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A 14th package of EU sanctions against Russia was formally adopted by the European Council on 24 June 2024. The package bans re-exports of Russian liquefied natural gas (LNG) in the EU, making it the first restriction adopted targeting LNG. The package also aims to close “loopholes” in EU sanctions and increases restrictions on EU companies’ third country subsidiaries. The package also includes extensions of certain deadlines, including for divestment and services to subsidiaries.
The new sanctions package was adopted on 24 June 2024 and entered into force on 25 June 2024. The measures are set out in the regulations accessible here and here.
Below, we have summarised some of the most significant changes:
The 14th sanctions package includes new tools to prevent circumvention of the sanctions in order to maximise the impact of the existing sanctions.
Firstly, EU parent companies will now be required to undertake best efforts to ensure that their third-country subsidiaries do not take part in any activities that undermine the sanctions. Whereas EU parent companies have previously been prohibited from actively using their third-country subsidiaries to circumvent sanctions, they are now also obliged to use their influence to prevent their third-country subsidiaries from taking actions that result in an effect that the EU sanctions seek to prevent.
Secondly, EU operators selling goods critical to the development of Russian military systems or battlefield goods found in Ukraine to third countries will need to implement due diligence mechanisms capable of identifying and assessing risks of re-exportation to Russia and mitigating such risks.
Lastly, EU operators selling, licensing, or transferring in any other way industrial know-how for the production of battlefield goods to third-country commercial counterparts will as of 26 December 2024 have to include contractual provisions to ensure that such know-how will not be used for goods intended for Russia.
The new sanctions include a ban on reloading of services of Russian liquified natural gas (LNG) in EU territory for the purpose of transshipment operations to third countries. The ban covers both ship-to-ship transfers and ship-to-shore transfers as well as reloading operations. The ban does not affect import to the EU of LNG but only re-export to third countries via the EU.
In addition, the new sanctions will prohibit new investments as well as the provision of goods, technology, and services for the completion of LNG project under construction.
For the first time, the EU has adopted a measure targeting specific vessels that are designated for various reasons, for example vessels that transport military equipment for Russia, vessels that support the development or expansion of the Russian energy sector, and/or vessels that are operated in such a way as to facilitate or engage in the violation or circumvention of the sanctions. The designated vessels are i.a., subject to a port access ban and a ban on provision of services. So far, 27 vessels have been targeted this way, cf. Annex X of Regulation 2024/1745 (amending Regulation 833/2014).
Furthermore, the prohibition on the transport of goods by road within EU territory, cf. Article 3l of Regulation 833/2014, has been amended so that EU operators that are owned 25% or more by a Russian natural og legal person are prohibited from becoming a road transport undertaking which transports goods by road within EU territory, including transit.
The new sanctions prohibit the use of the System for Transfer of Financial Messages (SPFS) of the Central Bank of Russia or equivalent specialised financial messaging services set up by the Central Bank of Russia for EU entities operating outside of Russia.
Moreover, a ban has been imposed on transactions with credit and financial institutions and crypto assets providers established outside of the EU when these entities facilitate transactions that support Russia’s military industrial base.
The 14th sanctions package includes new measures that will allow EU operators to claim compensation from damages caused by any persons, entities, and bodies referred to in point (a), (b) or (c) of Article 11 of Regulation 833/2014 due to the implementation of EU sanctions and Russian expropriation. Regarding expropriation, compensation can be obtained provided that such a decision is illegal under international customary law or under a bilateral investment treaty entered into between a Member State and Russia.
An additional 61 entities have been added to the list of those directly supporting Russia’s military and industrial complex in its war against Ukraine, some of which are located in third countries like China, Turkey, and the United Arab Emirates, cf. Annex I to Regulation 2024/1745. These entities will be subject to tighter export restrictions concerning dual use goods and technologies.
Moreover, the new sanctions impose further restrictions on exports of goods which could contribute to the enhancement of Russian industrial capacities, such as chemicals, including manganese ores and compounds of rare-earths, plastics, excavating machinery, monitors, and electrical equipment. In addition, five common high priority items were added to the restrictions on exports of goods.
As far as imports are concerned, the new sanctions impose further restrictions on the import of helium.
The new sanctions include asset freezes for an additional 69 individuals and 47 entities, bringing the total of individuals and entities on the list to nearly 2,300. The updated asset freeze list is set out in the Annex in Regulation 2024/1746 (amending Regulation 269/2014).
Article 5n of Regulation 833/2014 contains a prohibition on provision of various services such as accounting, auditing, management consulting, legal advisory services, and IT consultancy services to Russian legal entities. The expiration of the exemption for provision of such services intended exclusively for use by legal entities owned by an EU (and EEA/Swiss/EU partner country) parent company, has been extended to 30 September 2024.
The deadline in Article 12b of Regulation 833/2014 to obtain an authorisation for the divestment or wind-down of business activities in Russia has been extended to 31 December 2024. A new option to obtain a license for services covered by Article 5n that are strictly necessary for the divestment of Russian business activities has been introduced until 31 December 2024.
The scope of applicable sanctions targeting Russia has again been extended and Danish companies should ensure that their sanctions compliance programmes, policies, screening processes, and payment processes are updated to ensure that the newly adopted sanctions are appropriately addressed.
In light of the tightened export controls and new additions to the asset freeze lists, we recommend that Danish companies conduct re-screening of products and business partners.
Gorrissen Federspiel closely follows the developments of sanctions against Russia, and we can assist with interpretation of and compliance with applicable sanctions as well as the implementation of measures to ensure that sanctions are observed. If you have any questions, please feel free to contact a member of our Compliance & Sustainability team.
For more information on the previous EU sanctions packages, please see Gorrissen Federspiel’s newsletters of 27 February 2024, 19 December 2023, 26 June 2023, 27 February 2023, 19 December 2022, 7 October 2022, 8 June 2022, 11 April 2022, 16 March 2022, 10 March 2022, 2 March 2022, 28 February 2022, and 24 February 2022.