The EU published new FAQs on 10 August 2022 which state that
restrictions on coal products exported from Russia include a ban on
their transport to third countries. Certain fertiliser products may
also be 'caught in the cross-fire', contrary to the
EU's apparent intentions.
As part of the EU's fifth sanctions package of 8 April 2022,
restrictive measures were imposed under Article 3j(1) of Council
Regulation (EU) 833/2014 on the purchase, import or transport of
Annex XXII coal products. The restrictions state:
"(1) It shall be prohibited to
purchase, import, or transfer, directly or indirectly, coal and
other solid fossil fuels, as listed in Annex XXII into the Union if
they originate in Russia or are exported from Russia."
There are also similarly worded restrictions under Article 3i,
which targets inter alia certain fertiliser products.
Given the reference to 'into the Union', it was widely
interpreted that these restrictions only prohibited the purchase,
import or transfer of Annex XXII coal products where they were
destined for an EU Member State. Supportive of this was the
distinction in drafting between Article 3j(1) and the restrictions
under Article 3g(1) affecting iron and steel products, which
contained separate restrictions on the transport of such goods to
third countries (emphasis added):
"Article 3g
1. It shall be prohibited:
(a) to import, directly or
indirectly, iron and steel products as listed in Annex XVII into
the Union if they: (i) originate in Russia; or (ii) have been
exported from Russia;
(b) to purchase, directly or
indirectly, iron and steel products as listed in Annex XVII which
are located or which originated in Russia;
(c) to transport iron and
steel products as listed in Annex XVII if they originated in Russia
or are being exported from Russia to any other
country."
On 17 April 2022, the EU issued a FAQ stating that
"transfer is a broad concept covering a wide range of
operations: not only the movement of goods through customs
controls, but also the transport of goods, including (but not
exhaustively) their loading and trans-shipment". Whilst this
made clear that 'transfer' included transport, for the
reasons given above, Article 3j(1) still ostensibly required goods
to be destined for the EU.
On 14 June 2022, the EU published a further FAQ under the
heading 'Imports & Purchase of Goods', which stated,
amongst other things (emphasis added):
"Is the purchase of
goods listed in Annexes XVII, Annex XXI and XXII of Council
Regulation 833/2014 by an EU company allowed when the goods are
exported from Russia towards a third country and are not transiting
Union territory?
No. Articles 3g, 3i and 3j of Council
Regulation 833/2014 prohibit the purchase, import, or transfer,
directly or indirectly, of the goods listed in Annexes XVII, XXI
and XII if they originate in Russia or are exported from Russia.
The prohibition on purchase applies irrespective of the
final destination of the goods. Provided the purchase
falls within the scope of Article 13 of Regulation 833/2014, it is
not relevant whether the goods are destined for the EU or
not."
With this, the EU seemingly sought to clarify that EU persons
were restricted from purchasing restricted Russian-origin coal
regardless of its destination. However, there remained some
uncertainty whether the restrictions on importing and transferring
restricted coal products only applied to imports and transfers
'into the Union' (and not third countries). Given the
distinction between Articles 3j(1) and 3g(1), the title given to
the relevant FAQ ('Imports & Purchase of Goods' –
which was subsequently re-organised under the heading 'Purchase
of Listed Goods' in the EU's Consolidated FAQs) and the
precise wording of the FAQs – this appeared the most likely
position.
By way of further development, on 10 August 2022, the EU issued
a revised FAQ under the title 'Import, purchase and transfer of
listed goods' which states (emphasis added):
"2. Is the transfer of
goods listed in Annexes XVII, Annex XXI and XXII of Council
Regulation 833/2014 by an EU company allowed when the goods are
destined for a third country and are not transiting Union
territory?
Last update: 10 August
2022
No. Articles 3g, 3i and 3j of Council
Regulation 833/2014 prohibit the purchase, import, or transfer,
directly or indirectly, of the goods listed in Annexes XVII, XXI
and XXII if they originate in Russia or are exported from Russia.
The prohibition on transfer applies irrespective of the final
destination of the goods, whereas the prohibition on the import
applies by nature to goods moving 'into the Union'.
Provided the transfer falls within the scope of Article 13 of
Council Regulation 833/2014, it is not relevant whether the goods
are destined for the EU or not."
It is unclear whether the purpose of the latest FAQ is to
clarify the previous scope of Article 3j(1) or, in fact, broaden
it. In any event, this effectively means that EU persons are now
clearly prohibited from (i) purchasing Annex XXII coal products of
Russian origin or that are exported from Russia; (ii) transporting
such goods irrespective of their destination; and (iii) importing
them into the EU. In effect, then, Article 3j is to be read in the
same manner as the better-drafted Article 3(g).
The FAQ also applies to Article 3i, which restricts inter alia
certain fertiliser products (as listed in Annex XXI). As a result,
these products are ostensibly also subject to a transportation ban
in respect of third countries. However, this should be set against
recent statements made by the EU that any sanctions on Russia are
not intended to target the trade of agricultural and food products
between third countries and Russia. These are best summarised in
Recitals 11 and 12 to Council Regulation (EU)
2022/1269.1
It therefore seems likely that this may have been an unintended
consequence of the latest FAQs, and we expect further revisions may
be made to the relevant legislation to clarify this.
Footnote
- Council Regulation
(EU) 2022/1269
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