On 24 June 2024, the European Union published its 14^th sanctions package in response to Russia’s military aggression against Ukraine. The newly adopted Regulation 2024/1745, Regulation 2024/1746, Council Decision 2024/1738 and Council Decision 2024/1744 amend Regulation 833/2014 and Regulation 269/2014.

Sanctions package 14 consists of restrictive measures targeting 116 additional legal entities and individuals. These measures strive to freeze assets, ban travel, and prohibit the flow of financial resources. The latest sanction package also includes the measures described below.

Anti-circumvention rules

EU-based parent companies must ensure, to the best of their efforts, that their third-country subsidiaries do not take part in any activities that would circumvent sanctions. “Best efforts” are defined as “comprising all actions that are suitable and necessary to achieve the result of preventing the undermining of the restrictive measures in Regulation (EU) 833/2014. Those actions can include, for example, the implementation of appropriate policies, controls and procedures to mitigate and manage risk effectively, considering factors such as the third country of establishment, the business sector and the type of activity of the legal person, entity or body that is owned or controlled by the Union operator.” At the same time, the EU explains that the best efforts should be understood as comprising only actions that are feasible for the Union operator in view of its nature, its size and the relevant factual circumstances, in particular the degree of effective control over the legal person, entity or body established outside the Union. Such circumstances include the situation where the Union operator, due to reasons that it did not cause itself, such as the legislation of a third country, is not able to exercise control over a legal person, entity or body that it owns.

To prevent re-exportation of military goods to Russia, EU companies exporting such goods to third countries are required to conduct a thorough due diligence of their operations. Additionally, EU exporters of industrial know-how for military goods to third-country companies are obliged to include a “non-Russia clause” in contracts, ensuring the know-how will not be used for Russia.

Liquefied Natural Gas (LNG)

The new package forbids reloading services of Russian Liquefied Natural Gas (LNG) in EU territory for transshipment operations to third countries. This covers ship-to-ship and ship-to-shore transfers, as well as re-loading operations, and does not affect import into the Union, but only re-export to third countries via the EU. Also, new EU investments into newly constructed LNG projects, such as Arctic LNG 2 and Murmansk LNG projects are now prohibited. It also covers the provision of goods, technology, and services.

Furthermore, the measures impose import restrictions on Russian LNG through Union LNG terminals that are not connected to the interconnected natural gas system. It is forbidden to purchase, import, or transfer Russian LNG through terminals in the EU that are not connected to the interconnected natural gas system.

Finance

EU entities operating outside of Russia are forbidden from using the “System for Transfer of Financial Messages” (SPFS), a specialized financial messaging service developed by the Central Bank of Russia, or equivalent specialized financial messaging services. Exceptions include transactions necessary for ensuring access to judicial, administrative, or arbitral proceedings, trade in pharmaceutical, medical, agricultural, and food products, humanitarian purposes and others.

In addition, the EU forbids transactions with specified credit and financial institutions and crypto assets providers established outside of the EU if these entities facilitate transactions that support Russia’s defense-industrial base through the export, supply, sale, transfer, or transport of dual-use goods and technology to Russia.

Provision of Services

The previous wind-down period under Article 5n (7) of the Regulation 833/2014 has been extended from 20 June 2024 to 30 September 2024 allowing the provision of services for the exclusive use of legal persons, entities, or bodies established in Russia that are owned or controlled by a legal person incorporated in the EU.

EU Political Party Funding

The EU Council has banned EU political parties, NGOs, think tanks, and media providers from accepting any funding from the Russian state.

Transport Services

Twenty-seven vessels have been listed on a list prohibiting them from accessing EU ports and services. These vessels are engaged in the transportation of military goods, circumventing sanctions, and/or transporting LNG components or LNG shipments.

Restrictions have been broadened to prohibit EU operators with 25% or more ownership by a Russian legal person or individual from transporting goods by road within EU territory, including transit. The prohibition does not apply to transportation companies owned by dual nationals or Russian nationals with a temporary or permanent residence permit in a Member State. Transportation companies must disclose their ownership structure upon request by the national authorities of EU member states.

Regulations regarding the landing, taking off, and flying over by aircraft in the European Union have been amended by Decision (CFSP) 2024/1744. EU authorities can obtain information regarding the takeoff and landing of any aircraft involved in non-scheduled flights of Russian individuals or legal persons. Restrictions do no apply to flights which are solely piloted by a Russian individual.

Trade Restrictions

New restrictions have been introduced regarding the export of certain goods, including, chemicals, manganese ores, compounds of rare-earths, plastics, excavating machinery, monitors, and electrical equipment. In addition, it is now forbidden to import helium from Russia.

The list of named companies identified as supporting Russia technologically, and therefore subject to export restrictions, has been extended to include sixty-one new legal entities. These companies are located in third countries such as in China, Kazakhstan, Kyrgyzstan, Turkey, and the United Arab Emirates.

 Claims in a Russian Court

The latest sanctions package includes a ban on transactions with any Russian companies and individuals who lodge or have lodged a claim in Russian court against EU-based persons due to EU sanctions. This measure does not apply to cases in which it is strictly necessary to ensure access to judicial, administrative or arbitral proceedings in an EU member state or in recognition or enforcement of a judgment or an arbitration award rendered in a member state.

Intellectual Property Rights

Restrictions have been placed on the registration of intellectual property rights in the EU by Russian legal entities and individuals. Intellectual property offices in the EU, as well as WIPO will no longer accept applications from Russian nationals or legal persons, including if jointly filed with non-Russian entities. The prohibition does not apply to persons who have a residence permit for the EU.

Proper Due Diligence

It is worth mentioning that Decision (CFSP) 2024/1744 stipulates that EU operators are liable for unknowingly breaching sanctions if they have not performed proper due diligence. Publicly and readily available information must be duly taken into account when performing such due diligence. Here the EU clarifies that the 2011 European Court of Justice Decision requiring both knowledge and intent for a regulation breach is satisfied in cases where a person or entity is aware and accepts that participation in an activity may lead to the circumvention of sanctions. For this reason, it is critical for legal entities located in the EU to perform proper due diligence of their operations in regarding that their activities adhere to sanction restrictions.

Our series of articles on EU restrictive measures are provided for information purposes only and do not constitute legal advice. For professional advice tailored to your particular case please contact us at: .