June 26, 2024

European Union adopts 14th package of Russia-related sanctions

On June 24, 2024, the Council of the European Union adopted the 14th package of sanctions against Russia in response to its unjustified war against Ukraine.  The new restrictive measures target the energy, finance and trade sectors of the Russian economy as well as the circumvention of EU sanctions.  As part of the new package, the Council designated 116 additional individuals and entities that undermined or threatened the territorial integrity, sovereignty and independence of Ukraine.  In addition, the European Union has permitted, for the first time, the designation of vessels used to support Russia’s war against Ukraine.  Consequently, the Council also designated 27 vessels as part of the new package.  The designated vessels will be subject to a port access ban and ban on the provision of services.

The new package targeted the energy sector by prohibiting future investments in and exports to liquified natural gas (“LNG”) projects under construction in Russia.  Vessels will also be banned from using EU ports for the transshipment of Russian LNG.  There will also be a ban on the import of Russian LNG into specific terminals that are not connected to the EU gas pipeline.

Several new finance-related measures were implemented, including a measure that bans EU banks that operate outside of Russia from using the System for Transfer of Financial Messages (“SPFS”), a financial messaging service developed by Russia that is similar to the SWIFT system.  The European Union will also prohibit transactions with certain credit and financial institutions and crypto asset providers outside of the EU that have engaged in transactions that support Russia’s defense-industrial base.

The new anti-circumvention measures include a requirement for all EU parent companies to make best efforts to ensure that third-country subsidiaries are not engaging in potentially sanctionable activities.  When selling battlefield goods to third countries, EU operators must also implement due diligence mechanisms that are able to identify, assess and ultimately mitigate the risk of re-exportation of these goods to Russia.

With regard to trade-related measures, the Council added 61 new entities to the list of companies associated with Russia’s military-industrial complex – companies that will be subject to tighter export restrictions concerning dual use goods and technologies.  The Council also expanded the list of restricted items that might contribute to technological enhancements to the Russian defense and security sectors to include, among others, changes to the import ban on Russian diamonds, a new import ban on Russian helium, and a new ban on the export of manganese.  The new package also extended existing export restrictions on dual use and advanced technology items and export bans on industrial goods.  There is also a new prohibition on the purchase, import, transfer or export of Ukrainian cultural property goods that are suspected of having been unlawfully removed from Ukraine.  The Council also added Liechtenstein to the list of EU partners that agree to apply certain restrictive measures on the import of Russian iron and steel.

The package also contains new legal and political restrictions, including a ban on the ability of Russian persons to obtain certain intellectual property rights and a new ban on Russian companies that interfere with arbitration and court competence rules.  In addition, EU operators can now be compensated by Russian companies for damages related to sanctions implementation and expropriation.  There are also prohibitions to combat Russian interference in EU political processes, including a ban on the acceptance of financing from the Russian state.  EU persons are also prohibited from funding all Russian entities, not just state-owned entities as was previously the case.

Council of the EU Press Release | European Commission Press Release | 14th Package Q & A | Council Regulation (EU) 2024/1796