EU Sanctions
EXTENSION OF RUSSIAN RETALIATORY SANCTIONS - 24 JUNE 2015
Russia's President Putin has signed a decree extending to 6 August 2016 prohibitions against the import into the Russian Federation of certain food and agricultural products from the USA, Canada, the EU, Norway and Australia. These measures were first introduced on 7 August 2014 in response to trade and financial sanctions against Russia by those countries. The embargo, which President Putin states is with the aim of defending Russia's national interests, will now continue until 6 August 2016.
EU REGULATION 1351/2014 – 18 DECEMBER 2014
On 18 December 2014 the European Union passed Regulation 1351/2014, which with effect from 20 December 2014, widens the restrictive measures set out in Regulation 692/2014 of 23 June 2014.
Regulation 692/2014 had introduced trade restrictions in respect of goods originating in Crimea or Sevastopol. Regulation 825/2014 of 30 June 2014 subsequently amended and widened those prohibitions. Regulation 1351 further widens those restrictions and introduces others, some of which impact the shipping industry.
The restrictions applicable under Regulation 692/2014, as amended, now in place fall largely under three areas:
• Investments and related activities;
• Sale, supply, transfer and export of certain goods and technologies including those related to transport, telecommunications, energy and the exploration of oil, gas and mineral resources in Crimea and Sevastopol;
• Tourism, including the provision of cruise services to Crimea and Sevastopol;
Article 2a
The new measures prohibit a broad range of investment in Crimea or Sevastopol, whereas previously the restrictions applied only to certain economic sectors.
It is prohibited to:
(a) acquire any new or extend any existing participation in ownership of real estate or control an entity located in Crimea or Sevastopol, including the acquisition in full of such entity or the acquisition of shares, and other securities of a participating nature of such entity;
(b) grant or be part of any arrangement to grant any loan or credit or otherwise provide financing, including equity capital, to an entity in Crimea or Sevastopol, or for the documented purpose of financing such entity;
(c) create any joint venture in Crimea or Sevastopol or with an entity in Crimea or Sevastopol;
(d) provide investment services directly related to the activities referred to in points (a) to (d).
The above prohibitions do not apply to the conduct of legitimate business with entities outside Crimea or Sevastopol where the related investments are not destined to entities in Crimea or Sevastopol.
Article 2b
It is prohibited to sell, supply, transfer, or export certain goods and technology (as extensively listed in Annex II) used in the following specified sectors:
• Transport;
• Telecommunications;
• Energy;
• Prospection, exploration and production of oil, gas and mineral resources,
to persons in Crimea or Sevastopol or for use in Crimea or Sevastopol.
Restrictions have also been imposed in relation to the provision of technical assistance, brokering services, financing and financial assistance relating to such goods/technology to persons in Crimea or Sevastopol or for use in Crimea or Sevastopol.
Article 2c
There is now a general prohibition against the provision of technical assistance, or brokering, construction or engineering services directly relating to infrastructure in Crimea or Sevastopol in the sectors referred to under Article 2b, independently of the origin of the goods and technology.
Article 2d
It is prohibited for any ship providing cruise services, to enter into or call at any of the seven ports situated in the Crimean Peninsula as listed in Annex III, namely Sevastopol, Kerch, Yalta, Theodosia, Evpatoria, Chernomorsk, and Kamysh-Burun. This prohibition applies to ships flying the flag of a Member State or any ship owned and under the operational control of an EU ship owner or any ship over which an EU operator assumes overall responsibility as regards its operation. The prohibitions do not apply when a ship enters or calls at one of the listed ports for reasons of maritime safety in cases of emergency.
In each case, there is a carve out allowing for the execution of contractual obligations under a contract concluded before 20 December 2014, although in the case of Articles 2b and 2c, the grace period will expire on 21 March 2015.
Coupled with EU Regulation 692/2014 of 23 June 2014, which gave effect to trade restrictions on import into the EU of goods originating in Crimea or Sevastopol, and the impact of asset freeze measures against a number of individuals and entities in Ukraine and Russia, there is now a wide-ranging ban on trade involving Crimea and Sevastopol. Members are reminded of the need to exercise caution when considering trade involving these territories.
Copies of the above mentioned Regulations and guidance issued by the UK HMT can be downloaded from the links set out below.
3 NEW EU REGULATIONS CONCERNING RUSSIA/UKRAINE SANCTIONS - 8 SEPTEMBER 2014
The EU has published 3 new regulations in respect of sanctions affecting Ukraine and Russia, which came into effect from 12 September 2014.
Regulation 959/2014
A new ground is introduced upon which the EU can designate individuals or entities for asset freeze under Regulation 269/2014 – "natural or legal persons, entities or bodies conducting transactions with the separatist groups in the Donbass region of Ukraine".
Regulation 960/2014
This regulation amends Regulation 833/2014, implementing:
• further restrictions on the supply of dual use goods to Russia;
• a new prohibition on the supply of certain services necessary for deep water oil exploration and production, arctic oil exploration and production and shale oil projects in Russia (drilling, well testing, logging and completion services, and supply of specialised floating vessels);
• an extension of the restrictions on access to EU capital and financing markets, so that they now affect financial instruments with a shorter maturity (reduced from 90 days to 30 days) and apply to a wider range of Russian entities, including Rosneft, Transneft and Gazprom Neft, and to non-EU subsidiaries that are owned 50% or more by one of the listed entities.
• a prohibition on providing or being part of any arrangement to make certain new loans or credit to the entities which are subject to the restrictions on access to capital markets.
Regulation 961/2014
24 individuals are designated for asset freeze, mainly politicians in Russia and disputed territories such as Luhansk and Donetsk, but also 2 businessmen closely associated with President Putin.
Copies of these new regulations can be downloaded from the links set out below.
EU DESIGNATION OF KERCH AND SEVASTOPOL SEA PORTS - 18 AUGUST 2014
Recent EU designations (EU Council Implementing Regulation 810/2014 dated 25 July 2014) include the Sevastopol and Kerch Commercial Sea Ports. Kerch Commercial Sea Port has control over the Kerch Strait and administers the Kerch Canal. Vessels entering or leaving the Sea of Azov must pass through the Kerch Strait and the Kerch Canal. A number of Russian and Ukrainian ports such as Mariupol and Rostov are located in the Sea of Azov. The port authority levies canal dues and therefore in order to pass the Kerch Canal dues must be paid to the authority which is designated by the EU in order to reach non-designated ports such as Mariupol. The International Group is raising this issue with the EU, but until further guidance is issued by the EU Members should beware that payment of dues to the Kerch port authority may involve a breach of sanctions.
18 AUGUST 2014 - COUNCIL REGULATION (EU) No 825/2014 of 30 July 2014 concerning restrictions on the import into the Union of goods originating in Crimea or Sevastopol, in response to the illegal annexation of Crimea and Sevastopol
In response to the annexation of Crimea and Sevastopol by Russia, the European Union published Regulation 692/2014 of 23 June 2014, introducing trade sanctions in respect of goods originating in Crimea or Sevastopol and on the provision, directly or indirectly, of financing or financial assistance, as well as insurance and reinsurance, related to the import of such goods.
On 30 July the European Union published Regulation 825/2014 amending Regulation 692/2014. This notice therefore supplements the notice published below on 15 July 2014. The prohibitions in Article 2 are extended to include those noted below.
Prohibitions
Article 2 of the Regulation as amended provides that it is prohibited, amongst other things:
To import into the European Union “Goods”[1] originating in Crimea or Sevastopol;
To provide, directly or indirectly, financing or financial assistance as well as insurance and reinsurance related to the import of Goods originating in Crimea or Sevastopol;.
To sell, supply, transfer or export, directly or indirectly, key equipment and technology listed in Annex III of the amended Regulation to any natural or legal person, entity or body in Crimea or Sevastopol or for use in Crimea or Sevastopol.
To provide technical and financial assistance or brokering services related to the key equipment and technology listed in Annex III, including the provision, manufacture maintenance and use of such items. .
The prohibited key equipment and technology in Annex III includes that for
(a) the creation, acquisition or development of infrastructure in the transport, telecommunications and energy sectors in Crimea and Sevastopol; and
(b) the exploitation[2] of oil, gas and mineral resources[3] in Crimea or Sevastopol.
The list of prohibited items includes certain types of ships and associated equipment such as :
mobile drilling derricks;
floating or submersible drilling or production platforms;
sea-going light vessels, fire-floats, floating cranes and other vessels, the navigability of which is subsidiary to their main function (excl. dredgers, floating or submersible drilling or production platforms; fishing vessels and warships)
Exemptions
2.Article 3 of Regulation 692/2014 of 23 June 2014 provides a grace period until 26 September 2014 for the execution of trade contracts concluded before 25 June 2014 relating to the importation into the EU of goods originating in Crimea or Sevastopol, or of ancillary contracts necessary for their execution. . Article 3 also requires persons, entities or bodies seeking to perform the contract to provide a minimum of 10 days advance notice to their EU Member State Competent Authority. Furthermore goods made available to the Ukrainian authorities and entitled to “preferential origin” status in accordance with Regulation (EU) No 978/2012 and Regulation (EU) No 374/2014 or the EU-Ukraine Association Agreement may also be exempt.
Regulation 825/2014 provides for the same 10 day notification requirement and a grace period until 28 October 2014 for trade contracts, or contracts ancillary to their execution, concluded before 30 July 2014 concerning key equipment or technology as listed in Annex III.
3.Article 6 of Regulation 692/2014 of 23 June 2014, as amended prohibits the payment of claims in respect of contracts or transactions which are prohibited by the Regulation if they are made by designated persons, entities or bodies listed in Council Regulation 269/2014; persons, entities or bodies acting through or on behalf of such designated entities; persons, entities or bodies who have been found by a competent authority to have infringed the prohibitions in Regulation 692/2014; or if claims relate to the import of goods originating in Crimea or Sevastapol.
Scope of Application
4.Article 10 of Regulation 692/2014 of 23 June 2014, as amended provides that it shall apply:
Within the territory of the European Union.
On board any vessel under the jurisdiction of a European Member State.
To all nationals wherever located of any European Member State.
To any legal person, entity or body , which is incorporated or constituted under the law of a Member State.
To any legal person, entity or body in respect of any business in whole or in part within the European Union.
5.It is unlawful for European flagged or managed vessels to perform trade prohibited by EU Regulations and P&I clubs domiciled in the European Union cannot provide P&I insurance to any vessel of whatever nationality engaged in such trade. The prohibitions will also apply to non EU domiciled Members and Clubs to the extent that the prohibited activity and/or insurance provided constitutes business done in whole or in part of the EU. All International Group Club rules contain exclusions in relation to claims arising from trades for which it is unlawful to provide insurance by reason of sanctions.
6.Regulation 825/2014 entered into force on 31 July 2014.
All other clubs in the International Group have issued a similar notice.
RUSSIAN PRESIDENTIAL DECREE NO. 560 DATED 6 AUGUST AND RESOLUTION OF THE GOVERNMENT OF THE RUSSIAN FEDERATION NO. 778 DATED 7 AUGUST 2014
In response to the imposition of trade and financial sanctions against Russia by the USA, member states of the European Union, Canada, Norway and Australia, Russia has introduced, with effect from 7 August 2014, a one-year ban on the import into Russia of certain agricultural and food products originating from those countries. There are no grace periods enabling performance of pre-existing contractual obligations.
The affected products are defined according to classification codes used in Russia for customs clearance purposes, and based on the internationally accepted “Harmonized Commodity Description and Coding System”, “HS”. The relevant products include a broad range of food and agricultural products, including meat, milk and dairy products, fish, fruit and vegetables.
Neither the Decree nor the Resolution spell out the potential penalties that may be applied by the Russian authorities for breach of these prohibitions.
These measures may lead to disputes over liability for non-performance and termination of contracts. Members involved in the carriage of the affected commodities should pay close attention to their contractual arrangements.
EU REGULATION 833 – 31 JULY 2014
With effect from 1 August 2014, the EU will apply additional restrictive measures in respect of Russia with a view to increasing the costs of Russia's actions to undermine Ukraine's territorial integrity, sovereignty and independence, and in order to promote a peaceful settlement of the crisis.
A brief summary of the new restrictions is set out below:
Article 2 - ban on the supply of dual use goods and technology (whether or not originating in the EU) to any natural or legal person, entity or body in Russia or for use in Russia, if those items are or may be intended, in their entirety or in part, for military end use or for a military end user.
Competent authorities may grant an authorisation where the export concerns the execution of an obligation arising from a contract or an agreement concluded before 1 August 2014.
The relevant products are those as listed in Annex 1 of EU Regulation 428/2009.
Article 3 - prior authorisation shall be required for the sale, supply, transfer or export, directly or indirectly, of technologies as listed in Annex II, whether or not originating in the EU, to any natural or legal person, entity or body in Russia or in any other country, if such equipment or technology is for use in Russia.
Annex II includes technologies suited to the oil industry for use in deep water oil exploration and production, Arctic oil exploration and production, or shale oil projects in Russia.
Competent authorities may grant an authorisation where the export concerns the execution of an obligation arising from a contract or an agreement concluded before 1 August 2014.
Article 4 – it is prohibited to provide, directly or indirectly:
• technical assistance related to the goods and technology listed in the Common Military List, or related to the provision, manufacture, maintenance and use of goods included in that list, to any natural or legal person, entity or body in Russia or for use in Russia;
• financing or financial assistance related to the goods and technology listed in the Common Military List, including in particular grants, loans and export credit insurance or guarantee, for any sale, supply, transfer or export of such items, or for any provision of related technical assistance to any natural or legal person, entity or body in Russia or for use in Russia;
• technical assistance or brokering services related to dual-use goods and technology, or related to the provision, manufacture, maintenance and use of such goods or technology, to any natural or legal person, entity or body in Russia or for use in Russia, if the items are or may be intended, in their entirety or in part, for military use or for a military end-user;
• financing or financial assistance related to the dual-use goods and technology, including in particular grants, loans and export credit insurance, for any sale, supply, transfer or export of such items, or for any provision of related technical assistance to any natural or legal person, entity or body in Russia or for use in Russia, if the items are or may be intended, in their entirety or in part, for military use or for a military end-user.
These prohibitions do not apply in respect of the execution of an obligation arising from a contract or an agreement concluded before 1 August 2014, and to the provision of assistance necessary to the maintenance and safety of existing capabilities within the EU.
Article 5 - a ban on directly or indirectly purchasing, selling, providing brokering or assistance in the issuance of, or otherwise dealing with certain transferable securities and money-market instruments with a maturity exceeding 90 days, issued after 1 August 2014.
The ban applies to relevant securities and money-market instruments issued by:
(a) a major credit institution or other major institution having an explicit mandate to promote competitiveness of the Russian economy, its diversification and encouragement of investment, established in Russia with over 50 % public ownership or control as of 1 August 2014, as listed in Annex III; or
(b) a legal person, entity or body established outside the Union whose proprietary rights are owned for more than 50 % by an entity listed in Annex III; or
(c)a legal person, entity or body acting on behalf or at the direction of an entity referred to in point (b) of this paragraph or listed in Annex III.
Annex III lists the following Russian banks:
SBERBANK
VTB BANK
GAZPROMBANK
VNESHECONOMBANK (VEB)
ROSSELKHOZBANK
A copy of the Regulation can be downloaded from the link set out below.
EU REGULATION 826 – 30 JULY 2014
Eight individuals and three entities have been added to the EU list of sanctions targets under EU Regulation 269/2014 (based on grounds of undermining or threatening the territorial integrity, sovereignty and independence of Ukraine).
A copy of the Regulation listing the names of the individuals and entities now designated can be downloaded from the link set out below.
EU REGULATION 825 30 JULY 2014
On 23 June 2014, in response to the annexation of Crimea and Sevastopol by Russia, the European Union published Regulation 692/2014, introducing trade sanctions (set out in Article 2 of the Regulation) in respect of goods originating in Crimea or Sevastopol and on the provision, directly or indirectly, of financing or financial assistance, as well as insurance and reinsurance, related to the import of such goods.
Pursuant to Regulation 825/2014, and with effect from 31 July 2014, the prohibitions as set out in Article 2 of regulation 692/2014 are widened.
New Article 2a prohibits:
the granting of any financial loan or credit and the creation of any joint venture relating to; and
the acquisition (including acquisition of shares), or extension of participation in, enterprises established in Crimea or Sevastopol engaged in
• the creation, acquisition or development of infrastructure in the transport, telecommunications or energy sectors in Crimea or Sevastopol;
• the exploitation of oil gas or mineral resources in Crimea or Sevastopol.
“Mineral Resources” are listed in Annex II of Regulation 825/2014.
“Exploitation” and “Refining” are also defined terms.
New Article 2b prohibits the provision, directly or indirectly, of technical assistance and brokering services related to the investment activities referred to in Article 2a.
New Article 2c prohibits:
• the sale, supply, transfer, or export, directly or indirectly, of key equipment and technology as listed in Annex III to any natural or legal person, entity or body in Crimea or Sevastopol or for use in Crimea or Sevastopol.
• the provision, directly or indirectly, of technical assistance or brokering services related to the key equipment and technology listed in Annex III, or related to the provision, manufacture, maintenance and use of items listed in Annex III to any natural or legal person, entity or body in Crimea or Sevastopol or for use in Crimea or Sevastopol; and
• provision, directly or indirectly, of financing or financial assistance related to the key equipment and technology listed in Annex III to any natural or legal person, entity or body in Crimea or Sevastopol or for use in Crimea or Sevastopol.
These prohibitions do not apply to the execution, until 28 October 2014, of transactions required by a trade contract concluded before 30 July 2014 concerning key equipment or technology as listed in Annex III or by ancillary contracts necessary for the execution of such contracts provided that the natural or legal person, entity or body seeking to engage in such transactions, or to provide assistance to such transactions, has notified, at least 10 working days in advance, the transaction or assistance to the competent authority of the Member State in which it is established.
Annex III includes key equipment and technology related to the creation, acquisition or development of infrastructure in the following sectors: (a) transport; (b) telecommunications; (c) energy; (d) the exploitation of oil, gas and mineral reserves in Crimea and Sevastopol. The listed products include certain types of ships and associated equipment including:
• mobile drilling derricks;
• floating or submersible drilling or production platforms;
• sea-going light vessels, fire-floats, floating cranes and other vessels, the navigability of which is subsidiary to their main function (excl. dredgers, floating or submersible drilling or production platforms; fishing vessels and warships)
A copy of this Regulation can be downloaded from the link set out below.
EU REGULATIONS 810/2014 AND 811/2014 - 25 JULY 2014
On 25 July 2014 Council Implementing Regulation (EU) No. 810/2014 was published in the Official Journal of the EU so that 15 individuals and 18 entities have been added to the list of EU sanctions targets that are subject to an asset freeze. They include Donetsk People's Republic and Lugansk People's Republic, (which were targeted for asset freeze by the US with effect from 16 July 2014), and the commercial sea ports of Kerch and Sevastopol. Under the asset freeze measures, all funds and economic resources belonging to, or controlled by, the listed parties that fall under EU jurisdiction are required to be frozen, and no funds or economic resources may be made available – directly or indirectly – to or for the benefit of the listed persons by parties falling under EU jurisdiction. Parties falling within EU jurisdiction include vessels under the jurisdiction of an EU Member State, nationals (wherever located) of an EU Member State, and any legal person, entity or body inside or outside the territory of the Union, which is incorporated or constituted under the law of an EU Member State. The EU has now designated a total of 109 individuals and 20 entities pursuant to Regulations 269/2014 and 208/2014.
On the same date the EU published Council Regulation (EU) No 811/2014, broadening the grounds on which persons may be designated under Regulation 269/2014. The EU may now apply sanctions under Regulation 269/2014 to natural or legal persons who actively provide material or financial support to, or are benefiting from, the Russian decision-makers responsible for the annexation of Crimea or the de-stabilisation of Eastern-Ukraine.
Copies of the new regulations and an HMT Financial Sanctions Notice concerning EU Regulation 810/2014 can be downloaded from the links set out below.
15 JULY 2014 - COUNCIL REGULATION (EU) No 692/2014 of 23 June 2014 concerning restrictions on the import into the Union of goods originating in Crimea or Sevastopol (“the Regulation”)
In response to the annexation of Crimea and Sevastopol by Russia, the European Union has published Regulation 692/2014 of 23 June 2014, introducing trade sanctions in respect of goods originating in Crimea or Sevastopol and on the provision, directly or indirectly, of financing or financial assistance, as well as insurance and reinsurance, related to the import of such goods.
Prohibitions
1) Article 2 of Regulation 692/2014 provides that it is now prohibited:
• To import into the European Union goods originating in Crimea or Sevastopol.
• To provide, directly or indirectly, financing or financial assistance as well as insurance and reinsurance related to the import of goods originating in Crimea or Sevastopol.
2) For the purpose of the Regulation “goods originating in Crimea or Sevastopol” are defined as goods which are wholly obtained in Crimea or in Sevastopol or which have undergone their last substantial transformation there in accordance with Articles 23 and 24 of Regulation EEC 2913/92 dated 12 October 1992. Article 23 of Regulation 2913/92 provides that “goods originating in a country” shall be those wholly obtained or produced in that country and the expression “goods wholly obtained in a country” means:
(a) mineral products extracted within that country;
(b) vegetable products harvested therein;
(c) live animals born and raised therein;
(d) products derived from live animals raised therein;
(e) products of hunting or fishing carried on therein;
(f) products of sea-fishing and other products taken from the sea outside a country's territorial sea by vessels registered or recorded in the country concerned and flying the flag of that country;
(g) goods obtained or produced on board factory ships from - the products referred to in subparagraph (f) originating in that country, provided that such factory ships are registered or recorded in that country and fly its flag;
(h) products taken from the seabed or subsoil beneath the seabed outside the territorial sea provided that that country has exclusive rights to exploit that seabed or subsoil;
(i) waste and scrap products derived from manufacturing operations and used articles, if they were collected therein and are fit only for the recovery of raw materials;
(j) goods which are produced therein exclusively from goods referred to in subparagraphs (a) to (i) or from their derivatives, at any stage of production.
3) Article 24 of Regulation EEC 2913/92 provides that goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture.
4) On the face of it the new Regulation comprehensively limits trade activities from Crimea and Sevastopol to the European Union and Members who are subject to the scope of application (see paragraphs 7, 8 and 9 below) are advised to seek advice before fixing contracts for voyages from Crimea and Sevastopol. In light of the prohibition on the provision of insurance and reinsurance, and in order to protect their mutual membership, the Clubs in the International Group must continue to rely on existing cessation of cover / exclusion provisions in their Rules and terms of entry to ensure that such Clubs do not provide insurance or reinsurance for sanctioned activities, and that the Clubs do not participate knowingly and intentionally in activities the effect of which would or could circumvent the sanctions prohibitions.
5) Article 6 of the Regulation prohibits the payment of claims in respect of contracts or transactions (including claims under guarantees or involving indemnities) which are prohibited by the Regulation if they are made by designated persons, entities or bodies listed in Council Regulation 269/2014 dated 17th March 2014; persons, entities or bodies acting through or on behalf of designated entities; persons, entities or bodies who have been found by a European Union Member State competent authority to have infringed the prohibitions in Regulation 692/2014; or if claims relate to the import of goods originating in Crimea or Sevastopol.
Exemptions
6) Article 3 of the Regulation stipulates that the prohibitions will not apply to:
a) trade contracts concluded before 25 June 2014 or to ancillary contracts necessary for their execution, so long as these contracts are executed by 26 September 2014, and provided that persons, entities or bodies seeking to perform such contracts have given a minimum of 10 days’ advance notice of the relevant activity or transaction to their EU Member State Competent Authority.
b) goods originating in Crimea or Sevastopol which have been made available to the Ukrainian authorities for examination, for which compliance with the conditions conferring entitlement to preferential origin has been verified and for which a certificate of origin has been issued in accordance with Regulation (EU) No 978/2012 and Regulation (EU) No 374/2014 or in accordance with the EU-Ukraine Association Agreement.
Scope of Application
7) Article 10 of the Regulation provides that it shall apply within the territory of the European Union; on board any vessel under the jurisdiction of a European Union Member State; to all nationals (wherever located) of a European Union Member State; to any legal person, entity or body inside or outside the territory of the Union, which is incorporated or constituted under the law of a European Union Member State.
8) The Regulation applies also to any legal person, entity or body in respect of any business done in whole or in part in the European Union.
9) The broad scope of application now makes it unlawful for European Union nationals, EU domiciled Members, and EU Member State flagged or managed vessels to perform prohibited trade activities. Furthermore the prohibitions on the provision of insurance and reinsurance will prevent P&I clubs domiciled in the European Union from providing P&I insurance to any vessel or Member of whatever nationality engaged in prohibited trade activities. The sanctions for prohibited activities will also apply to non-EU domiciled Members and Clubs, to the extent that the prohibited activity and any insurance provided constitutes business done in whole or in part in the EU. All International Group Club rules contain exclusions from cover in relation to trades or activities for which it is unlawful to provide insurance by reason of sanctions.
10) The Regulation entered force on 25 June 2014.
All other clubs in the International Group have issued a similar notice.
Copies of the Regulation, and an associated European Council press release, can be downloaded from the links set out below.
UNITED KINGDOM - The Ukraine (European Union Financial Sanctions) Regulations 2014 (effective 6 March 2014) and The Ukraine (European Union Financial Sanctions) (No.2) Regulations 2014 ( effective 18 March 2014)
EU Regulations 208/2014 of 5 March 2014 and 269/2014 of 17 March 2014 implemented restrictive measures in respect of the on-going political instability in Ukraine, including:
• freezing of funds and economic resources belonging to, or owned, held or controlled by, a designated person;
• making funds or economic resources available to or for the benefit of a designated person
if a person subject to the Regulation(s) knows, or has reasonable cause to suspect, that he is dealing with such funds or economic resources.
Both EU Regulations include anti-avoidance provisions, such that it is also prohibited to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent the restrictive measures.
Both also provide that Member States are required to lay down rules on penalties applicable to infringements of the provisions of the Regulations, and to take all measures necessary to ensure that they are implemented. Such penalties must be effective, proportionate and dissuasive.
The penalties applicable to persons subject to UK law are set out in The Ukraine (European Union Financial Sanctions) Regulations 2014 (applicable to offences under EU Regulation 208/2014) and The Ukraine (European Union Financial Sanctions) (No.2) Regulations 2014 (applicable to offences under EU Regulation 269/2014). The UK regulations came into effect in the United Kingdom on 6 March and 18 March 2014 respectively. UK law will apply in respect of offences committed by conduct wholly or partially outside the UK committed by
(a) a UK national; or
(b) a body incorporated or constituted under the law of any part of the UK.
Pursuant to the UK Regulations, a person guilty of an offence is liable:
• on conviction on indictment to imprisonment for a term not exceeding two years or to a fine or both.
• on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding the statutory maximum or to both.
If an offence is committed by a body corporate with the consent or connivance of any director, manager, secretary or other similar officer of the body corporate, or any person purporting to act in any such capacity, or if such offence is attributable to the neglect of any such person, then that person, as well as the company, shall also be guilty of the offence.
Copies of the relevant EU and UK regulations can be downloaded from the links set out below.
EU COUNCIL DECISION 2014/265/CFSP of 12 May 2014 AND COUNCIL REGULATION 476/2014 of 12 May 2014
Pursuant to the Decision, the EU Council has broadened the legal basis for EU restrictive measures to be implemented under EU Regulation 269/2014 in response to the on-going situation in Ukraine. It has added the possibility of targeting persons associated with actions and policies undermining stability or security in Ukraine (previously, EU Regulation 269/2014 required a designated person to be himself / herself "responsible" for such actions) as well as with obstructing the work of international organisations in Ukraine, and entities linked to such persons. The Decision also introduces a legal basis for asset freezes against legal persons, entities or bodies in Crimea or Sevastopol whose ownership has been transferred contrary to Ukrainian law, or legal persons, entities or bodies which have benefited from such a transfer.
Pursuant to Regulation 476/2014, 13 individuals and 2 entities have been added to the list of asset freeze targets designated on the basis of the broader designation criteria set out above. The 2 entities are gas and oil companies whose assets are said to have been appropriated by the new Crimean government. Copies of the Decision, Regulation, and an explanatory notice published by HMT, can be downloaded from the links set out below.
List of additional entities:
1. PJSC CHERNOMORNEFTEGAZ On 17.03.2014 the ‘Parliament of Crimea’ adopted a resolution declaring the appropriation of assets belonging to Chernomorneftegaz enterprise on behalf of the ‘Republic of Crimea’. The enterprise is thus effectively confiscated by the Crimean ‘authorities’.
2. FEODOSIA On 17.03.2014 the ‘Parliament of Crimea’ adopted a resolution declaring the appropriation of assets belonging to Feodosia enterprise on behalf of the ‘Republic of Crimea’. The enterprise is thus effectively confiscated by the Crimean ‘authorities’.
List of additional persons:
1. Vyacheslav Viktorovich VOLODIN Born 4 February 1964 in Alekseevka, Saratov region. First Deputy Chief of Staff of the Presidential Administration of Russia. Responsible for overseeing the political integration of the annexed Ukrainian region of Crimea into the Russian Federation.
2. Vladimir SHAMANOV Born 15.02.1954 in Barnaul. Commander of the Russian Airborne Troops, Colonel-General. In his senior position holds responsibility for the deployment of Russian airborne forces in Crimea.
3. Vladimir Nikolaevich PLIGIN Born 19.05.1960 in Ignatovo, Vologodsk Oblast, USSR. Chair of the Duma Constitutional Law Committee. Responsible for facilitating the adoption of legislation on the annexation of Crimea and Sevastopol into the Russian Federation.
4. Petr Grigorievich JAROSH Acting Head of the Federal Migration Service office for Crimea. Responsible for the systematic and expedited issuance of Russian passports for the residents of Crimea.
5. Oleg Grigorievich KOZYURA Born 19.12.1962 in Zaporozhye Acting Head of the Federal Migration Service office for Sevastopol. Responsible for the systematic and expedited issuance of Russian passports for the residents of Crimea.
6. Viacheslav PONOMARIOV Self-declared mayor of Slaviansk. Ponomarev called on Vladimir Putin to send in Russian troops to protect the city and later asked him to supply weapons. Ponomarev's men are involved in kidnappings (they captured Ukrainian reporter Irma Krat and Simon Ostrovsky, a reporter for Vice News, both were later released, they detained military observers under OSCE Vienna Document).
7. Igor Mykolaiovych BEZLER Born in 1965 One of the leaders of self-proclaimed militia of Horlivka. He took control of the Security Service of Ukraine's Office in Donetsk region building and afterwards seized the Ministry of Internal Affairs' district station in the town of Horlivka. He has links to Ihor Strielkov under which command he was involved in the murder of Peoples' Deputy of the Horlivka's Municipal Council Volodymyr Rybak according to the SBU.
8. Igor KAKIDZYANOV One of the leaders of armed forces of the self- proclaimed ‘Donetsk People's Republic’. The aim of the forces is to ‘protect the people of Donetsk People's Republic and territorial integrity of the republic’ according to Pushylin, one of the leaders of the ‘Donetsk People's Republic’.
9. Oleg TSARIOV Member of the Rada. Publicly called for the creation of the Federal Republic of Novorossia, composed of South Eastern Ukrainian regions.
10. Roman LYAGIN Head of the ‘Donetsk People's Republic’ Central Electoral Commission. Actively organised the referendum on 11 May on the self-determination of the ‘Donetsk People's Republic’.
11. Aleksandr MALYKHIN Head of the ‘Lugansk People's Republic’ Central Electoral Commission. Actively organised the referendum on 11 May on the self-determination of the ‘Lugansk People's Republic’.
12. Natalia Vladimirovna POKLONSKAYA Born 18.03.1980 in Eupatoria. Prosecutor of Crimea. Actively implementing Russia's annexation of Crimea.
13. Igor Sergeievich SHEVCHENKO Acting Prosecutor of Sevastopol. Actively implementing Russia's annexation of Sevastopol.
29 APRIL - FURTHER EU AND US SANCTIONS
The EU and US have extended their respective sanctions measures against Russia and Ukraine in response to continuing unrest in certain areas of Ukraine, citing a failure by Russia and Ukrainian separatists to abide by the terms of the Geneva Joint Statement (issued by Russia, Ukraine, the EU and US) following talks held in Geneva on 17 April 2014, aimed at de-escalating the situation in Ukraine.
US MEASURES
On 28 April 2014 the US announced the designation of 7 Russian government officials, including members of President Putin's inner circle, and 17 entities pursuant to Executive Order 13661. E.O. 13661 authorises sanctions on, amongst others, officials of the Russian Government and any individual or entity that is owned or controlled by, that has acted for or on behalf of, or that has provided material or other support to, a senior Russian government official.
Newly designated individuals include Dmitry Kozak, Deputy Prime Minister of the Russian Federation, and Igor Sechin, President and Chairman of the Management Board of Rosneft.
The entities newly designated by the US include companies engaged in gas and oil transportation, construction companies involved in oil, gas and petrochemical projects, and banks associated with Bank Rossiya which itself was designated on March 20, 2014 pursuant to E.O. 13661 for acting for or on behalf of or materially assisting, sponsoring, or providing financial, material, or technological support for, or goods and services to or in support of, a senior official of the Government of the Russian Federation.
The US Departments of Commerce and State have concurrently announced a tightened policy to deny licence applications for the export of high-technology items that could contribute to Russia’s military capabilities.
EU MEASURES
With effect from 29 April 2014, the EU has amended Regulation 269/2014 to include the names of 15 additional individuals targeted for asset freeze and visa bans by the EU by reason of their involvement in activities which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine.
The newly-designated individuals are:
BELAVENTSEV, Oleg, Yevgenyvich; BOLOTOV, Valeriy; GENNADEVICH, Tsyplakov, Sergey; GERASIMOV, Valery, Vasilevich; KOVATIDI, Oleg, Fedorovna; KOZAK, Dmitry, Nikolayevich; MENYAILO, Sergei, Ivanovich; NEVEROV, Sergei, Ivanovich; PROKOPIV, German; PURGIN, Andriy; PUSHYLIN, Denys; SAVELYEV, Oleg, Genrikhovich; SERGUN, Igor, Dmitrievich; SHVETSOVA, Ludmila, Ivanovna; STRELKOV, Igor.
A total of 48 individuals are now sanctioned by the EU pursuant to EU Regulation 269/2014.
22 individuals are targeted for asset freeze under EU Regulation 208/2014 for the misappropriation of Ukrainian State funds and human rights abuses.
Broader US and EU sanctions targeting specific sectors of the Russian economy remain a possibility.
Copies of an associated HMT Financial Sanctions Notice and a White House press release commenting on these developments can be downloaded from the links set out below.
21 MARCH 2014 - FURTHER EU DESIGNATIONS
The EU has announced the designation of 12 more individuals for asset freeze pursuant to EU Regulation 269/2014.
All funds or economic resources of these individuals must be frozen. The latest designations target Russian and Crimean politicians and military personnel. A copy of an associated HMT advisory notice can be downloaded from the link set out below.
UKRAINE SANCTIONS UPDATE 17 MARCH 2014
In response to the growing crisis in Ukraine, the EU and US have taken steps to impose sanctions on various persons regarded as being responsible for human rights violations in Ukraine, undermining the democratic processes and institutions in Ukraine, threatening Ukraine’s peace, security, stability, sovereignty, and territorial integrity, and contributing to the misappropriation of Ukraine’s assets. The scope and impact of the measures are described in detail further below. At the present time, the measures are limited to the imposition of asset freezes and visa bans against various Ukrainian and Russian individuals.
The practical effect of designation under the two EU regulations and the two US executive orders is similar - persons subject to EU / US law are required to freeze the property of designated persons, and are prohibited from making funds or economic resources available, directly or indirectly, to or for the benefit of such designated persons.
Members subject to EU and/or US jurisdiction and involved in trade with Ukraine or Russia are advised to check the names of their business counter parties against EU and US designation lists. Many of the individuals that are currently subject to EU and US asset freeze are likely to have business interests. If there is a risk that a business counter party could be connected to a designated person or under their direction or control, beneficial ownership may need to be investigated by asking for further details including:
• identity of all directors and shareholders, including percentage shareholding;
• ultimate beneficial owners;
• articles of incorporation;
• share register of the entity.
Members are advised to seek legal advice if they have concerns about any of the individuals, companies or other entities connected with their trades involving Ukraine or Russia.
Members not subject to either EU or US jurisdiction may nevertheless encounter problems related to receipt/payment of funds from/to designated parties. Members are reminded that P&I cover is unlikely to be available for liabilities arising out of trade / contracts involving designated parties, or where the employment of vessels contravenes sanctions regulations.
EU REGULATION 269/2014 – 17 MARCH 2014
EU Regulation 269/2014, with effect from 17 March 2014, targets persons responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, including actions on the future status of any part of the territory which are contrary to the Ukrainian constitution, and natural or legal persons, entities or bodies associated with them. The substance of Regulation 269/2014 is similar to Regulation 208/2014 – it (1) imposes a freeze on all funds and economic resources belonging to, owned, held or controlled by designated persons/entities/or bodies (as listed in Annex I to the Regulation) and (2) prohibit funds or economic resources being made available, directly or indirectly to or for the benefit of such designated persons. It provides for identical derogations as are set out in Regulation 208/2014.
Annex I of Regulation 269/2014 currently lists 21 individuals, including those elected to government and military positions in Crimea following the disputed independence referendum held on 16 March 2014, members of the Federation Council of the Russian Federation and the Duma of the Russian Federation, and members of the military forces of the Russian Federation.
EU Member States have separately suspended export licences on equipment which might be used for internal repression.
EU REGULATION 208/2014 – 5 MARCH 2014
Pursuant to EU Regulation 208/2014, and with effect from 6 March 2014, the EU has imposed a freeze on all funds and economic resources belonging to, owned, held or controlled by designated persons/entities/or bodies (as listed in Annex I). Former President of Ukraine Viktor Yanukovych and 17 other Ukrainian individuals, primarily ministers and other government officials, are currently listed in Annex I. Regulation 208/2014 is targeted at persons identified as being responsible for the misappropriation of Ukrainian State funds and persons responsible for human rights violations in Ukraine, and natural or legal persons, entities or bodies associated with them.
Pursuant to the Regulation, it is prohibited for any funds or economic resources to be made available, directly or indirectly to or for the benefit of the designated persons. This prohibition is subject to a limited exception that permits financial or credit institutions to credit frozen accounts with funds transferred by third parties to the account of a designated person, although any additions to those accounts must also be frozen. The financial or credit institution must inform the relevant competent authority about any such transaction.
Further exceptions apply in respect of payments into the frozen accounts of designated persons where those payments relate to:
(a) interest or other earnings on those accounts;
(b) payments due under contracts/agreements/obligations that were concluded or arose before the date on which the designation occurred; or
(c) payments due under legal decisions in a Member State or enforceable in the Member State.
All such funds must also be frozen.
It is also expressly prohibited to participate knowingly and intentionally in activities whose object or effect is to circumvent the prohibitions outlined above.
The Regulation provide for derogations from the prohibitions in certain circumstances, subject to prior authorisation from the relevant competent authority, such as where the funds are:
• necessary to satisfy the basic needs of a designated person (such as payments for food, housing, medical needs);
• used exclusively for the payment of reasonable professional fees/legal expenses;
• used exclusively for the payment of fees or service charges for the routine holding or maintenance of the frozen funds/economic resources;
• necessary to satisfy certain legal claims against a designated person/entity/body;
• payments due by designated persons under contracts/agreements which were concluded by, or under an obligation that arose, prior to the date on which the designation occurred.
