Shipbroker Launches Challenge to SDN Designation in District Court in DC

Strait Shipbrokers and its managing director, Murtuza Mustafa Munir Basrai, filed a complaint July 19 in the U.S. District Court for the District of Columbia challenging its Specially Designated Nationals listing (see 2101050012). The Trump administration made the designation after concluding the company helped with the transport of petroleum from Iran. Straight Shipbroker countered, claiming it's not required to check the origin of its cargo in its role as a broker and that the designation was made in violation of the Administrative Procedure Act and its Fifth Amendment rights to due process (Strait Shipbrokers Pte. Ltd. et al. v. Blinken et al., D.C. Cir. #21-01946).

The plaintiffs, who filed the suit against the State and Treasury departments, said the SDN listing has placed the company and Basrai in a "dire financial situation." The SDN listing has prompted a freeze of the company's assets in its Citibank account in Singapore, the cancellation of its group insurance policy and damages to its dealings with U.S. companies and individuals, the complaint said. The company also has had to "terminate" 33 employees and said others have left, leaving the company with only six employees. Basrai is also facing being forced to return from Singapore to India -- a country he has not lived in for 20 years.

The U.S. violated the company's Fifth Amendment rights by not providing adequate notice of the designation or opportunity to challenge the basis of the designations, Strait Shipbroker said in the complaint. Although a foreign company, Strait Shipbroker said it is entitled to Fifth Amendment protections because it "regularly does business with U.S. companies and, on behalf of the Company, Mr. Basrai regularly visits the United States to do business. Additionally, as the vendor of services to U.S. persons, [the company has] standing based on 'the vendor-vendee relationship alone,'" citing the 1987 Nat'l Cottonseed Prods, Ass'n v. Brock in the D.C. Circuit.

Most recently, the plaintiffs filed for a preliminary injunction against the designation, arguing the case holds a likelihood to succeed on the merits. "Plaintiffs are likely to succeed on the merits of their APA claim because the SDN designation is unexplained," the July 22 complaint said. "The October 29, 2020 press release issued by [the Treasury Department's Office of Foreign Assets Control] merely stated the designations were pursuant to Executive Order 13846, but provided no basis for why those designations were made. ... An agency is required to explain its action." The State Department declined to comment, and Treasury didn't respond to a request for comment.