Dealing with EU trade sanctions against Russia
20th August, 2014
New guidelines have been issued to advise companies on dealing with the latest EU trade sanctions against Russia imposed in the light of the situation in eastern Ukraine.
The sanctions will impact most on businesses in the defence sector. However, the sanctions will also impact on many businesses in the energy sector, particularly if they are involved in deep water oil, Arctic oil and shale oil projects in Russia.
What is happening?
From 1 August, companies and organisations operating within the EU have had to take account of a range of restrictions on doing business with Russia.
These restrictions cover a broad spectrum of areas, from the defence sector to oil and energy companies.
What are the main restrictions?
In broad terms, the key sanctions being imposed are as follows:
- An arms embargo. As well as weapons, military vehicles and ammunition, this also covers technical assistance, financing and financial assistance, and brokering services. The embargo also bans the purchase, import or transport of military goods from Russia.
- A ban on dual-use items which may be intended for military end-use or a military end-user. Similar restrictions on technical assistance, financing and financial assistance, and brokering services also apply. Items intended purely for civil use will be assessed for export licences in the usual way.
- A requirement for export licences for certain energy-related technology and equipment to Russia. Such a licence will not be granted if there are “reasonable grounds” to determine that the export is for projects pertaining to deep water oil exploration and production, Arctic oil exploration and production, or shale oil projects in Russia. A licence is also required for providing technical assistance, brokering services, financing and financial assistance related to the sale, supply, transfer or export of these technologies to Russia or for use in Russia.
The last category of sanctions affecting the export of certain sensitive technologies in the energy sector are broad in scope and have the potential to impact on a wide range of businesses which may not have previously been affected by export control issues. Ward Hadaway has already received enquiries from a number of affected businesses.
Further information on the restrictions, including greater detail on how they apply to companies, the status of contracts signed before the imposition of sanctions and guidelines on compliance, is available by clicking here.
How are the sanctions being policed?
HMRC and the UK Border Force are responsible for ensuring compliance with export controls and trade sanctions and they have a range of measures available to them to ensure compliance.
Companies are being reminded that the unlicensed export of controlled goods is a criminal offence and serious and deliberate evasion of the controls may lead to prosecution.
Are all energy-related activities subject to these restrictions?
The Government has said that while it can give general advice and guidelines on complying with the restrictions relating to the energy sector, it cannot give definitive legal advice on the precise scope of the restrictions and how they apply in individual cases.
As a result, the Government says companies who need precise legal advice in this area “should make their own arrangements”.
How can Ward Hadaway help?
If your company is engaged in activities which may come under these restrictions or you are in the process of concluding agreements in this area, please get in touch.
We are already advising a number of clients on issues surrounding these restrictions and how they apply to their activities.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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