Additional sanctions against Russia Image

Additional sanctions against Russia

After seven sanctions packages introduced by the government against Russia, an eighth sanctions package has now also been introduced on 6 October 2022. These sanctions come on top of measures imposed against Russia in 2014 for annexing Crimea and failing to implement the Minsk agreements. The measures focus on economic sanctions and diplomatic measures. The new sanctions are aimed at recognising the non-government areas of the Donetsk and Luhansk oblasts of Ukraine and sending Russian forces to those areas. In this blog, you can read what sanctions have been added and what this means for both Russia and the EU.

Previous sanctions by sector

Sanctions list

The EU has imposed restrictions on certain individuals, companies and organisations. The list[1] of restrictions has been expanded several times so it is advisable to consult it before doing business with a Russian entity.

Food products (agri-food)

On the agri-food front, there is an import ban on seafood and spirits from Russia and an export ban on various ornamental plant products. These include bulbs, tubers, roses, rhododendrons and azaleas.

Defence

There is an import and export ban on arms and related products providing services and support. In addition, there is a ban on the sale, supply, transfer and export of civilian firearms, their essential parts and ammunition, military vehicles and equipment, paramilitary equipment, and spare parts. It also prohibits the supply of certain products, technologies, technical support and brokering related to products that can be used for ‘dual use’. Dual use means that goods can be deployed for normal use but also for military use.

Energy sector

The energy sector includes activities involving the exploration, production, distribution within Russia or extraction of petroleum, natural gas or solid fossil fuels. But also manufacturing or distribution within Russia or products from solid fuels, refined petroleum products or gas. And also construction e construction of facilities or installation of equipment for, or provision of services, equipment or technology for activities related to, power generation or electricity production.

Making new investments in the entire Russian energy sector is prohibited. In addition, there are far-reaching export restrictions on equipment, technology and services across the energy sector. There is also an export ban on certain equipment, technology and services for oil refining technologies, deepwater oil exploration and production, Arctic oil exploration and production, and shale oil projects in Russia. Finally, there will be a ban on the purchase, import and transfer of crude oil and refined oil products from Russia.

Financial sector

It is prohibited to provide loans, accounting, tax advice, consultancy and investment products to the Russian government, the Central Bank and related persons/entities. Also, no services may be given by trust companies to this group. Furthermore, they are no longer allowed to trade in securities and several banks have been cut off from the international payment system SWIFT.

Industry and raw materials

An import ban applies to cement, fertiliser, fossil fuels, jet fuel and coal. Large companies in the machinery sector have to comply with additional sanctions. Also, certain machinery is not allowed to be transported to Russia.

Transport

Aviation parts and repairs, related financial services and additional goods used in aviation. EU airspace is also closed to Russian aircraft. Sanctions are also in place against large companies in the aviation sector. In addition, there is a ban on road transport for Russian and Belarusian transport companies. There are certain exceptions, including for medical, agricultural and food products, and humanitarian aid. Furthermore, Russian-flagged ships are denied access to EU ports. There are also sanctions against large companies in the Russian shipbuilding sector.

Media

Several companies are no longer allowed to broadcast in the EU to counter propaganda and fake news.

Business services

The provision of business services is not allowed when it involves accounting, auditing services, tax advice, public relations, consultancy, cloud services and management advice.

Art, culture and luxury goods

With regard to this sector, goods belonging to people on the sanctions list are frozen. Transactions and exports of luxury goods to persons, companies and organisations in Russia or for use in Russia are also banned.

New measures since 6 October 2022

New goods have been placed on the import and export list. A cap has also been imposed on sea transport of Russian oil for third countries. Additional restrictions on Russia’s trade and services have also been imposed.

Extension of import and export ban

It will become illegal to import steel products, wood pulp, paper, plastics, elements for the jewellery industry, cosmetics and cigarettes. These goods will be added to the existing list as extensions. Transportation of additional goods used in the aviation sector will also be restricted. In addition, the export ban has been extended for items that can be used for dual use. This is intended to limit Russia’s military and technological strengthening and the development of its defence and security sector. The list now includes certain electronic components, additional chemicals and goods that can be used for capital punishment, torture or other cruel, inhuman or degrading treatment.

Russian maritime transport

The Russian Shipping Register will also be banned from transactions. The new sanctions prohibit trade by sea to third countries of crude oil (as of December 2022) and petroleum products (as of February 2023) originating or exported from Russia. Technical assistance, brokering services financing and financial assistance may also not be provided. However, such transportation and services can be provided when oil or petroleum products are purchased at or below a predetermined price ceiling. This sanction is not yet in place, but the legal basis is already in place. It will take effect only when a price ceiling is set at the European level.

Legal advice

It is now prohibited to provide legal advisory services to Russia. However, representation, advice preparation of documents or verification of documents in the context of legal representation do not fall under legal advice. This follows from the explanation on legal advisory services of the new sanctions package. Cases or proceedings before administrative bodies, courts or other duly constituted official tribunals, or in arbitration or mediation proceedings are also not considered legal advice. On 6 October 2022, the Dutch Bar Association indicated that it was still considering the consequences for the legal profession of the entry into force of this sanction. For the time being, it is advised to consult the Dean of the Dutch Bar Association when wishing to assist/advising a Russian client.

Architects and engineers

Architectural and engineering services include urban planning and landscape architectural services and engineering-related scientific and technical consulting services. It is restricted by prohibiting the provision of architectural and engineering services as well as IT consulting services and legal advisory services. However, the provision of technical assistance will still be allowed concerns goods exported to Russia. The sale, supply, transfer or export of those goods should then not be prohibited under this regulation when the technical assistance is provided.

IT consulting services

These include installation of computer hardware. Consider also assistance to complaints with the installation of the hardware and networks, “IT consulting services” include consulting services related to the installation of computer hardware, software implementation services. Comprehensively, it also includes the development and implementation of software. It is further prohibited to provide wallet, account and custody services of crypto assets for Russian persons or persons residing in Russia, regardless of the total value of the crypto assets.

Other sanctions

Other measures put in place is the possibility of placing persons and entities that facilitate sanctions avoidance on the sanctions list. Furthermore, there is a ban on EU residents sitting on boards of directors of certain Russian state-owned companies. Several individuals and entities are also placed on the sanctions list. These include representatives of the Russian defence sector, known persons spreading disinformation about the war and those involved in organising illegal referendums.

The Council also decided to extend the geographical scope of the 23 February sanctions, including in particular the ban on imports of goods from the non-government Donetsk and Luhansk oblasts, to the uncontrolled areas of the Zaporizhzhya and Kherson oblasts. The measures against those responsible for undermining or threatening Ukraine’s territorial integrity, sovereignty and independence are valid until 15 March 2023.

Contact

Under certain circumstances, there are exceptions about the above sanctions. Would you like to know more about this? Then feel free to contact our Tom Meevis, at tom.meevis@lawandmore.nl or Maxim Hodak, at maxim.hodak@lawandmore.nl or call us at +31 (0)40-3690680.

[1] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02014R0269-20220721

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