OFAC Removes Mandatory U.S. Choice of Law Requirement Across Venezuela General Licenses

On August 27, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued significant regulatory amendments to eight Venezuela-related General Licenses (GLs 46D, 47B, 48C, 50C, 51C, 52B, 54B, and 61A). Additionally, OFAC published two new Frequently Asked Questions (FAQs 1267 and 1268), updated FAQs 1233 and 1244, and archived FAQ 1260.

1. Elimination of Mandatory U.S. Governing Law (FAQ 1267)

• Removal of Choice-of-Law Mandate. Effective August 27, 2026, parties entering into contracts with the Government of Venezuela or blocked state-owned entities (such as PDVSA or Minerven) are no longer required to include a U.S. choice of law provision. OFAC amended all covered licenses to remove the requirement that contractual terms be construed and interpreted under the laws of a state or jurisdiction within the United States.
• Removal of Local Regulatory Notes. Concurrently, OFAC excised prior interpretative notes from the general licenses that previously addressed how U.S. governing law interacted with local Venezuelan sovereign frameworks regarding environmental compliance, labor standards, administrative permits and licenses, and other mandatory regulatory requirements.
• Policy Rationale & Regional Context. FAQ 1267 clarifies that this policy modification responds directly to investment-related framework reforms enacted by the Venezuelan government since January 2026. The U.S. government implemented this adjustment to reduce commercial friction and support U.S. corporate reinvestment in Venezuela, aiming to bolster Western Hemisphere security and promote regional economic stability.

2. Mandatory Forum Selection (FAQs 1268 & 1233)

• Procedural Forum Mandate. FAQ 1268 clarifies that while substantive governing law is now flexible, OFAC strictly maintains the requirement for a binding dispute resolution forum clause in all primary contracts.
• Permitted Dispute Resolution Venues. Dispute resolution proceedings relating to a contract or its breach with the Government of Venezuela or designated blocked entities must be specified to occur exclusively within one of four designated jurisdictions: the United States, the United Kingdom, France, or Singapore.
• Scope of Contractual Privity (FAQ 1233). OFAC clarifies that the mandatory forum selection rule applies strictly to primary contracts executed directly with the Government of Venezuela or designated blocked entities. This requirement does not extend to indirect parties or indirect counterparties involved in authorized activities, such as downstream transactions involving the provision of shipping, insurance, or other services to an entity engaged in a transaction involving PDVSA.

3. Contingent Contracts (FAQ 1244)

• Evaluation Criteria for Contingent Contracts. FAQ 1244 outlines that specific license applications to perform contingent contracts negotiated pursuant to General License 49 will be evaluated on a case-by-case basis, aligned with U.S. foreign policy and national security priorities.
• Contract Negotiation Considerations & Restrictions. OFAC encourages parties to consider standard policy limitations during contract negotiations, such as prohibitions on transactions involving designated jurisdictions or entities (Russia, Iran, North Korea, Cuba, or China), mandatory commercially reasonable terms, designated dispute resolution venues, and the remittance of funds owed to blocked persons (excluding local taxes, permits, and fees) into Foreign Government Deposit Funds or Treasury-designated accounts.

Disclaimer

This report is prepared for informational purposes only and does not constitute legal advice. The interpretation and application of OFAC sanctions regulations are a complex area of U.S. law. Companies are strongly encouraged to consult qualified U.S. sanctions counsel before taking any action in reliance on these General Licenses. LEC Abogados is a Venezuelan law firm and does not practice U.S. law or provide advice on OFAC regulations. Information is current as of the date of publication.