May 5, 2023

EU publishes guidance note on the implementation of sanctions-related safeguards to ensure food security

On May 3, 2023, the EU published a guidance note on measures affecting the implementation of sanctions in response to Russia’s destabilizing action in Ukraine and EU efforts to avoid measures that might lead to food insecurity around the globe.  In the note, the European Commission reports that asset freezes adopted under Regulation 269/2014, which concern restrictive measures imposed in response to actions that undermine or threaten the territorial integrity, sovereignty, and independence of Ukraine, have led to situations where an EU entity is essentially controlled by a designated individual or entity, including several cases involving the trade in agricultural and food products.  In response to these cases, the Commission suggests the development of “safeguards” to prevent designated persons from exercising control over non-designated EU entities and the implementation of a framework or set of “firewalls” to enable EU entities involved in the trade of agricultural and food products to continue while keeping the designated person’s funds and economic resources frozen.  The Commission indicates that the purpose of the guidance note is to facilitate the implementation of these firewalls in the EU and increase their recognition by Member States in order to resolve the pending cases and ultimately minimize the impact of sanctions on food insecurity in third countries.

The Commission emphasizes that the guidance note only addresses instances where a designated person controls a non-designated EU entity operating in the trade in agricultural and food products.  The note focuses on the meaning of term “control” in EU sanctions and how designated persons might come to control a non-designated EU entity.  It also covers the implementation of firewalls by legislation and by operators; the need for legislators and operators to recognize these firewalls; and recommendations regarding cross-border situations involving entities located in multiple Member States.  The note also provides criteria to be used for the appointment of a third party administrator or supervisor who would implement a firewall by legislation.

European Commission – Latest updates on sanctions adopted following Russia’s military agression against Ukraine | Guidance Note – May 3, 2023