Sanctions against Russia

Following the announcement, in March 2014, of a referendum about Crimea joining Russia, and the subsequent crisis affecting the sovereignty and territorial integrity of Ukraine, the European Union has imposed a number of sanctions against Russia as well as against Ukrainian separatists, which have been recently strengthened. Last week new amendments were introduced and some additional guidance has been provided on the application of the measures and the granting of authorisations.

The main body of sanctions, consisting mainly in an asset/funds freeze and an EU travel ban, have been directed against persons responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine as well as persons and entities associated with them. In this regard, since April 2014, the EU has been regularly updating the list of designated persons and entities subject to sanctions in light of the subsequent developments in Eastern Ukraine.

In addition, on July 31, 2014, the Council of the European Union (‘the Council’) imposed economic sanctions aimed at entire sectors of the Russian economy, so-called ‘sectoral sanctions’ (Decision 2014/512/CFSP and Regulation 833/2014). These sanctions target in particular the following sectors: capital markets, defence, dual use goods and sensitive technology (for the energy sector). They are aimed at restricting Russia’s access to EU capital markets and entered into force on September 12, 2014. In particular, sectoral sanctions against Russia include:

  • Prohibiting investment in the following sectors in Crimea and Sevastopol: infrastructure projects in the transport, telecommunications and energy sectors and in relation to the exploitation of oil, gas and minerals. Key equipment for the same six sectors may not be exported to Crimea and Sevastopol and finance and insurance services for such transactions must not be provided.
  • Prohibiting trade in new bonds, equity or similar financial instruments with a maturity exceeding 30 days, issued by listed companies. Services related to the issuing of such financial instruments, such as brokering, are also prohibited.
  • Prohibiting, subject to certain caveats, directly or indirectly making or being part of any arrangement to make new loans or credit with a maturity exceeding 30 days to the listed entities.
  • Banning the export of arms and related material as well as of dual use goods and technology for military use in Russia or to Russian military end-users.
  • Subjecting exports of certain energy-related equipment and technology to Russia subject to prior authorization requirements.

Furthermore, imports into the EU of goods originating in Crimea or Sevastopol have been banned and the provision of financing or financial assistance as well as insurance and reinsurance related to the import of such goods has been prohibited by the Council.

Current status

Further to a request by the EU Foreign Affairs Council, on November 28, 2014, the Council adopted a decision by which it reinforced EU restrictive measures against representatives of the so-called ‘Donetsk People’s Republic’ and ‘Luhansk People’s Republic’ operating in Eastern Ukraine (Decision 2014/855/CFSP and Regulation 1270/2014).

The Council extended the list of persons subject to an asset freeze and an EU travel ban for its involvement in action against Ukraine’s territorial integrity. In particular, 13 persons and five entities (public and social organisations) were added to the list, bringing the total number of individuals and entities under EU restrictions over the situation in Ukraine to 132 individuals and 28 entities.

Furthermore, on December 4, 2014 the Council amended its rules in relation to sanctions against Russia (by amending Regulation 833/2014) in order to clarify certain provisions thereof (Decision 2014/872/CFSP and Regulation 1290/2014).

More specifically, the new measures provide clarification on when the competent authorities may grant an authorisation for exports, sale or supply of dual-use goods and technology and also on authorisations in relation to the provision of technical and financial assistance related to such goods and technology. It also clarifies the categories of oil exploration and production projects which are subject to a restriction in relation to their supply, sale or export in Russia and its Exclusive Economic Zone and Continental Shelf. Finally, the new Regulation also provides clarification in relation to the prohibitions on making new loans or credit with maturity exceeding 30 days to certain entities and in relation to the exceptions to such prohibitions.