Third Update on Russia's Proposed New Counter-Sanctions

Law on Russian Economic Countermeasures

On 22 May 2018, the State Duma approved in the third and final reading the draft bill “On Measures (Countermeasures) in Response to Unfriendly Actions of the USA and (or) other Foreign States” (the Law on Countersanctions).

The lawmakers did not add any new measures as regards the scope of countersanctions as compared to the previous second reading, but broadened the application of the bill to all entities that are “directly or indirectly controlled by, or affiliated with, “unamicable” foreign states”. The previous version referred to entities that are more than 25% directly or indirectly owned by entities under the jurisdiction of the US and/or other “unamicable” foreign states.

The bill generally gives broad powers to President Putin and the Russian Government to introduce specific countersanctions at their discretion.

In order to be enacted, the Law on Countersanctions needs to be approved by the Federation Council, and then signed by President Putin. This is widely expected to happen early in July 2018.

Draft Bill on Criminal Liability for Compliance with Sanctions

Another legislative initiative, being actively discussed by Russian lawmakers, is the draft bill “On Amendments to the Criminal Code of the Russian Federation” (“Draft”) that proposes the imposition of criminal liability for complying with Western sanctions. The Draft was approved by the State Duma in the first reading on 15 May 2018.

The date of the second reading has been postponed because of heavy criticism of the current version of the Draft by the Russian business community. It is expected that the Draft will be considerably revised and softened. The revised version of the Draft has not been published yet.

Draft Bill on Administrative Liability for Compliance with Sanctions

Russian lawmakers are also expected to shortly introduce a draft bill envisaging administrative liability for legal entities that comply with Western sanctions while doing business on the local market.

The draft bill is expected to be adopted before the end of the current session of the Russian Parliament (i.e., by 29 July 2018). The proposed fines are expected to be up to RUB 50 mln. (approximately USD 805,000).