The eleventh package of EU-Russia sanctions
- 29. June 2023
- Posted by: Mutke Müller
- Categories: Commercial and Business Law, International Trade Law, Shipping and Transport Law
1. The Eleventh EU Sanctions Package against Russia – Further Changes to EU Sanctions Law
The eleventh EU sanctions package against Russia is in line with previous sanctions packages and follows them in purpose and logic.
The amendments were adopted on 23 June 2023 and came into force on 24 June 2023.
The focus remains on increasingly restricting the military and technological capabilities of Russian warfare.
Both extensions of trade-related and people-related sanctions should be highlighted, which have led to changes in the respective classification under the existing EU Regulations 833/2014 and 269/2014.
2. Trade-related sanctions
Lessons learned from monitoring military operations are incorporated into the design of sanctions regimes. An example of this is the restriction on the export of a further 15 technological goods found on the territory of Ukraine and previously in use by the Russian army. For high-value technological goods and air transport-related materials, a ban on transit has been regulated as a flanking measure.
For iron and steel products, there are separate verification requirements for imports. In the case of imports from other countries, it must be proven that the pre-production of the goods did not take place in Russia.
A ban on the sale, licensing, transfer or disclosure of intellectual property rights and trade secrets used in connection with goods subject to sanctions serves to prevent the relocation of production outside the EU.
Export bans have been established for luxury vehicles, this includes new and used cars above a certain engine size (> 1 900 cm³), furthermore the export of electric and hybrid vehicles is prohibited.
The ban on the import of coal products pursuant to the former Article 3j of EU Regulation 833/2014 was lifted.
In contrast, the export bans according to Article 3k of EU Regulation 833/2014 have been regulated in further detail, which must be observed in order to check the CN code in export transactions.
Particular attention has been paid to circumvention bans within the framework of the eleventh EU sanctions package and the regulations provide for the inclusion of third countries in this regard.
3. Avoidance of Circumvention
The findings regarding material serving Russia’s military operations are now being incorporated into the expanded listing of organisations outside Russia. Economic operators are therefore advised to exercise particular care in their economic dealings with states in which these organisations are based to act in conformity with the EU sanctions. These measures, originally aimed at preventing the production of Iranian combat drones, now include organisations in countries that play a larger role in trade balances, in particular China. Other states include the United Arab Emirates, Syria, Armenia and Uzbekistan. The corresponding listed organisations, a further 87 in number by way of the eleventh sanctions package, are subject to stricter export restrictions on dual-use goods and advanced technologies.
The eleventh sanctions package indicates that the findings on circumvention are intended to have an ongoing impact on the EU’s legal regime. The inclusion of third countries is explicitly formulated. It can be seen that diplomatic efforts on the part of the EU to prevent circumvention are given priority. If these efforts fail, the third countries will be listed.
4. Spotlight on regulations affecting the maritime industry
The new ban on access to EU ports for ships carrying out ship-to-ship transfers and allegedly violating the Russian oil import ban or the price cap of the G7 coalition also serves to curb circumvention transactions; this regulation is enshrined in Article 3eb of EU Regulation 833/2014. The eleventh sanctions package explicitly identifies the increase in fraudulent practices in the transportation of Russian crude oil and Russian petroleum products (Russian oil). In view of the EU’s sophisticated and far-reaching regulations, this is surprising; we had referred to an inclusion of the insurance industry in our article on the sixth package of EU-Russia sanctions.
However, what qualifies to become a suspicious case is not clearly regulated. The regulations state that this should be the case if the competent authorities have reasonable grounds to suspect a breach. The claim that this provision is intended to be clear is unlikely to be easily sustained. The economic operators concerned are advised to consistently demand all guarantees of origin along the entire supply chain and to keep them ready for possible checks. The EU sanctions concretise the ban on access to EU ports for those vessels that fail to notify the competent authority at least 48 hours in advance of a ship-to-ship transfer (STS) within the exclusive economic zone of a Member State or within 12 nautical miles of the baseline of the coast of that Member State, Article 3eb (2) of EU Regulation 833/2014. Exceptions exist for emergencies.
Also subject to a ban on access to EU ports are any ships, irrespective of their flag, which tamper with or switch off their Automatic Identification System (AIS) in breach of SOLAS regulation V/19 paragraph 2.4 when carrying Russian oil subject to the G7 oil import ban or price cap, Article 3ec of EU Regulation 833/2014.
The fact that the competent authorities have reasonable grounds to suspect a violation is also a sufficient criterion here to become a suspicious case.
A risk analysis should form the basis of the official decision. An exchange of information with the European Maritime Safety Agency (EMSA) and other EU Member States is foreseen.
Access bans cover ships for ports and anchorages within the jurisdiction of a Member State of the EU and the entire Gulf of Finland.
With regard to ship sales for certain ships which are already in Russia, the eleventh sanctions package provides for certain facilitations subject to authorisation in accordance with Article 4a of EU Regulation 833/2014.
5. Overview of other measures
The eleventh sanctions package provides for an extension of the ban on the transport of goods with trailers and semi-trailers registered in Russia on the territory of the Union, even if they are towed by lorries registered outside Russia. This takes into account that circumventions of the previously applicable regulations have taken place and are to be prevented in the future.
It should also be mentioned here that the eleventh sanctions package provides for further restrictions on media controlled by Russia.
Furthermore, the list of individuals whose assets are to be frozen has been extended again.
The EU sanctions against Russia are robust, unprecedented regulations with an enormous level of detail. It is to be welcomed that the EU is continuously minimising the risk of circumvention, but the downside is an increasing burden on corporate compliance tasks. In view of the depth of detail of the regulations, legal advice should be sought in the event of an identified need for advice; publications providing an overview cannot replace advice in individual cases. This also applies to this article. In trade with certain raw materials, the origin of which is not easily verifiable, challenges regarding the effective implementation of the sanctions regulations are still apparent.
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