The EU has published its so-called "Stage 3" sanctions against Russia in Regulation 833/2014 (see here) ("the Regulation").

Who do the sanctions apply to?

As is usual with EU sanctions, the scope is limited to:

  • activities in the EU by any persons; and
  • EU natural persons, and EU incorporated entities (including branches),  wherever located. EU sanctions do not apply to non-EU incorporated entities.

What do the new sanctions cover?

The new sanctions, which enter into force on 1st August 2014, cover the following issues.

First, Article 2 imposes a restriction on the sale, supply, transfer or export of all dual-use goods and technologies set out in Annex I to the main EU dual-use Regulation, wherever located, if those goods or technology are or may be for a military use, or for a military user.

Second, under Article 3, sale, supply, transfer or export of oil and gas related "equipment or technologies" listed in Annex II to or for use in Russia will require a prior authorization from a Member State competent authority. Sale, supply, transfer or export of technologies relating to "deep water oil exploration and production, Arctic oil exploration and production, or shale oil projects in Russia" (which is not further defined) to or for use in Russia is prohibited, but Member State authorities "may" authorise those technologies if they are related to the execution of a contract concluded before August 1st 2014.  Annex II refers to "technologies" although Annex II contains only goods (because of the reference to the CN commodity codes). We assume that Article 3 is intended to apply to both goods and technologies. It is clear that the 8-digit CN code in the first column of Annex II is limited by the description in the second column, and is not necessarily limited to dual use goods. For example, 841350 is described in the EU CN as "Other reciprocating positive displacement pumps". However, the prohibition in Article 3 does not appear to be as wide as "Other reciprocating positive displacement pumps" but limited by the description in the second column of Annex II, i.e., "Reciprocating positive displacement pumps for liquids, power-driven (excl. those of subheading 8413 11 and 8413 19, fuel, lubricating or cooling medium pumps for internal combustion piston engine and concrete pumps)".

The phrase "sale, supply, transfer or export" is obviously wider than export, and when this phrase was introduced in 2007, under the original Iran Regulation, it was interpreted strictly by some Member States, including the UK. This strict interpretation meant that any commercial activity, whether wholly inside the UK, or from inside the UK to any other country, was caught by the prohibition. In 2007, Germany took the view that the only commercial activity caught was from inside Germany to any other country. Most other Member States treated the phrase as meaning simply export from the EU. If these interpretations are adopted in relation to this Regulation, this will produce significant differences in licensing and enforcement across the Member States.

Article 10 provides the usual defence found in EU sanctions regulation that no liability occurs where persons did not know, or had no reasonable cause to suspect that they were violating the provisions of the regulation. For example, there would be no violation of the Regulation if a person did not know, or had no reasonable cause to suspect that Annex II equipment they supplied was to be supplied to or for use in Russia.

Third, Article 4 prohibits the provision of technical or financial assistance related to any goods or technology on the EU Military List to any person in Russia or for use in Russia. The EU Member States have separately agreed an arms embargo in relation to Russia. Article 4 also prohibits technical assistance or brokering services related to dual-use goods or technology, or their manufacture, maintenance or use, where those items are for military use or to be used by a military end-user. The prohibition does not apply to execution of contractual obligations concluded before 1st August 2014, or where the assistance is necessary to the "maintenance and safety of existing capabilities within the EU".

Article 4 also introduce a system of prior authorization for technical and financial assistance, and brokering services in relation to the equipment and technologies in Annex II.

As of the time of writing, the process for prior authorization, and conditions for approval or refusal are unclear. However, as with other authorization systems, each EU Member State is likely to have its own policy and procedure for these, and clearly there will be material differences between these systems.

Fourth, Article 5 prohibits the purchase, sale, brokering of or assistance in relation to the issuance of "transferable securities" and "money-market instruments" with a maturity exceeding 90 days issued after 1st August 2014 by five Russian banks listed in Annex III, i.e.,

  • Sberbank;
  • VTB Bank;
  • Gazprombank;
  • Vnesheconombank (VEB); and
  • Rosselkhozbank


  1. any entity established outside the EU whose "proprietary rights" are owned more than 50% by any of the above banks; or
  2. any person acting on behalf of those banks, or acting on behalf of any entity under a. above.

It is important to note that the Article 5 does not apply to EU-incorporated subsidiaries of those five banks, nor person acting on their behalf,  and so transferable securities and money-market instruments with a maturity exceeding 90 days issued by those EU-incorporated subsidiaries are not controlled. However, if EU-incorporated subsidiaries are acting on behalf of those five banks, then they appear to be caught by b., and so are within the prohibition.

The definitions of "transferable securities" and "money-market instruments" are respectively as follows:

‘transferable securities’ means those classes of securities which are negotiable on the capital market, with the exception of instruments of payment, such as:

  1. shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares,
  2. bonds or other forms of securitised debt, including depositary receipts in respect of such securities,
  3. any other securities giving the right to acquire or sell any such transferable securities or giving rise to a cash settlement.

‘money-market instruments’ means those classes of instruments which are normally dealt in on the money market, such as treasury bills, certificates of deposit and commercial papers and excluding instruments of payment.

Preamble 5 specifically excludes "other financial services such as deposit business, payment services and loans to or from the" five banks from the scope of the prohibition.

It also appears as if these 5 banks and the entities at a. and b. above are not to be treated as "designated persons" under EU law, and so any other dealings with them other than set out above are lawful.

Finally, Article 5 of the associated Decision (see here) states:

In order to maximise the impact of the measures referred to in this Decision, the Union shall encourage third States to adopt restrictive measures similar to those provided for herein.

This is close off other routes for supply of goods, technology and finance covered by the Regulation.

New restrictions on Crimea and Sevastopol

On 30 July, the European Council also published separate legislation targeting entities based in Crimea and Sevastopol which are active in a number of sensitive sectors: oil and gas; mineral resources; and transport, telecommunications, and energy infrastructure projects. Under the new restrictions, EU persons are prohibited from purchasing shares of a participatory nature in such entities. Additionally, the legislation imposes a restriction on providing these entities with insurance, loans, or other forms of financial assistance. These restrictions will not apply to the provision of loans, or the acquisition of shares, if these actions are required by a contract entered into before 30 July, and the competent authority has been given notice of at least 10 working days in advance of the transaction.

For more information on these restrictions, please click here for the full legislation.

New designated persons

On 30 July 2014, the European Council published new legislation concerning restrictive measures in relation to individuals and entities deemed responsible for undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. The new designations include 8 individuals and 3 entities as set out below:


  1. Alexey Alexeyevich GROMOV
  2. Oksana TCHIGRINA
  3. Boris LITVINOV
  4. Sergey ABISOV
  5. Arkady Romanovich ROTENBERG (having extensive business interests in a number of Western companies)
  6. Konstantin Valerevich MALOFEEV
  7. Yuriy Valentinovich KOVALCHUK (a shareholder in Bank Rossiya)
  8. Nikolay Terentievich SHAMALOV (a shareholder in Bank Rossiya)


  1. Joint-Stock Company Concern Almaz-Antey (a.k.a. Almaz-Antey Corp; a.k.a. Almaz-Antey Defense Corporation; a.k.a. Almaz-Antey JSC)
  2. Dobrolet aka Dobrolyot
  3. Russian National Commercial Bank