Lawsuit against OFAC: where these cases are heard

When a client is added to the SDN list and then denied delisting by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), or refused an OFAC specific license, the question eventually arises: can OFAC’s decision be challenged in court, and if so, where? A lawsuit against OFAC is available, and in the overwhelming majority of cases it is filed in one specific federal court: the United States District Court for the District of Columbia (D.D.C.).

This is neither accidental nor a matter of geographic convenience. The choice of this court reflects a combination of jurisdictional rules, accumulated case law, and the procedural character of sanctions litigation. Understanding why a lawsuit against OFAC belongs in the District of Columbia helps the client assess strategy and select counsel who can actually litigate the case in that forum.

The U.S. District Court for the District of Columbia and its role in sanctions disputes

The U.S. District Court for the District of Columbia is a federal trial court sitting in Washington. It occupies the same tier of the judicial system as any other federal district court, but its location and docket make it distinct. The court routinely hears disputes involving the federal departments and agencies headquartered in the capital, including the Department of the Treasury and, within it, OFAC.

Over the past two decades, the D.D.C. has developed the core body of case law in sanctions litigation. Its judges work regularly with the International Emergency Economic Powers Act (IEEPA), understand the structure of an OFAC administrative record, are familiar with procedures for handling classified evidence, and grasp the operational logic of the U.S. sanctions regime. In most other federal districts, such cases are rare or nonexistent, and the judge has to learn the underlying framework largely from scratch.

For the client, this means that a lawsuit against OFAC in the District of Columbia proceeds in an environment where the judge and chambers staff do not need a long ramp-up on sanctions law. The case moves more efficiently, and the merits receive sharper review.

Jurisdiction and venue: why D.C. and not another federal court

As a matter of procedural law, the choice of the District Court for the District of Columbia is driven by the venue provisions of 28 U.S.C. § 1391(e), which govern actions against federal agencies and officers. Under that statute, suit may be brought in the district where the defendant resides, where the events or omissions giving rise to the claim occurred, or where the plaintiff resides if the plaintiff is a U.S. resident.

OFAC and the Department of the Treasury are physically located in Washington. Decisions to add a person to the SDN list, to deny a delisting petition, and to refuse a specific license are made there. The vast majority of clients challenging OFAC actions are not U.S. residents and have no other connection to a particular American state that would support venue elsewhere. The result is that the District Court for the District of Columbia is the only realistically available forum.

There is also a practical jurisdictional point. Personal jurisdiction over federal defendants in the District of Columbia is uncontested. In other districts, OFAC or its director may dispute personal jurisdiction, leading to procedural delay and the risk of transfer. Filing in the D.D.C. removes that issue at the outset.

Precedents shaped by the District Court for the District of Columbia

The body of D.D.C. and D.C. Circuit case law covers virtually every significant legal question that arises in litigation against OFAC. Among the most important decisions: Kadi v. Geithner, in which the court confirmed that due process requirements apply to listing procedures and clarified that they include notice and an opportunity to be heard; Zevallos v. Obama, addressing the standard of judicial review for OFAC denials of delisting petitions; Fares v. Smith, which refined the requirements for the unclassified summary of evidence that OFAC must provide to a designee; and Joumaa v. Mnuchin, examining the limits of judicial intervention in the exercise of OFAC’s authority.

These decisions, together with others from the same court, form the framework on which any modern lawsuit against OFAC is built. A plaintiff filing in the D.D.C. enters a legal landscape in which the principal doctrines have already been articulated and are applied consistently. That reduces the unpredictability of outcome and allows counsel to argue from concrete precedent rather than from general principles of administrative law.

Appeal: the path to the D.C. Circuit and its specialization

Decisions of the District Court for the District of Columbia are appealed to the United States Court of Appeals for the District of Columbia Circuit, known as the D.C. Circuit. This court has long specialized in administrative law and federal regulatory practice. Many of its judges came to the bench from precisely that field: challenges to decisions of federal departments and agencies.

For sanctions cases, this means that the appeal is heard in a specialized environment. The D.C. Circuit is well-versed in the Administrative Procedure Act (APA), the arbitrary and capricious standard of review, the requirements applicable to an administrative record, and the doctrines of procedural fairness in the sanctions context. Many of the leading precedents in lawsuits against OFAC come from the D.C. Circuit, and its case law is more consistent and predictable than that of other circuits.

Procedural features of OFAC cases in the District of Columbia

A lawsuit against OFAC in the D.D.C. has procedural features that set it apart from an ordinary civil dispute. The case is decided on the administrative record assembled and filed by OFAC itself. This is not the familiar civil process of discovery, depositions, and adversarial trial testimony. The court reviews whether OFAC’s decision was justified in light of the information the agency had before it at the time the decision was made.

A portion of the administrative record is typically classified. The D.D.C. has well-established procedures for handling such material: the court reviews it ex parte and in camera, without access by the plaintiff or counsel. OFAC must, however, provide the plaintiff with an unclassified summary sufficient to allow a meaningful response to the allegations. The adequacy of that summary is itself often a litigated issue, and the standards by which a court evaluates it have been developed largely in the District of Columbia.

The APA standard of review presupposes that the court does not substitute its judgment for OFAC’s and does not retry the case on the merits. The court’s task is to determine whether the agency’s decision was arbitrary, capricious, or otherwise not in accordance with law. This is the well-known arbitrary and capricious review, and its application in sanctions cases is by now thoroughly worked out in the D.D.C.

In light of these features, success in a lawsuit against OFAC depends largely on the quality of the work done before suit is filed: how the petition for removal from the OFAC SDN list or the OFAC specific license application was prepared, what materials were submitted to OFAC, and how carefully procedural defects were preserved on the record. A lawsuit against OFAC is not won at a single hearing; it is won through sustained work that begins long before the complaint.

Bar membership requirements for plaintiff’s counsel

To file a lawsuit against OFAC in the District Court for the District of Columbia, plaintiff’s counsel must be admitted to this court. Not every American attorney holds such membership: it requires a separate process of review, sponsorship, and admission, in addition to admission to the bar of one of the states. An attorney who is not admitted to the D.D.C. may participate only pro hac vice, by filing a one-time motion and engaging local counsel of record, who carries part of the procedural responsibility for the case.

In practice, this adds cost for the client and creates dependence on outside counsel who may not specialize in sanctions matters. Being admitted to the U.S. District Court for the District of Columbia removes those constraints and allows counsel to handle the case directly, from the complaint through appeal.

The attorney at Fesenko, P.C. Law Offices is admitted to the bar of the U.S. District Court for the District of Columbia and litigates in that court directly, without retained local co-counsel.

If you or your company has been denied removal from the SDN list, refused an OFAC specific license, or subjected to unjustified delay in the review of submitted applications, these circumstances may support an action in federal court. Contact Fesenko, P.C. Law Offices to assess the legal basis for a potential claim, identify applicable deadlines, and evaluate the case’s likelihood of success.