Prohibited Dealings

Status

Optional (see Notes section below)

Source

Department of Foreign Affairs and Trade

Legislation / Policy

Divisions 102 and 103 of the Criminal Code – available at: https://www.legislation.gov.au/Series/C2004A04868
Autonomous Sanctions Act 2011 – available at: https://www.legislation.gov.au/Series/C2011A00038
Charter of the United Nations Act 1945 – available at: https://www.legislation.gov.au/Series/C1945A00032

Legislation / Policy contact
Additional information

Information about sanctions - available at: https://dfat.gov.au/international-relations/security/sanctions/Pages/about-sanctions.aspx#laws
Information about sanctions regimes - available at: https://dfat.gov.au/INTERNATIONAL-RELATIONS/SECURITY/SANCTIONS/SANCTIONS-REGIMES/Pages/sanctions-regimes.aspx
The Consolidated List is a list of persons and entities subject to targeted financial sanctions or travel bans under Australian sanctions laws (the Charter of the United Nations Act 1945 and the Autonomous Sanctions Act 2011) - available at: https://dfat.gov.au/international-relations/security/sanctions/Pages/consolidated-list.aspx
World Bank Listing of Ineligible Firms and Individuals currently sanctioned under the World Bank’s fraud and corruption policy – available at: https://www.worldbank.org/en/projects-operations/procurement/debarred-firms
Listed Terrorist Organisations under the Criminal Code Act 1995 (Cth) – available at: https://www.nationalsecurity.gov.au/Listedterroristorganisations/Pages/default.aspx

Guidance

This clause is mandatory for inclusion in all DFAT procurement contracts and grant agreements. 

While its inclusion won’t be necessary in all procurement contracts conducted by other entities, it will sometimes be necessary because it is an offence under Australian sanction law to directly, or indirectly, make an asset available to a designated person or entity. 

Therefore the clause should be included where the procurement involves a risk of a connection to terrorism or the potential for an entity involved in the goods or services to be subject to sanctions under international or Australian law (e.g. arrangements involving certain international Suppliers). 

The clause requires the Supplier to ensure those involved in providing the goods and services are not:

  • involved in terrorism or are a terrorist organisation under the Criminal Code Act 1995 (Cth);
  • subject to sanctions or other measures (i.e. travel bans) under the Autonomous Sanctions Act 2011 (Cth) or the Charter of the United Nations Act 1945 (Cth);
  • subject to sanctions under the World Bank’s fraud and corruption policy, being those listed on the World Bank Listing of Ineligible Firms and Individuals
  • owned, controlled by, acting on behalf of, or at the direction of others involved in terrorism or subject to such sanctions; or
  • providing support, resources or assets to others involved in terrorism or subject to such sanctions.

This clause also requires the Supplier to notify the Customer where there are reasonable grounds to suspect those involved in providing the goods and services may be involved in terrorism or subject to relevant sanctions.

Under the clause, the Supplier must impose these same obligations in the subcontracts with its Subcontractors. This includes an obligation that Subcontractors impose these obligations in any further subcontract.

Clauses

Prohibited Dealings

X.1    The Supplier must ensure that it and any individuals, persons, entities or organisations involved in delivering Goods and or Services under this Contract, including its officers, employees, agents and subcontractors, are not:

  1. directly or indirectly engaged in preparing, planning, assisting or fostering a terrorist act;
  2. listed terrorist organisations for the purposes of the Criminal Code Act 1995 (Cth) (details of listed terrorist organisations are available at https://www.nationalsecurity.gov.au/Listedterroristorganisations/Pages/default.aspx);
  3. subject to sanctions or similar measures under the Charter of the United Nations Act 1945 (Cth) or the Autonomous Sanctions Act 2011 (Cth) (details of individuals and entities are available at: https://dfat.gov.au/international-relations/security/sanctions/Pages/consolidated-list.aspx);
  4. listed on the ‘World Bank’s Listing of Ineligible Firms and Individuals’ posted at: https://www.worldbank.org/en/projects-operations/procurement/debarred-firms ;
  5. owned, controlled by, acting on behalf of, or at the direction of individuals, persons, entities or organisations referred to in clauses X.1a to X.1d above; or
  6. providing direct or indirect support, resources or assets (including any grant monies) to individuals, persons, entities or organisations referred to in clauses X.1a to X.1e above.

X.2 Where the Supplier becomes aware that there are reasonable grounds to suspect it or any of its officers, employees, agents and subcontractors has or may have contravened any part of clause X1, the Supplier must:

  1. notify the Customer and confirm that information in writing as soon as possible, which must be no later than within 24 hours;
  2. immediately take all reasonable action to mitigate the risks; and
  3. take any other action required by the Customer.

X.3    The Supplier must ensure that any subcontract entered into by the Supplier for the purposes of fulfilling its obligations under this Contract imposes on the Subcontractor the same obligations that the Supplier has under this clause, including this requirement to impose obligations on any further subcontractor.

Notes

While use of this clause is optional, it is an offence under Australian sanction law to directly, or indirectly, make an asset available to a designated person or entity so meeting the policy intent is mandatory. 

This clause or one that achieves the same outcome, should be included when the procurement involves a risk of a connection to terrorism or the potential for an entity involved in providing the goods or services to be subject to sanctions under international or Australian law (e.g. certain international Suppliers).

Where a “Prohibited Dealings” clause is included, the contract should also enable cancellation of the contract (for cause) if it becomes apparent that there is a connection between the supplier and listed persons.

Standardisation of contractual text results in efficiencies for both Parties to a contract. Before deciding whether a particular clause is appropriate, procurement officials should carefully consider the context of their procurement.

Where this clause is included, the clause wording should be used without change.

Terms that are capitalised may need to be changed to align with the Contract terminology.


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