Building on sanctions imposed in June and July 2014 prohibiting imports into the EU from Crimea and Sevastopol and new investments related to infrastructure in the sectors of transport, telecoms and energy and the exploitation of natural resources in Crimea and Sevastopol, effective 19 December 2014, the Council of the European Union issued Regulation 1351/2014 expanding on restrictions with respect to Crimea and Sevastopol. The new regulation prohibits investments there, as well as related services and services related to tourism activities, activities in the maritime, transport, telecoms and energy sectors and the exploitation of oil, gas and minerals in Crimea and Sevastopol. In addition, the new regulation broadened the list of items in Annex III to the regulation, which items are prohibited to be exported, sold, supplied or transferred to any person in Crimea or Sevastopol or for use there. Related technical assistance, brokering and financial services in respect of such items are also prohibited.
There are “grandfather” provisions for contracts concluded before 20 December 2014, which contracts in some cases must be executed by 15 March 2015, provided the competent authority in the relevant EU member state is notified at least 5 working days in advance of any execution of such a contract.
Licenses may also be granted for supply of certain goods and technology for certain limited purposes, including certain medical uses, and where necessary to protect health and safety and the environment.
In a parallel action, President Obama announced on 19 December 2014 that he had signed a new Executive Order prohibiting without a license, among other things:
- New investments in Crimea by US persons wherever located;
- Importation into the United States, directly or indirectly, of goods, technology or services from Crimea;
- Exportation, reexportation, sale or supply directly or indirectly from the US or by a US person wherever located of any goods, technology or services to Crimea; and
- Approval, financing, facilitation, or guarantee by a US person wherever located of a transaction by a non-US person that would be prohibited if performed by a US person or in the US.
The wording of the new Executive Order raises some difficult practical compliance issues, such as determining exactly what addresses in Ukraine constitute the Crimean region of Ukraine, and the applicability of normal personal communications exemptions for providers of internet services. Further clarifications and guidance will be required.
At the same time, the US Treasury Department’s Office of Foreign Assets Control (OFAC) issued General License No. 4 that authorizes the exportation and reexportation of certain agricultural commodities, medicines and medical supplies to Crimea, on certain conditions (including prohibitions on supplies to military or law enforcement purchasers or importers).
The new Executive Order also authorizes the addition of persons and entities to OFAC’s SDN List determined by the US Secretary of the Treasury in consultation with the US Secretary of State to be operating in Crimea, a leader of an entity operating in Crimea or to be owned or controlled by, or acting on behalf of such a designated person. Simultaneously, OFAC announced the addition of several individuals and entities, many of whom were already designated as targets of freezing sanctions by the EU.
The pressure under EU and US Ukraine-related sanctions keeps mounting.