamoukar would receive no proceeds from the merchandise presently in POCo’s inventory. The agreement further stipulated that Hamoukar renounced his interest in the property now and in the future. Purcell was in Canada, and Hamoukar was in Syria, when they signed the agreement by exchange of faxes at 3:05 PM U.S. Eastern Time on October 30, 2006. 2. The last sentence of Paragraph 14 of the Compromis is hereby corrected to read (correction in bold): Schedule A consisted of the itemized list of inventory described in paragraph 12. 3. The U.S. Prayer for Relief in Paragraph 29 of the Compromis is hereby corrected to read (correction in bold): The United States of America respectfully requests that this Court: (a) DETERMINE that the United States’s actions vis-à-vis POCo property located within the United States was consistent with its obligations under international law; and (b) DETERMINE that Canada violated obligations owed to the United States under international law when it granted refugee status to Mr. Kuzbari.
Signed this 17th day of January 2013 in Washington, DC /S/ John Baird Minister of Foreign Affairs, for Canada /S/ Hilary Rodham Clinton Secretary of State, for the United States of America