On December 16, 2022, the EU adopted its 9th Sanctions Package further expanding the scope of the existing sanctions and restrictive measures, as well as adding to the list of sanctioned individuals and entities.1 Whereas the EU's focus has been shifting from the adoption of ever-broader sanctions to more attention for harmonization in the implementation and enforcement of sanctions (see Mayer Brown 's Legal Updates ‘ Further Harmonization of EU Sanctions Enforcement: Violations of EU Sanctions Added as “EU Crimes”' and ‘ European Commission proposes common definitions and penalties for EU sanctions violations') this 9th Sanctions Package further widens the scope of individuals and entities subject to existing asset freeze measures and lays down additional export/import control, as well as “sectoral” measures.2
Asset Freeze Measures and Grounds for Authorization
The EU has added another 140 individuals and 47 entities to the list of persons subject to asset freeze measures (including the prohibition to makes economic resources available and a travel ban for individuals).3 In addition, several new grounds for authorization have been introduced:
- New ground for authorization 1: National Competent Authorities can authorize the release of frozen funds/economic resources or the making available of economic resources to certain listed banks (Bank Rossiya, Promsvyazbank, VEB.RF, Otkritie FC Bank, Novikombank, Sovcombank, VTB Bank, Credit Bank of Moscow and JSC Far Eastern Bank) when necessary for the purchase, import or transport of agricultural and food products, including wheat and fertilisers.
- New ground for authorization 2: National competent authorities can authorize the release of frozen funds/economic resources or the making available of economic resources to individuals “who held a significant role in international trade in agricultural and food products, including wheat and fertilisers, prior to their listing” if necessary for the sale, supply, transfer or export of agricultural and food products, including wheat and fertilizers, to third countries in order to address food security.
- New ground for authorization 3: National competent authorities can authorize the release of frozen funds/economic resources or the making available of economic resources to Sberbank if these funds or economic resources are “necessary for the completion, by 17 June 2023, of an ongoing sale and transfer of proprietary rights directly or indirectly owned by that entity in a legal person, entity or body established in the Union”.
- New ground for authorization 4: National competent authorities can authorize the release of frozen funds/economic resources or the making available of economic resources to Credit Bank of Moscow and JSC Far Eastern Bank if these funds or economic resources are “necessary for the termination by 17 June 2023, of operations, contracts, or other agreements, including correspondent banking relations, concluded with those entities before 16 December 2022”.4
The first two grounds for authorization are the result of intense lobbying efforts by certain Member States who faced difficulties in releasing certain shipments of agricultural and food products (which are explicitly permitted), to the extent that the transactions and shipments involved certain individuals or entities that are the subject of the EU's asset freeze measures.
Trade Restrictions: Import and Export
The EU's 9th Sanctions Package also contains various components that extend or enhance the various, already existing, export control and import restrictions.5
- Export Control: extension of product lists and additional grounds for authorization
— the list of restricted items which might contribute to Russia's military and technological enhancement or the development of its defence and security sector (“Annex VII items”) was extended through the addition of drone engines, further chemical and biological equipment, riot control agents and electronic components.
— the list of entities (“Annex IV entities”) against whom tighter export restrictions regarding dual-use goods and technology as well as Annex VII items are imposed was extended.
— the export ban covering goods and technology suited for use in aviation and the space industry (“Annex XI items”) was extended to include aircraft engines and their parts. For these goods, a grandfathering clause allows for the temporary execution of contracts concluded before the entry into force of the new measures.
- New ground for authorization 1: the provision of technical assistance relating to Annex XI items can be authorized by national competent authorities if it is necessary for avoiding collision between satellites, or their unintended re-entry into the atmosphere.
- New ground for authorization 2: the sale, supply, transfer, export of a limited number of Annex XI items (and technical assistance relating to them) can be authorized by national competent authorities if necessary for medical or pharmaceutical purposes, or for humanitarian purposes, such as delivering or facilitating the delivery of assistance, including medical supplies, food, or the transfer of humanitarian workers and related assistance or for evacuations.
— the list of goods which could contribute to the enhancement of Russian industrial capacities (“Annex XXIII items”) was extended through the inclusion of items such as generators, toy drones, laptops, hard drives, IT components, night-vision and radio-navigation equipment, cameras and lenses. For these goods, a grandfathering clause allows for the temporary execution of contracts concluded before the entry into force of the new measures was adopted.
— the grandfathering clause allowing an exemption to the export restriction on goods which generate significant revenues for Russia (“Article XXI items”) is extended by 6 months for methanol only.
— New general ground for authorization: Competent authorities can authorize under conditions the sale, supply or transfer of goods and technologies listed in Annexes II, VII, X, XI, XVI, XVIII, XX and XXIII, or dual-use items until 30 September 2023, where such sale, supply or transfer is strictly necessary for the divestment from Russia or the wind-down of business activities in Russia.
- Import Restrictions: oil and petroleum products and authorizations of divestments and wind-downs of business activities in Russia
— It is clarified that Bulgaria cannot sell petroleum products obtained from Russian crude oil imported on the basis of a derogation to the prohibition to import crude oil from Russia to buyers located in other Member States or in third countries.
— Hungary, Slovakia and Bulgaria are allowed to export to Ukraine diesel products obtained from Russian crude oil imported on the basis of a derogation to the prohibition to import crude oil and petroleum products from Russia.
— New ground for authorization for natural gas condensate: Concerning the prohibition to import crude oil or petroleum products from Russia, the competent authorities can authorize the purchase, import or transfer of natural gas condensate falling under CN 2709 00 10 after having determined that this is necessary for ensuring the security of energy supplied—in particular, liquefied natural gas—of the Union. The Council also introduced a new reporting obligation for individuals and entities involved in transactions for the purchase, import or transfer into the Union of natural gas condensates from Russia.
— New general ground for authorization: A competent authority can authorise under conditions the import or transfer of goods listed in Annexes XVII and XXI until 30 September 2023, where such import or transfer is strictly necessary for the divestment from Russia or the wind-down of business activities in Russia.
In addition to the extension of the Asset Freeze measures and trade restrictions, the 9th Sanctions Package also contains the following sectoral restrictive measures:
- Investments in the Russian Energy / Mining Sector: an extension of the scope of the already existing prohibition targeting new investments in the Russian energy sector by also prohibiting new investments in the Russian mining sector.
— This prohibition does not apply to the mining and activities involving certain critical raw materials including Aluminium (including bauxite), Chromium, Cobalt, Copper, Iron ore, Mineral fertilisers (including potash and phosphate rock), Molybdenum, Nickel, Palladium, Rhodium, Scandium, Titanium, Vanadium, certain heavy rare earths (dysprosium, erbium, europium, gadolinium, holmium, lutetium, terbium, thulium, ytterbium, yttrium) and certain light rare earths (cerium, lanthanum, neodymium, praseodymium and samarium).
- Transaction ban: the Russian Regional Development Bank has been added to the list of entities with which it is prohibited to directly or indirectly engage in any transaction (“Annex XIX entities”). The Council also extended the ban on Union nationals to hold any posts on the governing bodies of certain state-owned companies to all Russian State-owned or controlled legal persons, entities or bodies located in Russia (this prohibition was limited to Annex XIX entities in the past).
— New ground for authorization: A competent authority can authorize transactions with Annex XIX entities which are strictly necessary for the divestment and complete withdrawal by 30 June 2023, of the entities mentioned in paragraph 1 or their subsidiaries in the Union from a legal person, entity or body established in the Union.
- Service ban: the services ban has been extended to also encompass market research and public opinion polling services, technical testing and analysis services, and advertising services.
- Broadcasting ban: the suspension of the broadcasting licenses in the EU of Russian media outlets under the permanent control of the Russian leadership has been extended through the addition of ‘NTV/NTV Mir, Rossiya 1, REN TV and Pervyi Kanal'.
- Flight ban: it has been clarified that the export prohibition relating to Annex XI items and the prohibition to land, take off from, or overfly the territory of the Union applies to both manned and unmanned aircrafts.
- Deposits: the Member States' reporting obligation on deposits exceeding EUR 100 000 from legal persons, entities or bodies established in third countries and majority-owned by Russian nationals or natural persons residing in Russia has been aligned with the similar obligations already existing for the other types of deposits.
The EU's 9th Sanctions Package is adopted in a context of increased focus on harmonizing implementation and enforcement. Companies are well advised to continue their on-going sanctions monitoring efforts and to perform sufficient due diligence, in particular insofar as they deal with products or items that are the subject of restrictions.
1 Council of the EU, Russia's war of aggression against Ukraine: EU adopts 9th package of economic and individual sanctions, 16 December 2022. Available at https://www.consilium.europa.eu/en/press/press-releases/2022/12/16/russia-s-war-of-aggression-against-ukraine-eu-adopts-9th-package-of-economic-and-individual-sanctions/.
2 Official Journal of the EU, L 322I, 16 December 2022. Available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L:2022:322I:TOC.
3 Council Implementing Regulation (EU) 2022/2476 of 16 December 2022 implementing Regulation (EU) No 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, ST/15263/2022/INIT, OJ L 322I , 16 December 2022, p. 318–465.
4 Council Regulation (EU) 2022/2475 of 16 December 2022 amending Regulation (EU) No 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, ST/15779/2022/INIT, OJ L 322I , 16 December 2022, p. 315–317.
5 Council Regulation (EU) 2022/2474 of 16 December 2022 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine, ST/15384/2022/INIT, OJ L 322I , 16 December 2022, p. 1–314.
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