End-of-Year Recap - US Litigation and Enforcement Risk

In 2025, US litigation and enforcement risk evolved sharply for both US and foreign companies operating internationally. Recent court decisions and new executive designations expanded Anti-Terrorism Act (ATA) exposure—including new Foreign Terrorist Organization (FTO) listings in Latin America—requiring businesses worldwide to reassess compliance in higher-risk regions. Meanwhile, swiftly changing sanctions regimes and ongoing trade disputes have introduced fresh legal uncertainty for cross-border business. Building on these trends, the Department of Justice’s renewed Foreign Corrupt Practices Act (FCPA) enforcement now targets cases that overlap with national security, trade, and cartel risks, increasing complexity for both US and foreign companies on the global stage.

Anti-Terrorism Act

Authors: Tim Harkness, Elischke de Villiers, Paloma Palmer

As 2025 draws to a close, the landscape of Anti-Terrorism Act (ATA) litigation has been reshaped by significant developments from the courts and the executive branch. These changes have altered the risk calculus for companies operating globally, creating new litigation pathways for plaintiffs and strengthening defenses for corporate defendants. This post synthesizes these key events and offers a look ahead at what they signal for 2026.

Key Developments in ATA Law in 2025

The year was marked by three pivotal events that have already begun to influence ATA litigation strategy. 

First, the Second Circuit’s July decision in Ashley v. Deutsche Bank provided a robust defense for financial institutions.  Applying the Supreme Court’s Twitter v. Taamneh standard, the court dismissed claims against several banks, holding that providing routine commercial banking services—even after being warned that customers’ products were being diverted for terrorist use—does not meet the “conscious and culpable participation” required for aiding-and-abetting liability under Justice Against Sponsors of Terrorism Act (JASTA). In other words, the threshold to meet “conscious and culpable participation” is higher than passive involvement or poor oversight. 

Second, the Supreme Court’s ruling in Fuld v. Palestine Liberation Organization has caused parties to litigate anew the jurisdictional reach of US courts over foreign entities. In Fuld, the Court upheld the constitutionality of the Promoting Security and Justice for Victims of Terrorism Act (PSJVTA), which deems the PLO and Palestinian Authority to have consented to US jurisdiction based on specific conduct, such as making payments to terrorists' families. Some have argued that this decision signals a departure from the traditional "minimum contacts" analysis, suggesting the Fifth Amendment affords Congress greater latitude to establish personal jurisdiction over foreign entities in matters of national security.  Others have argued for a more narrow reading of Fuld.  2026 will be a year in which the implications of Fuld will come into sharper relief. 

Finally, the executive branch’s designation of six Mexican drug cartels and two Venezuelan criminal organizations as Foreign Terrorist Organizations (FTOs) created a new frontier of ATA risk. This action exposes companies operating in Latin America to potential ATA liability for providing "material support" to these groups, including through extortion payments, a risk that was previously limited as cartel-related claims were often dismissed because the groups were not designated FTOs.

What to Expect Under ATA Law for 2026

The developments of 2025 set the stage for a dynamic and consequential 2026. The Ashley decision will likely embolden corporate defendants, particularly financial institutions, to seek early dismissal of claims based on the provision of ordinary-course services, forcing plaintiffs to plead facts showing more than passive or indirect involvement.

Conversely, the Fuld ruling is expected to encourage plaintiffs to test the boundaries of personal jurisdiction against foreign defendants. We may see an increase in ATA litigation against entities previously thought to be beyond the reach of US courts, with litigants leveraging the precedent to argue for jurisdiction based on other federal statutes.

The FTO designations in Latin America will almost certainly trigger a new wave of ATA litigation. Companies with supply chains or operations in the region now face heightened exposure and must intensify their due diligence and compliance protocols to avoid entanglement with these newly designated groups. Lawsuits that previously failed may now succeed, targeting businesses for conduct like making payments to cartels for security.

Finally, a critical deadline looms: September 28, 2026, marks the tenth anniversary of JASTA. This is the date when the ten-year statute of limitations will begin to expire for claims arising from injuries that occurred on or before September 28, 2016. Consequently, we anticipate a surge in case filings in the months leading up to this anniversary as plaintiffs’ counsel rush to bring claims that might otherwise be time-barred.

Sanctions and Trade Developments

Authors: Nabeel Yousef and Andrew Bulovsky

Sanctions, export controls, and tariff policies have made headlines in 2025.  Key among these have been novel, expansive tariffs, which have been challenged in the Supreme Court; lifting of sanctions on Syria; and the imposition (and subsequent one-year suspension) of expanded export controls. 

Syria sanctions and export controls relaxed

Most notably, the US Treasury Department’s Office of Foreign Assets Control (OFAC) revoked US primary sanctions on Syria by rescinding the Syria Sanctions Regulations in favor of a more limited sanctions program targeting, among other things, persons linked to the previous Syrian government.[1]  Additionally, the US government is expected to repeal secondary sanctions under the Caesar Act as part of 2025 year-end legislation, and the UK and EU have removed most of their sanctions on Syria.  The dramatic changes to these sanctions programs present companies with commercial and investment opportunities in Syria that have effectively been closed off for the past 14 years.[2]

The US Commerce Department’s Bureau of Industry and Security (BIS) relaxed certain export controls on Syria, including (i) broad authorization for the export of EAR99 items to Syria; (ii) expanded license exceptions; and (iii) a permissive licensing policy.[3]  These changes supplement OFAC’s sanctions developments and, with the appropriate level of due diligence and contractual protections,[4] pave the way for new investment and business opportunities related to Syria.

Russia sanctions expanded

OFAC has increased its pressure on Russia by designating Rosneft and Lukoil—Russia’s two largest oil companies—on its list of Specially Designated Nationals (the SDN List).[5]  These designations reflect the United States’ stated goal of achieving an end to Russia’s war on Ukraine.  It remains to be seen, however, whether the United States lifts sanctions on Russia and/or whether it sanctions Russian or Ukrainian entities to pressure their respective countries to agree to a US-brokered peace deal. 

China trade escalation and “deals”

Most of 2025 was marked by rising trade tensions between the United States and China, as each country introduced retaliatory trade measures against the other.  Both countries, however, have recently taken steps to ease tensions—engaging in diplomatic dialogue, retaliatory actions, and committing to resume key trade flows. For example, in September 2025, BIS announced the “Affiliates Rule,” which provided that foreign entities 50% or more owned by one or more entities on the BIS Entity List, Military End User List, or the SDN List under certain programs would be targeted by the same export control licensing requirements as its ownership.

Following a meeting between the United States and China, however, BIS, suspended the implementation of the Affiliates Rule until November 10, 2026.[6]  Companies might consider carefully reviewing their potential exposure under the Affiliates Rule in case it is reimplemented.

Wide-reaching tariffs imposed and challenged

Tariff policy may be the most far-reaching trade-related development of 2025.  The Trump Administration has relied on the International Emergency Economic Powers Act (IEEPA)—in addition to Section 232 of the Trade Expansion Act of 1968 and Section 301 of Trade Act of 1974—to impose “reciprocal” tariffs on most countries and “fentanyl” tariffs on China, Mexico, and Canada.  In May 2025, the Court of International Trade and the US District Court for the District of Columbia set aside tariffs imposed under IEEPA, but allowed for the tariffs to be levied while the decisions were appealed.[7]  The US Court of Appeals upheld the lower court’s decision in a 7-4 decision in August 2025.[8]

Most recently, in November 2025, the Supreme Court heard oral arguments for the tariffs cases in Learning Resources v. Trump (consolidated with Trump v. V.O.S. Selections).  The Supreme Court’s decision is pending, with potential litigation, supply chain disruptions, and billions of dollars in rebates hanging in the balance.

What to expect for sanctions and trade developments in 2026

Companies will likely see continued sanctions, export controls, and tariff policy changes—along with corresponding enforcement risks—that may affect their businesses in 2026.

• With respect to sanctions, the Trump Administration may increasingly leverage designations under the FTO sanctions regulations to pursue its policy agenda.  The Trump Administration may also impose sanctions targeting persons involved in Russia or Iran’s energy sectors.

• With respect to export controls, the Affiliates Rule may be reimposed, expanding the reach of end-user restrictions.

• With respect to tariffs, depending on the outcome of the Supreme Court case, 2026 may see litigation related to tariff rebates and efforts by the Trump Administration to pursue its tariff policy goals under various legal authorities, including Section 301 of the Trade Act of 1974 or Section 232 of the Trade Expansion Act of 1962.

Anti-Bribery and -Corruption (“ABC”) Developments:  

DOJ Revises FCPA Enforcement Priorities—Pledging to “Firmly” and “Fairly” Prosecute Foreign Bribery and Corruption in the Year Ahead

Authors: Eric Bruce, Dan Cendan, Justin Simeone, and Grace Bruce

After a transitional year during which DOJ revised its FCPA enforcement guidelines, DOJ leaders have pledged to “firmly” and “fairly” prosecute foreign bribery in the year ahead, aligning enforcement with the Trump Administration’s broader “America First” priorities. 

Key Developments in ABC in 2025

In February 2025, Executive Order 14209 temporarily paused initiation of any new FCPA investigations or enforcement so that the Attorney General could consider strategies to “restore proper bounds” rooted in American economic competitiveness and national security. By June 2025, Deputy Attorney General Todd Blanche lifted the pause and issued new FCPA enforcement guidelines directing prosecutors to prioritize cases involving: 

• Harm to US companies competing in foreign markets;
• Threats to US national security involving “key infrastructure and assets,” like defense, intelligence, or critical infrastructure;
• Serious misconduct involving “substantial” payments, “fraudulent conduct,” or “sophisticated” schemes to conceal bribe payments;
• Misconduct involving cartels and transnational criminal organizations (TCOs); and
• Individual misconduct, especially when imputing corporate liability. 

DOJ has also strengthened incentives for companies to voluntarily disclose misconduct, or otherwise risk prosecution. In May 2025[JCS1] , DOJ revised its Corporate Enforcement Policy (CEP) to introduce tiered penalty reductions based on whether a company voluntarily self-discloses, fully cooperates, timely and appropriately remediates, and presents no aggravating circumstances. At the same time, DOJ has maintained pressure to disclose early, by continuing a 2024 Whistleblower Awards Pilot Program that rewards individuals who provide original and truthful information resulting in forfeiture. In December 2025, DOJ reported more than 1,100 tips in less than two years, with over 50 percent referred to prosecutors, suggesting a steady pipeline of cases.

In a December 2025 address, DAG Blanche reaffirmed DOJ’s commitment to enforce the FCPA “firmly,” “fairly,” and within the “bounds of reason” as part of a rigorous white collar enforcement program. Shortly after, DOJ announced the first FCPA deferred prosecution agreement of the year, involving $118 million in fines and forfeiture paid by Millicom International Cellular, S.A., related to bribery involving a subsidiary in Guatemala. DOJ noted that some of the bribe payments were funded with laundered narcotrafficking proceeds, underscoring DOJ’s focus on the intersection of corruption and organized crime.

What to Expect in ABC for 2026

Based on DOJ’s statements and initial actions since the pause was lifted, companies should anticipate heightened scrutiny in the following areas in the year ahead.

• Conduct harming US interests: DOJ expects to prioritize conduct that harms US interests and negatively impacts competition by US companies, which may mean directing resources to cases where non-US companies use corruption to unfairly win contracts from US companies or otherwise undermine American competitiveness.
• Geographic regions with cartel and TCO connections: DOJ is looking to prioritize cases that intersect with the cartels and TCOs, which is likely to increase attention on operations Central and South America. The Millicom resolution is one such example.
• Individuals with criminal responsibility: DOJ has emphasized its “first priority” is to prosecute individual criminals, and DAG Blanche has stated that DOJ will be more likely to seek corporate resolutions where “one or more culpable individuals whose conduct can be fairly computed to the company.”
• Related enforcement priority areas: DOJ has also signaled that it will target schemes intersecting with other US priorities, such as fraud related to trade restrictions, digital assets, and variable interest entities, particularly those involving Chinese actors. 

Freshfields will continue to monitor these developments closely. 

For a collection of related previous posts and webinars, please click this link.