Another package of sanctions from 15 March 2022
On 15 March 2021, the European Union published another package of sanctions that includes new severe measures .
Prohibition of transactions with certain state-owned companies
A new transaction prohibition is likely to have the most extensive economic effects. This affects certain state-owned companies listed by name in the likewise new Annex XIX. It makes it prohibited to initiate or continue to directly or indirectly engage in transactions of any kind and with any content with these companies, Art. 5aa and Annex XIX of newly amended Regulation (EU) no. 833/2014.
This transaction prohibition applies to important Russian companies such as Oboronprom, United Aircraft Corporation, Uralvagonzavod, Rosneft, Transneft, Gazprom Neft, Alsmast Anty, Kamaz, Rostec, Sofcomflot and United Ship Building Corporation. The prohibition also applies to companies established outside the European Union whose proprietary rights are directly or indirectly owned for more than 50% by these companies. However, the Regulation also provides for significant exceptions to this prohibition, for example regarding a grandfather clause for the execution until 15 May 2022 of contracts concluded before 16 March 2022, or for certain transactions in connection with the purchase, import or transport of fossil fuels and certain metals into the European Union or related to energy projects outside Russia.
Additional measures: sanctions related to capital markets and goods
The measures affecting the capital markets and payment systems were supplemented with a prohibition to provide credit rating services to any Russian national or entity (Art. 5j of newly amended Regulation (EU) no. 833/2014).
In addition, it is now prohibited to import certain iron and steel products which originate in or have been exported from Russia (Art. 3g and Annex XVII of newly amended Regulation (EU) no. 833/2014) and to sell, supply, transfer or export certain luxury goods to any natural or legal person, entity or body in Russia or for use in Russia insofar as their value exceeds EUR 300 per item (Art. 3h with Annex XVIII of newly amended Regulation (EU) no. 833/2014).
Another new prohibition is to invest in or grant any new loan or credit or otherwise provide financing to any legal person, entity or body incorporated or constituted under the law of Russia or any other third country and operating in the energy sector in Russia, particularly Art. 3a of newly amended Regulation (EU) no. 833/2014.
Wide-ranging additions have likewise been made to Annex IV of Regulation (EU) no. 833/2014: it is only permitted under very strict conditions to grant approval to the companies listed there for exceptions to the prohibition of supplying dual-use and Annex VII goods that could contribute to strengthening Russia militarily or technologically.
Sanctions against natural persons
The list of natural persons and entities covered by prohibitions such as the supply prohibition, which is wider-ranging in places than the new business prohibition, has also been expanded, Annex I of newly amended Regulation (EU) no. 269/2014. For example, the oligarchs Abramovich, Khan and Kerimov and the entities Rosneft Areo, Rosoboron Export, Russian Helicopters, United Aircraft Corporation, United Ship Building Corporation and Uralvagonzavod (see also Russia Sanctions / Consolidated Short List of Sanctioned Legal Entities and Persons) have been added to the list.
These measures add a new dimension to the already head-spinning complexity of current sanctions law. It has become very difficult, even for experts, to discern what business can still be conducted with which listed persons or entities. To implement these measures in an effective compliance structure, companies need to have a completely automated sanctions list screening that includes all lists and the information needed to correctly evaluate a listing. Additionally, the rules and exceptions also include vague passages that make it very difficult for companies to clearly determine what their obligations – including contractual obligations – are and when – punishable – prohibitions apply.
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