Russian Federation: Russian Counter-Sanctions: Review Of 2018 And Outlook For 2019

Last Updated: 28 January 2019
Article by Hannes Lubitzsch and Tatiana Dovgan

Introduction

In 2018, the Russian Federation for the first time took comprehensive counter-measures to respond to the US/EU sanctions. This response was triggered mainly by the adoption of CAATSA1 on 2 August 2017 and the extension of the US sanctions on 6 April 2018. The counter- measures are a combination of economic sanctions and measures to prevent the implementation of the US/EU sanctions in Russia. Further counter-measures – in particular the introduction of liability for sanctions compliance in Russia – are expected in 2019.

Key developments

  • On 15 May 2018, the State Duma adopted at its first reading a draft blocking law providing for criminal liability for sanctions compliance with a penalty of up to four years' imprisonment. While such a criminal liability for sanctions compliance now seems to be off the table, administrative liability may still be introduced.
  • The new framework law on counter-measures which came into force on 4 June 2018 constitutes another basis for the Russian President to take extensive economic countermeasures against the United States and EU Member States. To date, however, countermeasures under this law have been taken only against Ukraine.
  • Throughout 2018, the Russian Government issued a number of orders restricting the disclosure of information with respect to sanctioned persons. Information from publicly available sources may now be incomplete with respect to these persons.
  • On 6 July 2018, import customs duties for certain types of goods originating from the United States were increased. On 12 July 2018, the import ban on agricultural products, raw materials and food from the United States and EU Member States was extended until 31 December 2019.
  • On 1 November 2018, the first economic measures under the new framework law on counter-measures were imposed on Ukraine. The Russian assets of 567 individuals and 75 companies – almost all Ukrainian – have been frozen. Further, on 29 December 2018, the import of a variety of Ukrainian goods was prohibited.
  • International companies operating in Russia are trying to avoid violations of the US/EU sanctions which may lead to breaches of Russian antitrust law. However, to date there has been no indication that the Federal Antimonopoly Service (FAS) will investigate these cases.
  • Throughout 2018, Russian courts further developed their case law which complicates the implementation of the US/EU sanctions in Russia. Sanctions clauses in agreements have to be drafted on a case-by-case basis taking into account this court practice and the proposed liability for sanctions compliance.

More detailed information you can find in the attached report.

Footnote

1. Countering America's Adversaries Through Sanctions Act (Public Law 115-44).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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