Russia-Ukraine War

Russia sanctions

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Tightening of EU sanctions against Russia

The European Union has adopted new sanctions against Russia. The sanctions adopted on 22 February 2022 were transposed into directly applicable law by a new embargo regulation, Regulation (EU) 2022/263 dated 23 February 2022. The decree applies in relation to Donetsk and Luhansk.
On 15 March 2022, another EU sanctions package was adopted, which appeared in Official Journal L87I.
In addition, the already existing regulations, Regulations (EU) 833/2014 and 269/2014 (Crimea), were adapted. The Federal Office of Economics and Export Control (BAFA) provides information on sanctions online and by calling 06196 908-1237. This decision establishes restrictions on goods originating in the non-government-controlled areas of the Donetsk and Luhansk regions of Ukraine and on the direct or indirect provision of financing or financial assistance, as well as insurance and reinsurance, related to the import of such goods, except for goods for which a certificate of origin has been issued by the Government of Ukraine.
It also restricts trade in goods and technologies for use in certain sectors in the non-government-controlled areas of Ukraine's Donetsk and Luhansk regions and prohibits the provision of services in the sectors of transport, telecommunications, energy, prospecting, exploration and extraction of oil, gas and mineral resources, as well as services related to tourism-related activities in the said areas.
According to Article 2 of the decision, the following is prohibited:
  • the importation into the European Union of goods originating in the specified territories, and
  • the direct or indirect provision of financing or financial assistance as well as insurance and reinsurance in connection with the importation of specified goods.
These prohibitions do not apply to the performance of commercial contracts entered into before 24 May 2022, or to accessory contracts necessary for the performance of such contracts, until 23 February 2022, provided that the natural or legal person, entity or body seeking to perform the contract has notified the activity or transaction at least 10 working days in advance to the competent authority of the Member State in which it is established.
Furthermore, the prohibitions do not include: products originating in the specified territories which have been submitted for verification to the Ukrainian authorities, for which the fulfilment of the conditions conferring originating status has been verified and for which a certificate of origin has been issued by the competent authority of Ukraine in accordance with the EU-Ukraine Association Agreement.
In the wake of the currently worsening situation in the Russia-Ukraine conflict, the European Union has initially carried out further listings of Russian citizens. The respective listed natural or legal persons, entities or bodies will be de facto excluded from doing business. These are people who are active in Ukraine, Russia and Crimea/Sevastopol. The legal basis is Decision 2014/145/CFSP and Regulation (EU) No 269/2014, as amended and extended on 21 February 2022 by Decision (CFSP) 2022/241 and Implementing Regulation (EU) 2022/2014. These resolutions expand the 2014 sanctions listed below.
In addition, in direct response to Russia's recognition of the “Donetsk People's Republic (DNR)” and the “Luhansk People's Republic (LNR),” on 22 February 2022 the United States issued an Executive Order (EO) extending the scope of EOs 13660, 13661, 13662, 13685, 13849 to the LNR and DNR and imposing embargo measures with extraterritorial effect against these territories. Exceptions apply in accordance with General Licences 17 through 22.

EU sanctions against Russia dated 15 March 2022

Specifically, the sanctions package consists of two pieces of legislation that appeared in Official Journal L87I.
Council Implementing Regulation (EU) 2022/427 initially added 15 natural persons and nine other legal persons to the sanctions list contained in Annex I to Regulation (EU) No. 269/2014. These include, on the one hand, prominent oligarchs, lobbyists and propagandists who spread the Kremlin's narrative about the situation in Ukraine, and on the other, important companies in the aerospace, shipbuilding and mechanical engineering industries as well as military and dual-use goods are affected.
In addition, with Council Regulation (EU) 2022/428 amending Regulation (EU) No. 833/2014, the following sanctions in particular will enter into force on 16 March:
  • Prohibition of all transactions with certain state-owned enterprises (see end of Annex II),
  • Prohibition of the provision of rating services to Russian persons or entities or access to relevant subscription services,
  • Expanding the list of those with ties to Russia's defence technological and industrial base who are subject to tighter export restrictions, for dual-use items and for goods and technologies that could contribute to technological improvements in Russia's defence and security sectors,
  • Prohibition of new investments in the Russian energy sector and the introduction of a comprehensive restriction on exports of equipment, technologies and services intended for the energy industry,
  • Import bans on iron and steel products and on so-called luxury goods (see Annex II).
EU Official Journal L87I: https://eur-lex.europa.eu/legal-content/DE/TXT/?uri=OJ:L:2022:087I:TOC

Financial sanctions

At a special summit of heads of state and government held on 25 February 2022, the EU adopted a comprehensive sanctions package, which was supplemented by further measures such as Russia's expulsion from the SWIFT banking communications system. The list of Russian banks concerned was published in the Official Journal of the EU on 2 March 2022:
  • Bank Otkritie
  • Novikombank
  • Promsvyazbank
  • Bank Rossiya
  • Sovcombank
  • VNESHECONOMBANK (VEB)
  • VTB BANK
Sanctions, some of which had already been imposed in response to the occupation of Crimea, are currently being added to those already in place:
  • Transaction ban with the Russian Central Bank. All assets belonging to the Bank in the EU are frozen.
  • Financial sanctions targeting 70 percent of Russia's banking sector (with key energy transactions excluded).
  • Export restrictions, for example, on aircraft parts, the energy sector, semiconductors and high-tech goods, as well as dual-use goods.
  • Expansion of the sanctions list to include additional individuals, including Russia's President Putin and his Foreign Minister Lavrov, as well as several oligarchs associated with Putin. The sanctions list includes an asset freeze, credit bans, and an EU entry ban.
The EU officially announced the decisions in its Official Journal – issues L48 to L54.
German companies can also find out the current status of restrictions on business in Russia on the website of the Federal Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle, BAFA) website.
The latest Russia embargo regulations are briefly summarised here by the IHK Düsseldorf (Chamber of Commerce and Industry).

EU sanctions since 2014

The background to the EU embargo against Russia imposed in July 2014 is the illegal annexation of the Crimean Peninsula and the port city of Sevastopol by the Russian Federation. EU sanctions include the following:
  1. There are financial sanctions against Russian persons and entities (companies) (Regulation (EU) No. 269/2014 and Regulation (EU) No. 208/2014). Check the recipients in Russia (using the website www.finanz-sanktionsliste.de, etc.).
  2. There is an arms embargo in place, set out in Regulation (EU) No. 833/2014 (Embargo Regulation). This prohibits the export of military equipment on the EU Common Military List (corresponding to Part IA of the German Export List). Imports of defence equipment from Russia and support services such as financing or transportation are also prohibited.
  3. The export of dual-use goods to Russia is prohibited if they are to be delivered to certain recipients listed in Annex IV of Embargo Regulation No. 833/2014. Nine large companies are named there. There is an exception if these deliveries are related to aerospace.
  4. The export of dual-use goods to Russia is prohibited if they have a military use or are intended for a military end-user in Russia. The sale, delivery and intra-Community transfer of dual-use goods with Russia as a final destination are also prohibited. Dual-use goods are all goods listed in Annex I of the EU Dual-use Goods Regulation (listed dual-use goods). An export licence is required to export these goods to other countries. For Russia, the export ban is related to military use.
  5. Because there is an arms embargo against Russia, exports of non-listed items are subject to licensing if they have a military end-use. The forms of military end-use are defined in Article 4 of the EU Dual-use Goods Regulation.
  6. Certain petroleum production equipment and technology must be approved for export by BAFA. These are listed in Annex II of Regulation (EU) No. 833/2014. A specification was made in Regulation (EU) No. 1290/2014. Accordingly, goods for deep-sea oil production, Arctic oil production and shale oil production are not eligible for authorisation. Please note: According to the current view, an authorisation requirement exists if the product is listed with the corresponding commodity code in Annex II, even if it is not intended for oil production. Please review Annex II.
  7. A non-binding inspection scheme for goods deliveries (PDF file – 198 KB) helps exporters to carry out the inspection steps correctly.
  8. To the extent that technical assistance or financial services are to be provided that are related to the military equipment or dual-use goods listed in Annex I to Regulation (EU) No. 2021/821 – in the case of the latter, only with respect to a military end-user or use – such services are generally prohibited, unless such services are based on contracts concluded prior to 1 August 2014. Insofar as these services relate to goods in Annex II of the Regulation (petroleum equipment), these services are subject to prior authorisation. Other services such as drilling were prohibited in the newly added Article 3a as of 12 September 2014 (including legacy contract provisions and an environmental protection provision).
  9. DThe embargo contains a limitation of liability and a prohibition of performance: If a company did not know or had no reasonable cause to believe that it was violating the embargo, it cannot be held liable for doing so. Claims for damages by business partners are excluded if these contracts cannot be fulfilled due to the embargo.
  10. Russian banks that are more than 50 percent publicly owned by Russia can no longer place bonds or similar financial products with a maturity exceeding 90 days within the Internal Market. The banks in question are the following institutions listed in Annex III of the Regulation: Sberbank, VTB BANK, Gazprombank, Vnesheconombank (VEB) and Rosselkhozbank. The embargo does not affect deposit-taking or payment transactions with these institutions. As of 12 September 2014, the refinancing option was further restricted.
  11. In addition, restrictive measures apply to Crimea and Sevastopol. These are import bans on goods originating in Crimea or Sevastopol (Regulation (EU) 692/2014) and export bans on goods for transport, energy, communications and mineral resources (Regulation (EU) 1351/2014). BAFA provides information about these sanctions regarding Crimea and Sevastopol on its website.
In addition to the sometimes unclear formulations in the embargo regulation, the main problem is the issue of military ties, because many Russian companies are active in both the civilian and military sectors (mixed recipients). Here, a preliminary enquiry to BAFA is recommended. If you are sure that your shipments are not affected by the embargo measures, you do not need to take additional precautions. However, it is advisable to document the embargo check.