Sanctions On Russia

The EU has - as announced for several weeks in political debates - intensified the economic sanctions against Russia. In connection therewith, two regulations have entered into force:

Council Regulation (EU) No 825/2014 of 30 July 2014 amending Council Regulation (EU) No 692/2014 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. Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine. In the following, the key provisions of these two Regulations will be described – according to a newsletter format, briefly and in excerpts. The newsletter starts with Regulation 833/2014 because this Regulation may be economically more relevant to German and European undertakings.

Generally speaking, the sanctions will take on a new dimension against Russia through these Regulations and will affect a great number of established business relationships between undertakings in the EU respectively Germany and Russian business partners.

1. Council Regulation (EU) No 833/2014

   According to Article 2 of this Regulation, it shall be prohibited to sell, supply, transfer or export, directly or indirectly, dual-use goods and technology 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 use or of for a military end-user. As a consequence, a large number of transactions with Russian business partners will potentially not be possible any more. Although the prohibition requires for military use or a military end-user, however, as it is sufficient that the goods "may be intended" for military use or for a military end-user, the scope of application of this provision is rather wide. Pursuant to Article 2 (1) second sentence, the Russian military is excluded per se as recipient of dual-use goods and technology. In particular, the inclusion of dual-use goods and technology may have a substantial impact, since a wide range of goods could be affected (from machine-tools through chemicals to electronic semiconductors etc.) Shipments based on contracts concluded before 1 August 2014 shall not be affected, in case the competent authority (in Germany the Federal Office of Economics and Export Control, Bundesamt für Wirtschaft und Ausfuhrkontrolle – BAFA) grants an...