EU adopts 14th package of sanctions against Russia

On 24 June 2024, the European Union adopted the 14^th package of sanctions against Russia. The amendments to Council Regulation (EU) 833/2014 and Decision 2014/145/CFSP, as well as Regulation 269/2014, in particular, introduced anti-circumvention measures and new personal sanctions against individuals and entities, and extended the embargo on various categories of goods.

Measures to prevent circumvention of sanctions

EU companies are now required to "undertake best efforts" to ensure that their third-country subsidiaries (including those in Russia) do not act to circumvent EU sanctions. According to the Preamble of Regulation (EU) 833/2014, such efforts include the implementation of appropriate policies, controls and procedures by company participants, taking into account restrictions that may be contained in the third country legislation, as well as the size of the business and its factual capabilities. It is likely that the exact measures which are considered as "best efforts" will be specified in the updated FAQ on the application of EU sanctions issued by the European Commission. At the same time, the 14^th package of sanctions does not contain provisions on the liability for the actions of foreign subsidiaries that violate the sanctions.

EU companies that transfer industrial know-how for the production of battlefield  goods to third-country partners will have to include contractual provisions to ensure that such know-how will not be used for goods intended for delivery to Russia.

From 26.12.2024, EU companies will be required to implement due diligence mechanisms capable of identifying and assessing risks of re-exportation of battlefield goods to Russia. The risk assessment must be documented and updated on a regular basis. Appropriate policies, controls and procedures must also be put in place to mitigate and effectively manage risks.

Ban on provision of services

The deadline for the entry into force of the termination of the exception for subsidiaries of companies of the EU and of partner countries [1] from the prohibition of the provision of services to Russian legal entities has been postponed from 20 June to 30 September 2024. At the same time, for German companies and citizens, BAFA General License No. 42 was previously issued, extending this deadline until 31 March 2025, provided that they submit a notification to BAFA within 30 days after the start of services, i.e., by 31 October 2024 at the latest. It is possible that these deadlines will be further extended.

The 14^th sanctions package also stipulates that EU citizens who are residents of the Russian Federation since a date prior to 24 February 2022 may continue to work in Russian subsidiaries of companies of the EU or partner countries in positions involving the provision of "banned" services in favour of such employer (in particular, business and management consulting, accounting, legal, and other services). Previously, the FAQ on the application of EU sanctions set out the exact opposite position.

Financial restrictions

From 25.06.2025, EU companies operating outside Russia are prohibited from connecting to the System for Transfer of Financial Messages (SPFS) or equivalent financial messaging services for Central Bank payment transactions. EU operators will be barred from making transactions with individuals and legal entities that themselves use the SPFS or similar systems.

Bank sector

The possibility is introduced of unblocking certain bank transfers which had previously been blocked because they involved Russian banks which had been subject to sanctions. In particular, unblocking may be applied to the following:

Energy

A ban was introduced on reloading of Russian LNG in European ports for further transportation to third countries and on investments in Russian LNG projects. The measures do not affect imports, but apply only to re-exports to third countries via the EU.

Intellectual property

The new package of sanctions imposes a ban on the patent offices of the EU and its member states from accepting applications for registration of certain intellectual property objects from Russian individuals and companies. At the same time, applications may be filed by individuals with residence permits in the EU and certain EU partner countries [2].

Litigation

Compensation for damages

In the following events, an EU company has the right to bring a claim for compensation for damages in a competent court of a EU member state:

Prohibition of transactions in case of change of jurisdiction

The Russian Federation has a rule allowing Russian companies to transfer litigation from companies of "unfriendly" jurisdictions to Russian state courts, even if a different jurisdiction (e.g., foreign commercial arbitration) was agreed upon in the contract. In response to this measure, a ban on transactions with Russian companies that have previously applied this rule of Russian law on the transfer of litigation is introduced for companies and citizens of the EU. This prohibition does not apply to transactions with Russian citizens.

Satisfaction of claims of Russian claimants

The EU had also previously banned the satisfaction of claims of Russian citizens and companies under contracts, the fulfilment of which became impossible due to EU sanctions. According to the new sanctions package, the competent authorities of the EU member states may authorize the satisfaction of such claims until 31.12.2024 if it is necessary to withdraw from the Russian market.

Transport

A ban is introduced on access to European ports and any services for vessels involved in Russia's military operations or part of the dark fleet. This measure targets to prevent circumvention of already imposed sanctions.

There is also a ban on unscheduled private charter flights if a Russian person decides on the place of departure or destination.

The existing ban on the transport of goods by road to the EU has been tightened, including transit, for EU companies that are 25% (or more) owned by Russian persons.

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[1] Australia, Canada, Iceland, Japan, Liechtenstein, New Zealand, Norway, South Korea, Switzerland, the United Kingdom, USA

[2] Iceland, Liechtenstein, Norway, Switzerland