War-related Extensions of EU Sanctions Measures

1. Changes to EU sanctions law

The Council of the European Union announced a number of welcome expansions to sanctions measures this autumn. These will be discussed in more detail below.

2. Background – supply of Iranian military technology

The delivery of drones to Russia, for which Iran was known, was followed by reports that Iran intended to supply further ballistic missiles to Russia. The European Council took a stand on this in an exchange of views on the geopolitical situation and the main global challenges with the Secretary-General of the United Nations, published in March 2024, calling on Iran to stop this further support for the aggressor and thus intensification of  the suffering, not only on the front line but also by bullying the Ukrainian civilian population and the country’s civilian infrastructure, see https://data.consilium.europa.eu/doc/document/ST-7-2024-INIT/de/pdf

3. Adjusting the measures of the EU

Iran’s continued supply of military technology to Russia has contributed to the Council of the European Union making adjustments in May 2024 to the framework of targeted sanctions designed in July 2023. While it was initially planned to restrict the supply of drones and unmanned aerial vehicles (UAV), respectively, other military goods used in aerial combat, i.e. missiles, have since been included to justify sanctions against Iran. The extensions of sanctions measures that have now been announced are to be understood as measures that fill this broader framework.

While the Council initially announced in July 2024 that the sanctions in place at that time against individuals and organisations in Iran would be extended until 27 July 2025, these sanctions were further extended in autumn 2024. We will take a look at the content of these regulations here.

4. New regulations autumn 2024

The sanctions announced in autumn 2024 can be summarised by the keywords responsibility and logistics. In October, Iran’s Deputy Defence Minister was added to the list of sanctioned individuals, along with leading officials of the Islamic Revolutionary Guard Corps and the managing directors of the EU-sanctioned companies Iran Aircraft Manufacturing Industries and Aerospace Industries Organization.

The airlines, Saha Airlines, Mahan Air and Iran Air, as well as two companies involved in the supply chain for the delivery of Iranian-made UAVs to Russia, namely Basamad Electronic Pouya Engineering Co. (alias Dynamic Electronic Frequency Engineering Limited Liability Company) and Iran Alumina Company linked to fuel production, are now on the sanctions list.

Furthermore, the director of Islamic Republic of Iran Shipping Lines (IRISL), Mohammad Reza Khiabani, is now on the sanctions list, as are IRISL itself and the Russian shipping companies MG Flot LLC, VTS Broker LLC and Arapax LLC.

The regulations currently in place, which were announced on 18 November 2024, prohibit the export, transfer, delivery and sale of components used in the development and manufacture of missiles and drones from the EU to Iran. To this end, a new Annex IV has been added to EU Regulation 2023/1529 and further changes are to be observed in accordance with EU Regulation 2024/2897 within the framework of EU Regulation 2023/1529. Annex IV lists the ports of Amirabad and Anzali, with which direct or indirect transactions are prohibited in accordance with the revised Article 1a of the Regulation, unless the exemption in Article 1a (2) applies. This exception applies in the event that a ship in need of assistance seeks a place of refuge, in the event of a call at a port of distress for reasons of maritime safety or to save human lives at sea or for humanitarian purposes, in the event of an urgent need to prevent or mitigate an event that is likely to have a serious and significant impact on the health and safety of people or the environment, or in the event of a natural disaster.

The amendments also lead to an extension of the existing Annex II of EU Regulation 2023/1529. The list of items subject to the prohibitions of Article 2 has thus been significantly extended.

5. Revision of the Price Cap Coalition Advisory

On 21 October 2020, the Price Cap Coalition issued an updated advisory for the maritime industry. This advisory should be seen at least as a reminder and warning to the maritime industry of the obligations associated with the sanctions regimes. In addition, it contains some important recommendations (‘recommended actions’). These are designed in light of factual developments, such as the build-up of an extensive ‘shadow fleet’. These recommendations may play a role in determining the required due diligence standard and it is therefore recommended that maritime industry players familiarise themselves with them and take them into account in their own actions. In particular, attention is drawn to Recommendation No. 9, which is intended to serve the growth of an oil price cap-undermining tanker fleet.

The Advisory can be found on the Office of Foreign Assets Control (OFAC) website at

https://ofac.treasury.gov/media/933506/download?inline.

6. Assessment

The EU sanctions in response to Russia’s military action on Ukrainian territory are robust, unprecedented regulations with an enormous depth of detail. As recent developments show, the law on sanctions also provides very targeted answers to current interrelated geopolitical challenges. The measures described here, which apply to individuals and companies not only in Russia but also, and in particular, in Iran, are to be considered particularly targeted. There is concern that other companies may devote themselves to the flourishing trade in military goods as the sanctions continue, so that further monitoring of business activities may be necessary. Geopolitical developments will be accompanied by sanctions for the foreseeable future, and it is highly advisable to familiarise oneself with the content of these measures in order to ensure compliance.

In view of the depth of detail of the regulations, if there is a need for advice, it is worth considering obtaining legal advice; overview publications cannot replace advice in individual cases. This also applies to this article.

7. Ahlers & Vogel – new developments

After Ahlers & Vogel was able to support clients in a number of high-profile cases involving EU sanctions law in the past and, in recent years, was particularly able to help players in the maritime industry to comply with sanctions regulations, we have decided to bundle our willingness and expertise in an expanded sanctions team. If required, you can contact us at the email address sanctions@ahlers-vogel.de. In urgent matters, we can be reached on the telephone number +4940378588922