Belgian Company Says BIS Hold on Aircraft Sale Is Unconstitutional
The Commerce Department's Bureau of Industry and Security is violating Belgian shipping company Exmar Marine's Fourth and Fifth amendment rights by blocking its ability to sell an aircraft it owns, Exmar alleged in a Dec. 1 complaint. Arguing its case in the U.S. District Court for the District of Columbia, Exmar said BIS has no legal authority to stop the sale of the aircraft and that such action to do so cuts against constitutional protections against unreasonable seizure and violations of due process (Exmar Marine, NV v. Bureau of Industry and Security, D.C. Cir. #21-3141).
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In 2014, Exmar bought a Gulfstream G280 aircraft, financed through a five-year lease from Bank of America. Since Exmar is a foreign company, it sought to register the aircraft with the U.S. Civil Aircraft Registry via a trust, wherein the trustee is either a U.S. citizen or resident alien. During 2014-2019, the trustee was Bank of America Leasing & Capital. In 2019, though, the vessel was re-financed with GEFA Bank, and the trust was moved over to Aircraft Guaranty Corporation Holdings -- an American company that registered thousands of aircraft.
In February, BIS unsealed an indictment in a Texas district court alleging that AGC's executives had "engaged in illegal activities," although neither Exmar nor the aircraft were named, the complaint said. The indictment charges both AGC and its owner, Debra Lynn Mercer-Erwin and others, with a host of drug distribution, money laundering, export violations and aircraft registration violation charges. AGC's act of registering thousands of aircraft for foreign owners is itself illegal, the U.S. said (see 2103010028).
From this point on, BIS prohibited the AGC trust from releasing a bill of sale for any of its aircraft, "which effectively prohibits any transfer transaction," Exmar said. "BIS has never provided any legal authority to support its prohibition on the sale of any aircraft, including the Aircraft, owned by the AGC Trust." BIS required that all aircraft be cleared before any transfer of ownership was allowed.
In March, Exmar tried to sell its aircraft. BIS told the Belgian company that it had to provide an Electronic Export Information filing to release the craft, which Exmar did. However, BIS then dragged its feet when it came time to issue a response, the complaint said. Eventually, in September, BIS said that "[t]he aircraft has not been approved for release." Exmar says that BIS's actions have deprived it of its property rights and BIS has not, at any point, given the company a chance to comment over whether the aircraft should be allowed to change hands.
This action violates Exmar's Fourth and Fifth amendment rights, Exmar alleged. "BIS does not have a warrant to seize the Aircraft," the complaint said. "It does not have legal authority to prohibit the release of the bill of sale of the Aircraft. It is unreasonable to prohibit the release of the bill of sale of the Aircraft. BIS does not have a warrant to seize the Aircraft. ... BIS has violated the Fifth Amendment to the United States Constitution by depriving Exmar of its property right of free transferability of the Aircraft without due process. Exmar has been damaged and continues to be damaged as a direct and proximate result of BIS' unconstitutional deprivation of Exmar's due process rights." A BIS spokesperson declined to comment.