The European Union decided to expand its sanctions against Russia on 12 September 2014. These sanctions are focused on further restricting access to capital markets and introducing a ban concerning dual-use goods and technology and a restriction on supplying certain services to the oil industry. European enterprises doing business with Russian entities in these areas may be affected. They should keep these sanctions in mind and closely monitor any changes in the sanctions regime.
After the Ukraine crisis earlier this year, the European Union issued sanctions against Russian persons and entities that, according to the EU, threaten the territorial integrity of Ukraine. On 12 September 2014, the EU again expanded these sanctions.
Capital market restrictions
The new EU regulation further restricts Russian state-owned enterprises in the defence and oil sectors from accessing capital markets. The sanctions now also contain elaborate restrictions regarding certain transferable securities and money-market instruments with a maturity exceeding 30 days.
Export of dual-use goods
Dual-use goods are items that can be used for either civilian purposes, but which may also have military applications. The new EU regulation now contains a general prohibition on the export of dual-use goods to targeted enterprises named in an annex to the regulation. The same prohibition applies to providing technical or financial assistance, brokering services, financing and providing other services related to those goods and technology. The execution of agreements concluded before 12 September 2014 does not fall under the prohibition.
Under the new EU regulation, it is prohibited to provide a number of specified services to oil projects in Russia, including deep water exploration and the production of oil. This involves drilling, well testing, logging and completion services, and the supply of specialised floating vessels. Also with regard to the oil industry prohibitions, the execution of agreements concluded before 12 September 2014 does not apply.
In addition to these measures, the list of targeted persons has been expanded. All funds and economic resources belonging to these persons have been frozen, and no funds or economic resources can be made available to them.
These sanctions not only apply within the EU, but also to European companies doing business outside the EU. Capital market players and European enterprises that have dealings with sanctioned persons or do business in any of the targeted areas may be affected as a result of the sanctions. They would do well to take the sanctions into account and closely follow changes in the sanctions regime when doing business with Russian entities.