Court of International Trade Issues Preliminary Injunction in Unprecedented Section 301 Litigation | Akin Gump Strauss Hauer & Feld LLP

Yesterday, in the unpublished “In D Section 301 Litigation Cases, US Court of International Trade (CIT) issued a preliminary injunction which suspends the liquidation of applicants’ unliquidated entries from China that are subject to Section 301 rights under “List 3” and “List 4A”. Because this decision will affect entries from China for the more than 6,500 plaintiffs who have already filed suit, as well as other companies who may be considering entering the case.

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In August 2017, the Office of the United States Trade Representative (USTR) launched an investigation into China’s intellectual property practices. The USTR announced its findings in March 2018 and initially imposed proportionate measures to address China’s unfair trade practices. But when China retaliated with import tariffs, the USTR launched a trade war that ultimately subjected the vast majority of imports from China to additional duties. In September 2018 and August 2019, the USTR released two lists, one known as List 3 and the other known as List 4A, which together submitted over $300 billion worth of imports from China at additional duties ranging from 7.5% to 25%.

In September 2020, Akin Gump filed a lawsuit on behalf of four plaintiffs alleging that Lists 3 and 4A exceed the authority of the USTR under the Trade Act and otherwise violate the Administrative Procedure Act. Since then, the CIT has received over 3,800 consecutive challenges involving over 6,500 complainants. Due to the unprecedented nature of this litigation, the CIT assigned all lawsuits to a three-judge panel, with the first lawsuit filed by Akin Gump serving as the main case.

In April 2021, after months of silence, the U.S. government announced – in a break from binding precedent and its own recent practice – that it believed the CIT had no authority to order refunds of List 3 or List 4A paid after liquidation. even if the plaintiffs prevail on the merits. In order to protect their ability to seek reimbursement of these rights, the plaintiffs filed a motion for a preliminary injunction to stay the liquidation.

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On July 6, 2021, after briefing and oral argument, the three CIT judges issued a split opinion granting the plaintiffs’ request for a prior injunction suspending the liquidation of unliquidated entries subject to List 3 and List 3 rights. 4A.

Writing for herself and for Justice Choe-Groves, Justice Kelly agreed with the plaintiffs that they had satisfied the factors for a preliminary injunction: the plaintiffs would suffer irreparable harm absent interim relief in light the uncertainty created by the government’s position on refunds; the plaintiffs had demonstrated “sufficiently serious and substantial issues” on the merits; and equity and the public interest weigh in favor of plaintiffs. Chief Justice Barnett dissented, but his disagreement with the majority was limited: in his view, there was no likelihood of irreparable harm because, in accordance with applicable law and Federal Circuit precedent, the CIT clearly has the power to order repayment of liquidated assets and unliquidated inflows (as claimed by the plaintiffs), despite the government’s new position to the contrary.

The CIT has now temporarily restricted the liquidation of all entries for the next 28 days and ordered the US government to establish a repository by which plaintiffs who have filed a lawsuit can identify all unliquidated entries affected by the duties. of List 3 and List 4A. For all of these identified entries, the US government must either stipulate the availability of refunds or suspend liquidation, so as to ensure the availability of refunds for duties paid if the claimants prevail on the merits.