Worldwide: July Sanctions Update: Ukraine And Iran

Since March 2014, we have been closely monitoring the developments relating to the situation in the Ukraine and reporting them as  Client Alerts and blog updates.

We have set out below a summary of the recent changes in respect of the Ukraine as well as an update on the position regarding the "Joint Plan of Action" in respect of Iran.

Ukraine: EU extends list to further 11 individuals

The European Union has made further additions to the list of sanctioned parties under the regime put in place in response to the Russian Federation's actions in the Crimea ( Regulation 269/2014 and subsequent amendments).

On 12 July 2014 the European Council published Regulation 753/2014, which added an additional 11 individuals to the list of those subject to a travel ban and placed a freeze on their assets within the European Union. These individuals are:

  • Aleksandr Yurevich BORODAI; The so-called Prime Minister of the Donetsk People's Republic (DPR). Responsible for the separatist 'governmental' activities of the so-called government of the DPR (e.g. on 8 July stated 'our military is conducting a special operation against the Ukrainian "fascists"'). Signatory of the Memorandum of Understanding on the Novorossiya Union.
  • Alexander KHODAKOVSKY; The so-called Minister of Security of the DPR. Responsible for the separatist security activities of the so-called government of the DPR.
  • Alexandr Aleksandrovich KALYUSSKY; The so-called de facto Deputy Prime Minister for Social Affairs of the DPR. Responsible for the separatist 'governmental' activities of the so-called DPR.
  • Alexander KHRYAKOV; The so-called Information and Mass Communications Minister of the DPR. Responsible for the pro-separatist propaganda activities of the so-called DPR.
  • Marat BASHIROV; The so-called Prime Minister of the Council of Ministers of the People's Republic of Luhansk (PRL), confirmed on 8 July. Responsible for the separatist 'governmental' activities of the so-called government of the PRL.
  • Vasyl NIKITIN; The so-called Vice Prime Minister of the Council of Ministers of the PRL, (used to be the so-called Prime Minister of the PRL, and former spokesman of the 'Army of the Southeast'). Responsible for the separatist 'governmental' activities of the so-called government of the PRL. Responsible for the statement made by 'the Army of the Southeast' announcing that the Ukrainian presidential elections in the PRL could not take place due to the 'new' status of the region.
  • Aleksey KARYAKIN; The so-called Supreme Council Chair of the PRL. Responsible for the separatist 'governmental' activities of the Supreme Council, responsible for asking the Russian Federation to recognize the independence of the PRL and signatory of the Memorandum of Understanding on the Novorossiya Union.
  • Yurij IVAKIN; The so-called Minister of Internal Affairs of the PRL. Responsible for the separatist 'governmental' activities of the so-called government of the PRL.
  • Igor PLOTNITSKY; The so-called Defence Minister of the People' s Republic of Luhansk. Responsible for the separatist 'governmental' activities of the so-called PRL.
  • Nikolay KOZITSYN; Commander of the Cossack forces. Responsible for commanding separatists in Eastern Ukraine fighting against the Ukrainian government forces.
  • Oleksiy MOZGOVY; One of the leaders of armed groups in Eastern Ukraine. Responsible for training separatists to fight against the Ukrainian government forces.

So far a total of 72 individuals and two entities are listed as designated parties by the EU. You can access a consolidated list of all those listed by the EU by using the following link.

Ukraine: EU restrictions on the import of goods originating in Crimea or Sevastopol

On 23 June 2014 the European Council published Council Decision 2014/386/CFSP, which was implemented by  Regulation 692/2014 of 23 June 2014 (the Regulation) "in response to the illegal annexation of Crimea and Sevastopol", which prohibits the import into the EU of goods "originating from" Crimea or the city of Sevastopol.

Under the Regulation goods originating in Crimea or Sevastopol are defined as goods wholly obtained in Crimea or in Sevastopol or which have undergone their "last substantial transformation" there in accordance with EU customs law.

The relevant EU customs law sets out that "goods wholly obtained in a country" may include inter alia: (i) mineral products extracted within that country; (ii) vegetable products harvested within that country; and (iii) waste and scrap products derived from manufacturing operations and used articles, if they were collected within that country and are fit only for the recovery of raw materials.

Goods whose production involved more than one country are deemed to originate in the country where they underwent their last, substantial, economically justified processing or working which resulted in the manufacturing of a new product or represented an important stage of the manufacturing process.

The prohibition also extends to the direct or indirect provision of financing or financial assistance, as well as insurance and reinsurance services, related to such goods.

The effects of the Regulation came into force on 25 June 2014 and shall apply until 23 June 2015. However it could be amended further, as is appropriate, so it shall remain under constant review.

It is important to note that the Regulation provides two derogations to this prohibition:

  1. The prohibition does not apply to contracts for goods concluded before 25 June 2014 and executed by 26 September 2014, or ancillary contracts necessary for the execution of such contracts, provided that any parties seeking to perform such contracts must have notified, at least 10 working days in advance, the activity or transaction to the competent authority of the Member State in which they are established (e.g. HM Treasury in the UK).
  2. The prohibition does not apply to goods originating in Crimea or Sevastopol which have a Ukrainian Certificate of Origin issued by the Ukrainian Government. This was made clear in a  Corrigenda (correction) to the Regulation published by the European Council on 4 July.

    The derogation requires that such goods must be made available to the Ukrainian authorities for examination, for which compliance with the conditions conferring entitlement to preferential origin has been verified and for which a certificate of origin has been issued (in accordance with Regulation 978/2012 and Regulation 374/2014 or in accordance with the EU-Ukraine Association Agreement).

Ukraine: Publication of the United States' Ukraine-related Sanctions Regulations and further designations

The United States (US) Department of the Treasury's Office of Foreign Assets Control (OFAC) issued the new Ukraine-Related Sanctions Regulations, at 31 C.F.R. Part 589 on 8 May 2014 (to implement the three Executive Orders (E.O.) issued in March 2014, E.O. 13660 of 6 March 2014 (Blocking Property of Certain Persons Contributing to the Situation in Ukraine), E.O. 13661 of 17 March 2014 (Blocking Property of Additional Persons Contributing to the Situation in Ukraine), and E.O. 13662 of 20 March 2014 (Blocking Property of Additional Persons Contributing to the Situation in Ukraine)).

OFAC clarified that the regulations were published in abbreviated form and that OFAC intends to supplement Part 589 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance and additional general licences and statements of licensing policy.

The Ukraine-Related Sanctions Regulations did not add any further sanctions than those already put in place by OFAC under the Executive Orders named above and designations published by OFAC.

On 20 June 2014, OFAC added the following individuals to the OFAC SDN List:

  • BOLOTOV, Valery (a.k.a. BOLOTOV, Valeri; a.k.a. BOLOTOV, Valeriy); DOB 1970; alt. DOB 1971 (individual).
  • GIRKIN, Igor Vsevolodovich (a.k.a. STRELKOV, Igor Ivanovich; a.k.a. STRELKOV, Ihor; a.k.a. STRELOK, Igor), Shenkurskiy Passage (Proyezd), House 8-6, Apartment 136, Moscow, Russia; DOB 17 Dec 1970; Russia citizen; Passport 4506460961 (individual).
  • KAUROV, Valery Vladimirovich (a.k.a. KAUROV, Valerii Volodymyrovych; a.k.a. KAUROV, Valeriy; a.k.a. KAUROV, Valery); DOB 02 Apr 1956; POB Odessa, Ukraine (individual).
  • MENYAILO, Sergei Ivanovich (a.k.a. MENYAILO, Sergei; a.k.a. MENYAILO, Sergey); DOB 22 Aug 1960; POB Alagir, North Ossetia, Russia; Acting Governor of Sevastopol (individual).
  • PONOMARYOV, Vyacheslav (a.k.a. PONOMAREV, Vyacheslav; a.k.a. PONOMARYOV, Vachislav); DOB 02 May 1965 (individual).
  • PURGIN, Andrey Yevgenyevich (a.k.a. PURGIN, Andrei; a.k.a. PURGIN, Andrej; a.k.a. PURGIN, Andriy; a.k.a. PURGYN, Andriy; a.k.a. PURHIN, Andriy); DOB 26 Jan 1972 (individual).
  • PUSHILIN, Denis (a.k.a. PUSHYLIN, Denis; a.k.a. PUSHYLIN, Denis Volodymyrovych; a.k.a. PUSHYLIN, Denys); DOB 09 May 1981; POB Makeevka, Ukraine (individual).

As previously noted, United States persons are prohibited from continuing or entering into transactions with entities and individuals specifically designated on OFAC's SDN List, and entities that are 50% or more owned by a sanctioned entity or individual.

Iran: Update on the easing of sanctions by the United States and the European Union

As reported in our Client Alerts of  December 2013 and January 2014, the "Joint Plan of Action" was reached between the United Kingdom (UK), the US, Germany, France, Russia and China (collectively known as the E3+3 or the P5+1) and Iran in November 2013. This was envisaged as being a two-step process in relation to relief from international trade sanctions against Iran.

In January of this year, it was announced that the first step, the interim deal (with a time limit of six months renewable by mutual consent) between the E3+3 and Iran, would begin to run on 20 January 2014. The interim deal is due to expire on 20 July 2014.

Despite the latest round of negotiations, which began on 2 July and which are scheduled to come to a close on 15 July 2014, there is still no evidence of an imminent final deal or notice of a potential extension.

The effect of this is that the easing of restrictions that have been in place over the last six months will come to an end on 20 July 2014. In accordance with the current regulations, any transactions under these eased restrictions must have occurred and all actions under any agreement in place must be completed by that date.

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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