The seventh package of EU-Russia sanctions and the Black Sea Grain InitiativeRecent developments in sanctions legislation
- 11. August 2022
- Posted by: Marie-Theres Waldleben
- Categories: Commercial and Business Law, International Trade Law, Shipping and Transport Law
1. Economic goods-related sanctions
In continuation of our previous contributions on the EU-Russia sanctions, the seventh package of the sanction regime will be presented in excerpts. The status of the economic goods-related sanctions regulations is now so detailed that a complete overview can no longer be provided; it therefore makes more sense to refer to an analysis of the existing sanctions regulations for individual goods. In principle, it should be noted that there are exemptions for specific purposes, which must also be considered.
The main headline of the seventh package should nevertheless be mentioned. It is not to be located in the area of maritime law but concerns the export ban on Russia’s most important export commodity after energy: gold.
Whether an import ban on this easily tradable commodity to EU member states will affect Russia’s income from the sale of gold seems at least questionable; for the year 2021, China and India are named as two of the three largest importing trading partners. In the current political situation, it cannot be ruled out that these economic relations will become entrenched. The sanctions package provides for a ban on direct or indirect purchase, import or transfer. Prior to the adoption of the sanction regime, there was a reduction in the number of imports into EU countries. Trade in gold is not characterised by a demand situation comparable to that of energy-relevant raw materials. From Russia’s point of view, the tradability of this raw material for the generation of income must become increasingly important in the face of dwindling sales opportunities for energy-relevant raw materials. To what extent this will have an impact on the price development of gold is difficult to predict and therefore remains to be seen.
The sanctions package provides for an exemption for gold not intended for sale but for personal use, as well as for the official activities of diplomatic missions, consular posts or international organisations in Russia. A licensing procedure is provided for the exchange of cultural goods.
2.Amendment of Article 5aa
A challenge that is increasingly coming into focus in the context of the conflict is the global increase in food insecurity. This is explicitly mentioned in the seventh package of sanctions measures and Article 5aa of Regulation (EU) No 833/2014 is amended accordingly with new exemptions that allow for increased trade compared to the previous legal situation. Goods that serve the supply of food and medical products are in the foreground. It is recommended to obtain legal advice on the sanction measures before entering into corresponding business relationships. For the practical implementation of corresponding trade activities, we will also briefly discuss the role of the Joint Coordination Centre (JCC) in Istanbul at the end of our article, because this involves special requirements for companies in the maritime industry.
On our own behalf, so to speak, we would like to point out another important new regulation, which is also anchored in the new version of Article 5aa of Regulation (EU) No. 833/2014. It explicitly allows transactions that are strictly necessary to ensure access to judicial, administrative or arbitral proceedings in a Member State or for the recognition or enforcement of a court judgment or an arbitral award from a Member State and are consistent with the objectives of Regulations (EU) No 833/2014 and (EU) No 269/2014.
3. Amendment to Article 3ea
An amendment relevant to the maritime sector is the new Article 3ea of Regulation (EU) No 833/2014.
In addition to the existing restrictions on Russian-flagged vessels calling at ports in the EU, the seventh package of sanctions measures now stipulates that locks may no longer be made available for incoming shipping traffic. Here, too, an authorisation procedure for granting exemptions is provided for. In principle, not only direct trade transactions are prohibited, but also related services such as financing and insurance.
How detailed these regulations are can best be illustrated by an example of a case that is perhaps less obvious at first. A grower of rhododendrons in the Ammerland region is planning to expand his sales market to Russia and wants to take out a company loan to finance his capacity expansion. The credit transaction of a financing bank in this regard would already be in breach of sanctions, as would the conclusion of corresponding supply contracts, namely due to a violation of Art. 3k Regulation (EU) No. 833/2014 in connection with Annex VI.
In addition to observing the sanctions lists, it is therefore advisable to carry out a detailed examination of transactions with the remotest connection to Russia and/or Belarus.
4. Additional remarks
The list of persons subject to sanctions has been extended again, in particular by adding various military functionaries, but also various scientific, cultural and political institutions, foundations and other economically relevant institutions and companies such as – as the best-known example – Sberbank.
Within the framework of what is politically desired, there are important exceptions: for example, technical assistance and cooperation with Russian institutions is permitted to the extent that it can be used to maintain the work of the International Civil Aviation Organisation (ICAO) in setting technical industrial standards.
5. The Black Sea Grain Initiative
The Black Sea Grain Initiative was founded in response to the armed conflict between two important exporters of grain and fertiliser with the aim of improving global food security. The focus is on the export of these goods by ship from the ports of Odessa, Chornomorsk and Yuzhne. The Joint Coordination Centre (JCC), based in Istanbul, was founded with the aim of facilitating and coordinating these transports. Through reports on corresponding ship movements, the JCC strives to create transparency about further operational developments. In order to ensure the best possible performance of the transport operations, the JCC has published procedures that are mandatory for the entry and exit of ships under the provisions of the International Convention for the Safety of Life at Sea, 1974 and the 1988 Protocol thereto, Safety of Life at Sea (SOLAS), Chapter XI-2/11 and the International Ship and Port Facility Security Code (ISPS Code), Part A, 4.2 and Part B, 4.26. The procedural requirements published by the JCC provide for certain protective rights for ships against possible threats from the existing war situation and the parties at war.
We will be happy to explain these requirements in more detail for the planning of such voyages.
If you have any further questions on the subject, our experts in international trade law, commercial and business law as well as shipping and transport law will be happy to assist you.