Further to our advisory dated February 28, yesterday the European Council published Regulation No. 204/2011, implementing and expanding upon the UN sanctions against Libya that were enacted this past weekend. The new EU sanctions go into effect immediately.
Consistent with UN Security Council Resolution 1970, the EU Regulation imposes an arms embargo on Libya, and designates for financial sanctions the same group of Qadhafi family members that are designated in Resolution 1970. However, the EU Regulation restricts the export of certain goods that are not contemplated in the UN Resolution (in particular, specified goods that can be used for internal repression purposes), and also imposes financial sanctions against a wider range of Libyan persons, including several additional members of Colonel Qadhafi’s family and other members of his inner circle. These parties are listed in Annexes II and III of the Regulation. (Annex II lists the parties identified in the UN Resolution, and Annex III lists the parties designated unilaterally by the EU.)
The Regulation requires the blocking of any assets that parties subject to the Regulation come into possession of, that are “belonging to, owned, held or controlled by” the persons and entities designated in Annexes II and III. In addition, it prohibits providing any funds or assets to those persons, directly or indirectly. The Regulation authorizes Member States to issue licenses for certain discrete transactions, including where a payment is required from a designated party pursuant to a contractual obligation pre-dating the Regulation.
In contrast to the Libyan sanctions enacted recently by the United States and some other jurisdictions (such as Canada), the EU measures do not impose a broad sanction against the Libyan Government as such. Accordingly, EU companies are not currently prohibited from doing business with the Libyan government or state-owned companies, although caution should be exercised to ensure that parties designated by the EU are not involved in the transaction in question, and that they do not have controlling interests in any parties to the transaction.
The EU Regulation is directly applicable in all of the 27 EU Member States, though it will be enforced by the Member States pursuant to national implementing laws. Consistent with other EU sanctions regulations, the Libya sanctions will apply to any EU nationals or entities organized under the laws of an EU Member State (irrespective of where they are operating), any person or entity acting within the jurisdiction of an EU Member State, or on board any aircraft or vessel under the jurisdiction of a Member State.
Notably, some Member States have also frozen the assets of additional Libyan persons who are not identified in the EU Regulation (in particular, Austria). Accordingly, companies situated in Member States who have ongoing business in Libya should verify that their activities comply both with the EU Regulation and any unilateral national measures.
As is the case with the UN and other international sanctions regimes against Libya, the EU measures are liable to shift depending on how the precarious situation unfolding in Libya is resolved.