March, 2022 - EU imposes further sanctions on Russia

On 15th March, 2022 the EU implemented further sanctions on Russia by way of Council Regulation (EU) 2022/427 and Council Regulation (EU) 2022/428.

As well as 15 individuals, Council Regulation (EU) 2022/427 adds nine entities operating in the shipping, aviation, military and dual-use and machine building sectors to the designated list.  

Regulation (EU) 2022/428 introduces a number of new measures including (i) a ban on new investments in the Russian energy sector, (ii) an export restriction on equipment, technology and services for the energy industry in Russia (with the exception of the nuclear industry and the downstream sector of energy transport) and (iii) trade restrictions on the importation, transportation and purchase of iron and steel products which originate in Russia or have been exported from Russia, including providing technical assistance, brokering services, financing, financial assistance and insurance or re-insurance.

In addition, Regulation (EU) 2022/428 imposes a prohibition on directly or indirectly engaging in any transaction with a legal person, entity or body established in Russia, which is:

• publically controlled or with over 50 % public ownership; or
• in which Russia, its Government or Central Bank has the right to participate in profits; or
• with which Russia, its Government or Central Bank has other substantial economic relationship, as listed in Annex XIX to the Regulation. 

This prohibition also applies to companies outside Russia where the listed party is a majority shareholder. For contracts concluded before 16th March, 2022, there is a wind down period to complete these contracts by 15th May, 2022.  The prohibition does not apply to transactions which are “strictly necessary” for the purchase, import or transport of fossil fuels, in particular coal, oil and natural gas, as well as titanium, aluminium, copper, nickel, palladium and iron ore from or through Russia into the European Union. The prohibition also does not apply to transactions related to energy projects outside Russia in which those listed in Annex XIX to the Regulation may be minority shareholders.

EU sanctions apply to all EU nationals, including any entities incorporated under the law of an EU member state, regardless of where they are doing business. They also apply to all business done by EU and non-EU persons in whole or in part within the EU territory, including on any vessel under an EU member state’s jurisdiction. Members are urged to seek appropriate guidance to satisfy themselves that they do not run a risk to fall foul of the applicable regulations and to carry out thorough due diligence in respect of their contractual counterparties and commercial arrangements.

Many of the above provisions also include prohibitions against the provision or insurance or reinsurance for any sanctioned activities. As such, Members are encouraged to check the position with their P&I and/or Defence Clubs before engaging in any trade which involves Russia.

As always, if Members have any questions in relation to the above issues they are invited to contact the Club for further information.