EU-Ukraine/Russia restrictive measures: where do we stand?

21 March 2014

Due to the ongoing political crisis, presence of Russian troops and recent referendum regarding the secession of the region of Crimea from Ukraine, the European Union (“EU”) has issued several restrictive measures in the past weeks.

At this stage, the EU restrictive measures have been focussed (i) on the freezing and recovery of assets of persons identified as responsible for the misappropriation of Ukrainian State funds and persons responsible for human rights violations in Ukraine and (ii) on travel restrictions and freezing of funds and economic resources of certain 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 such persons.

The adopted EU restrictive measures are enforceable and directly applicable in all EU Member States. The EU restrictive measures apply:

  1. within the EU territory, including its airspace;
  2. on board any aircraft or any vessel under the jurisdiction of an EU Member State;
  3. to any person inside or outside the EU territory who is a national of an EU Member State;
  4. to any legal person, entity or body, inside or outside the EU territory, which is incorporated or constituted under the law of an EU Member State;
  5. to any legal person, entity or body in respect of any business done in whole or in part within the EU.

The key EU restrictive elements in view of the situation in Ukraine are as follows:

  • Council Regulation (EU) No 208/2014 of 5 March 2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine, effective as of 6 March 2014:
    • Asset freeze against 18 individuals, meaning that all funds and economic resources belonging to, owned, held or controlled by eighteen persons listed under Annex I of Council Regulation (EU) No 208/2014 are to be frozen. This means that any funds and economic resources belonging to, owned, held or controlled by the eighteen listed individuals within the EU jurisdiction are to be frozen.
    • Prohibition to make any funds or economic resources, directly or indirectly, available to or for the benefit of the eighteen individuals listed under Annex I of Council Regulation (EU) No 208/2014.
    • Prohibition to circumvent, knowingly and intentionally, the aforementioned measures.
  • Council Regulation (EU) No 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine, effective as of 17 March 2014:
    • Asset freeze against additional 21 individuals, meaning that all funds and economic resources belonging to, owned, held or controlled by twenty-one persons listed under Annex I of Council Regulation (EU) No 269/2014 are to be frozen. This means that any funds and economic resources belonging to, owned, held or controlled by the twenty-one listed individuals within the EU jurisdiction are to be frozen.
    • Prohibition to make any funds or economic resources, directly or indirectly, available to or for the benefit of the twenty-one individuals listed under Annex I of Council Regulation (EU) No 269/2014.
    • Prohibition to circumvent, knowingly and intentionally, the aforementioned measures.
  • EU Member States have agreed to suspend, until further notice, all export licensing to Ukraine for equipment which might be used for internal repression.
It should be further taken into account that the EU Member State should not prevent a listed person from making a payment due under a contract entered into prior to the date on which such person was listed in the respective EU Regulations, provided that concerned EU Member State has determined that the payment is not, directly or indirectly, received by any listed person. In addition, the competent authorities of the EU Member States can authorize derogations from the imposed restrictive measures by releasing certain frozen funds or economic resources upon fulfilment of certain circumstances and conditions.

In view of the above EU restrictive measures, the UK has decided to suspend all extant licences and application processing for licences for direct export to Russia for military and dual use items destined for units of the Russian armed forces or other state agencies which could be or are being deployed against Ukraine. The UK government will also suspend licences for exports to third countries for incorporation into equipment for export to Russia where there is a clear risk that the end product will be used against Ukraine.

Considering the deteriorating situation in Ukraine, it is quite possible that the EU and individual EU Member State will adopt further restrictive measures. Taking the aforementioned into account, persons falling under the scope of the EU restrictive measures (as depicted above) should take and incorporate adequate internal (compliance) measures and checks in relation to any transactions, shipments, dealings and/or agreements with third parties in order to ascertain that the restrictive measures imposed by the EU and individual EU Member States are being fully complied with.

Authors

Image of Goran Danilovic

Goran Danilovic

Associate
Netherlands

Call me on: +31 (0)70 353 8800
Image of Brian Mulier

Brian Mulier

Partner
Netherlands

Call me on: +31 (0)70 353 8800