On 23 June 2023, the EU published its 11th sanctions package.
We set out below a summary of key highlights in this latest update. These are all subject to further interpretative guidance provided by the EU, where applicable.
Designations / Asset Freeze Restrictions
The new round of sanctions extends the categories of persons that may be subject to an asset freeze, to include not only natural or legal persons, entities or bodies facilitating infringements of the prohibition against circumvention but also those that are significantly frustrating the provisions laid out by EU sanctions.
Over 100 additional individuals and entities have been added to the list of entities and individuals subject to asset freezing measures, including senior military officials, decision makers, Russian IT companies, banks, businesspersons, judges etc. In total 1572 entities and 244 individuals are currently listed as being subject to asset freezes.
Two new banks are designated, MRB Bank and CMRBank. An authorisation may be granted to release frozen funds or resources belonging to them if such funds or economic resources are necessary for the purchase, import or transport of agricultural and food products, including wheat and fertilizers.
Transit via Russian Territory
The transit via the territory of Russia, of Annex VII items, goods suited for use in aviation or space industry (Annex XI) and jet fuel and fuel additives (Annex XX) is now also prohibited.
Export / Import Bans and Related Activities
Military, Defence and Security:
- Extension of the list of items that contribute to Russia’s military and technological enhancement, the development of its defence and security sector (Annex VII), including electronic components, semiconductor materials, manufacturing and testing equipment for electronic integrated circuits and printed circuit boards, precursors to energetic materials, and precursors to chemical weapons, optical components, navigational instruments, metals used in the defence sector and marine equipment.
- Extension of the list of restricted firearms, their parts, essential components, and ammunition, and adds other types of arms under Annex XXXV (e.g. CN 9303 and ex 9304).
Article 2b / List of restricted entities for sale, transfer or export (and related services) of certain goods and technology
- 87 entities added for their support of Russian’s military and industrial complex.
- Ten entities from third countries have been added, including four entities for their involvement in the manufacturing of Unmanned Aerial Vehicles and the provision of such equipment to Russia, and others for their involvement in the circumvention of trade restrictions:
- Asia Pacific Links Ltd. (Hong Kong, China)
- Tordan Industry Limited (Hong Kong, China)
- Alpha Trading Investments Limited (Hong Kong, China)
- Tako LLC (Armenia)
- Alfa Beta Creative LLC (Uzbekistan)
- GFK Logistics Asia LLC (Uzbekistan)
- I Jet Global DMCC (Syria)
- I Jet Global DMCC (United Arab Emirates)
- Success Aviation Services FZC (United Arab Emirates)
- Iran Aircraft Manufacturing Industries Corporation (HESA) (Iran)
- Additional Russian entities involved in the development, production, and supply of electronic component for Russia’s military and industrial complex
Article 3k: Further restrictions on goods which could contribute to the enhancement of Russian industrial capacities (e.g., new and second-hand cars above a certain engine size (> 1.900 cm³), and all electric and hybrid vehicles), as listed under Annex XXIII. There is a wind-down period until 25 September 2023 for contracts predating 24 June 2023 relating to such newly listed products.
Intellectual property rights and trade secrets: In addition to technical assistance, brokering services, other services, financing and financial assistance, it is now prohibited to sell, licence or transfer in any other way intellectual property rights or trade secrets as well as grant rights to access or re-use any material or information protected by means of intellectual property rights or constituting trade secrets relating to goods and technology whose sale, supply, transfer or export is prohibited.
[This covers in particular dual-use goods and technology; goods and technology listed in Annex VII; firearms, their parts, essential components and ammunition, other types of arms as listed in Annex XXXV; Annex II items; goods and technology suited for use in oil refining and liquefaction of natural gas, as listed in Annex X; goods suited for use in aviation or space industry, as listed in Annex XI and jet fuel and fuel additives as listed in Annex XX; maritime navigation goods and technology as listed in Annex XVI; luxury items as listed in Annex XVIII and goods which could contribute in particular to the enhancement of Russian industrial capacities as listed in Annex XXIII].
Luxury items: It is now also prohibited to provide technical assistance, brokering services or other services related to luxury items and related to the provision, manufacture, maintenance, or use of those goods to any natural person or legal person, entity or body in Russia or for use in Russia. It is also prohibited to provide financing or financial assistance.
Imports of iron and steel: Importers are now obliged to provide evidence of the country of origin of the iron and steel inputs used for the processing of the product in a third country in the context of the prohibition to import or purchase iron and steel products listed in Annex XVII when processed in a third country incorporating iron and steel products originating in Russia as listed in Annex XVII.
General amends to Annexes relating to Article 3g, 3i and 3k: General amendments were made to streamline the relevant annexes, by removing the segregation of the various “Part A”, “Part B” etc as such distinction was more relevant to the transitory periods, which have now all expired. Further, some CN Code references, especially in relation to those goods caught by Article 3k, have now been expanded – where some references used to refer to specific products at a 6 to 8 CN Code digit level, they now capture all products under the 4 digit CN Code heading. It is therefore important to refresh checks in relation to new transactions or fixtures.
Coal (previously Article 3j): The restrictions relating to coal products are now silo-ed under Article 3i.
Access to EU Ports and Locks for Vessels
- On and from 24 July 2023, EU ports and locks will not be available to any vessel that has engaged in STS activity “at any point of the voyage to a Member State’s ports or locks”, if the relevant competent authority has reasonable cause to suspect that such vessel is in breach of Articles 3m(1) and (2) and Articles 3n (1) and (4).
- Even if the vessel’s fixture is in compliance with Articles 3m and 3n, that vessel will not be granted access if it fails to notify the relevant competent authority at least 48 hours in advance of such STS activity, if such STS activity occurs within the Exclusive Economic Zone or 12 nautical miles from the baseline of that Member State’s coast.
- These are all subject to exemptions or grounds for derogation in emergency circumstances or for humanitarian purposes.
- Competent authorities will exchange information in relation to any refusals made under this new provision.
- On and from 24 July 2023, EU ports and locks will not be available to any vessel that a competent authority has reasonable cause to suspect that such vessel has illegally interfered with, switched off or otherwise disabling its AIS “at any point of the voyage to a Member State’s ports or locks”, in breach of the SOLAS Regulation when transporting crude oil or petroleum products under Articles 3m(1) and (2) and Articles 3n (1) and (4).
- This is all subject to exemptions or grounds for derogation in emergency circumstances or for humanitarian purposes.
- Competent authorities will exchange information in relation to any refusals made under this new provision.
Crude oil by pipeline: The temporary exemption under Article 3m(3)(d) for Russian crude oil delivered by pipeline stops applying to Germany and Poland as of 23 June 2023.
Caspian Pipeline Consortium (CPC) for Kazakh origin crude oil: By way of derogation to some of the existing export ban, the competent authorities may authorise the sale, supply, transfer, export or transit through Russia, and the provision of related technical assistance, brokering services or other services, or financing or financial assistance, for the operation and maintenance of the Caspian Pipeline Consortium (CPC) pipelines and associated infrastructures necessary for the transport of goods falling under CN 2709 00 originating in Kazakhstan and which are only being loaded in, departing from or transiting through Russia, under such conditions as they deem appropriate. The competent authorities may also authorise the provision of auditing services, engineering services, legal advisory services, technical testing and analysis services for the operation and maintenance of the CPC pipelines and associated infrastructure.
Article 3n(6)(c): The exemption in relation to the Sakhalin-2 Project is extended until 31 March 2024, in order to ensure Japan’s energy supply, as specified in Annex XXIX.
Divestment (Article 12b)
Provision of services:
- Extension of the wind-down period for which competent authorities may authorise the continuation of services (e.g., accounting, auditing, bookkeeping or tax consulting services, market research, public opinion polling services, architectural and engineering services, legal advisory services, IT consultancy services etc.) until 31 March 2024 where such provision of service is strictly necessary for the divestment from Russia or the wind-down of business activities in Russia.
- In addition, the competent authorities may authorise the provision until 31 March 2024 of legal advisory services which are legally required for the completion of a sale or transfer of proprietary rights directly or indirectly owned by a legal person, entities or bodies established in Russia in a legal person, entity or body established in the Union.
Divestment or wind-down of business in Russia:
- Extension of the wind-down period for which competent authorities may authorise the sale, supply or transfer of goods and technologies subject to an export ban under Annex II, VII, X, XI, XVI, XVIII, XX and XXIII, as well as the sale, licensing or transfer in any other way of intellectual property rights or trade secrets as well as granting rights to access or re-use any material or information protected by means of intellectual property rights or constituting trade secrets to 31 December 2023, where such sale, supply, transfer, licensing, granting rights to access or re-use is strictly necessary for the divestment from Russia or the wind-down of business activities in Russia.
Gas pipeline infrastructure joint venture:
- Competent authorities may now also authorise the sale, supply or transfer of goods and technologies listed in Annex II until 31 March 2024, where such sale, supply or transfer is strictly necessary for the divestment from a joint venture incorporated or constituted under the law of a Member State before 24 February 2022, involving a Russian legal person, entity or body, and operating a gas pipeline infrastructure between Russian and third countries.
Circumvention (Article 12f)
To curb circumvention, the new round of sanctions introduces the possibility to take exceptional, last-resort measures restricting the sale, supply, transfer or export of sensitive goods and technology to third countries whose jurisdiction is demonstrated to be at a continuing and particularly high-risk of being used for circumvention.
The new package prohibits the sale, supply, transfer, export, and related activities, of goods and technology listed in Annex XXXIII, whether or not originating in the Union, to any natural or legal person, entity or body in a third country listed in that Annex (for now, no products or countries have been listed). Annex XXXIII will specify, for each item of listed goods and technologies, the third countries to which the sale, supply, transfer or export is prohibited.
Broadcast ban: Extension of the suspension of broadcasting licences of 5 Russian media outlets (RT Balkan, Oriental Review, Tsargrad, New Eastern Outlook and Katehon)
Road transport ban: Extension of the prohibition to transport goods by road to trailers and semi-trailers registered in Russia, including when hauled by trucks registered outside of Russia. There is a short wind-down period until 30 June 2023 for the transport of goods that started before 24 June 2023, if the trailer or semi-trailer was already in the Union and needs to transit through the Union in order to be returned to Russia.
Provision of services: New derogation from the prohibition to provide certain services (e.g., bookkeeping, accounting, auditing etc.) to Russian entities required for the setting-up, certification or evaluation of a firewall which removes the control exercised by a listed person over the assets of a non-listed EU entity owned or controlled by the listed person, and ensures that no further funds or economic resources accrue to the benefit of the listed person.
Information obligation for non-scheduled flights: Aircraft operators of non-scheduled direct or indirect flights between Russia and the EU, must notify the competent authorities in the EU country of arrival or departure, at least 48 hours in advance of their operations.
Information sharing between the Member States and forum shopping: Member States must inform other Member States and the Commission of any authorisations denied and, and before a Member States grants an authorisation for a transaction which is identical to a transaction which has been subject to denial in another Member State, it must consult the Member state that issued the denial.
Partner countries: Switzerland has been added as partner countries which are applying a set of export control measures substantially equivalent to those set out by the EU.
Ban on transferable securities to persons in Russia: the prohibition to sell transferable securities now extends to transferable securities denominated in any currency issued after 6 August 2023.