Sanctions Update: Russia
The EU adopted further sanctions against Russia on Friday. Leaving to one side the political aspects, from a purely commercial level, for companies subject only to EU jurisdiction (as compared to those subject to EU and US measures) the current EU sanctions are unlikely to have any direct commercial impact.
The EU is clearly assessing how it could enlarge the scope and impact of EU sanctions. Looking at recent policy and practice such measures could involve applying specific sanctions to sectors of the Russian economy; or, by imposing notification or prior authorisation requirements for defined financial transactions with Russia or Russian entities.
A more difficult issue would arise if the EU further extends the scope of listed persons beyond the current 33 military and political representatives (you will already be in difficulty if for example you have contracts outstanding with Vice Admiral Vitko, Commander of Russia's Black Sea Fleet). The issue may become how to interpret the scope of listing of eg a Russian state owned "holding" company. Would this mean that only trade directly with the holding company is affected or should all transactions with all group companies be considered prohibited ( an issue that has arisen previously in the context of US sanctions with Belarus). Informal guidance agreed by EU Member States in 2013 now suggests that the latter would be the intended outcome.
Preliminary indications are that the EU will now look more closely at these options in the coming days. Stand by then for what could become a more difficult commercial ride.
Our team of specialist EU regulatory lawyers have in depth experience of both applying and contesting EU sanctions measures at the EU level and in key EU Member States including Belgium, Denmark, France, Germany, Ireland, Italy, Latvia, Netherlands, Spain and United Kingdom.