Russia - Ukraine War: Sanctions summary (11/04/2022)

Port bans

UK sanctions

Russian ships are prohibited from 1^st March 2022 from entering ports in the United Kingdom.  Russian ships include:

• a ship owned, controlled, chartered or operated by a designated person
• a ship owned, controlled, chartered or operated by persons connected with Russia
• a ship registered in Russia, or
• a ship flying the flag of Russia

These sanctions do not apply to other ships originating from or destined for Russian ports; ships carrying cargo to or from Russia are not within scope of the transport sanctions unless they fall within the definition of a Russian ship or specified ship as above. Further, the sanctions do not apply to ships (that are not otherwise included in the Regulations) with Russian crews or Masters, unless they are a designated person.

EU sanctions

It is prohibited from 16^th April 2022 to provide access to any EU port to any vessel registered under the flag of Russia.  This prohibition applies to vessels that have changed their Russian flag or their registration to the flag or register of any other state after 24 February 2022.  There are several exemptions as set out in Article 3ea of Regulation 833/2014.

For details of global port restrictions on Russian connected vessels please see our Industry News Item: Industry News: Port restrictions on Russian connected vessels (nepia.com)

Trade restrictions

US Sanctions

The following are prohibited:

• the import of goods, services, technology from the Donetsk People’s Republic and Luhansk People’s Republic Region of Ukraine (the “Covered Regions”) to the US;
• the export of goods, services or technologies from the US or by a US person to the Covered Regions.
• the import into the US of the following products of Russian Federation origin: crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products[1];
• new investment in the energy sector in the Russian Federation by a United States person, wherever located; and

The US is also now empowered to sanction persons operating in the marine sector of Russia.

UK sanctions

The UK has imposed trade prohibitions relating to:

• military goods and military technology (as specified in Schedule 2 to the Export Control Order 2008).
• anything which falls within Chapter 93 of the Goods Classification Table, other than military goods.
• provision of technical assistance, armed personnel, financial services or funds, or associated brokering services where such provision enables or facilitates the conduct of certain military activities.
• dual-use goods and technology (as specified in Annex I to Council Regulation 428/2009 as retained by the European Union (Withdrawal) Act 2018 (‘the Dual-Use Regulation’)).
• critical-industry goods and technology (as specified in Schedule 2A to the Russia (Sanctions) EU Exit) Regulations 2019 (“the Regulations”)).
• aviation and space goods and technology (as specified in Schedule 2C to the Regulations).
• energy-related goods (as specified in Part 2 of Schedule 3 to the Regulations).
• energy-related services.
• goods originating in non-government controlled Ukrainian territory.
• infrastructure-related goods (as specified in Part 3 of Schedule 3 to the Regulations).

More details of the UK sanctions can be found here: Russia sanctions: guidance – GOV.UK (www.gov.uk).

EU sanctions

The EU sanctions pursuant to Regulation 833/2014 (as amended) include prohibitions on:

– The sale, supply, transfer or export of:

• Dual-use goods and technology (that is, goods which have both a potential civil and military application, a list of which can be found in Annex I to EU Regulation 2021/821).
• Equipment or technology (whether or not originating in the EU) which is listed in Annex II to a person or entity in Russia or for use in Russia. Annex II includes certain goods and technology suited to certain categories of exploration and production projects.
• Goods and technology which might contribute to Russia’s military and technological enhancement, or development of the defence and security sector, as listed in Annex VII of the Regulation (noting in particular a specific category for marine-related goods in Category 8), with similar limited exemptions and authorisation procedures as above;
• Goods and technology suited for use in oil refining as listed in Annex X of the Regulation, with an exemption until 27 May 2022 for the performance of contracts concluded before 26 February 2022;
• Goods and technology suited for use the aviation and space industries as listed in Annex XI of the Regulation, with an exemption until 28 March 2022 for the performance of contracts concluded before 26 February 2022;
• Luxury goods as listed in Annex XVIII from the EU to Russia.
• Jet fuel and certain fuel additives (as listed in Annex XX); and goods and technology which could contribute in particular to the enhancement of Russian industrial capacities (as listed in Annex XXIII).

– The purchase, import of transfer of:

• Coal and other solid fossil fuels into the EU if they originate in Russia or are exported from Russia, including in transit, with an exemption until 10 August 2022 (for contracts concluded before 9 April 2022). Further, derogations may be granted for transports that are deemed necessary for certain purposes (such as the purchase, import or transport of certain goods into the EU).
• Goods which generate significant revenues for Russia into the EU, including (among other things) wood, cement, fertilisers and seafood (as listed in Annex XXI).
• Import and transport of iron and steel products listed in Annex XVII into the EU if they originate in Russia or have been exported from Russia. There is an exemption until 17 June 2022 for the performance of contracts concluded before 16 March 2022.

The transport of Russian cargoes is also impacted by the party related sanctions (see below).  There is also a trade ban between Donetsk and Luhansk and the EU (see Regulation 2022/263).

Members should note that some of the EU measures include prohibitions against the provision of insurance and reinsurance for the listed activities. As a consequence, even if a Member is not directly impacted by the Regulation (because, for example, they are domiciled outside the EU), the Club may not be able to provide cover for engaging in these activities. Members are strongly encouraged to contact the Club accordingly before engaging in any of these trades. 

Members are also reminded that EU sanctions apply in the following circumstances: within the territory of the Union, including its airspace; on board any aircraft or any vessel under the jurisdiction of a Member State; to any person inside or outside the territory of the Union who is a national of a 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 Member State; to any legal person, entity or body in respect of any business done in whole or in part within the Union.

Party related sanctions

The EU, US and UK have all sanctioned individuals and companies in response to the Russian invasion of Ukraine.   The sanctions introduced against entities range from full asset freezes, to bans on almost all transactions with the sanctioned entity, together with more limited restrictions.

Of particular note is the EU prohibition on transactions with certain state-owned Russian companies listed in Annex XIX (these companies include Rosneft, Transneft and Gazprom Neft).  There is an exemption until 15 May 2022 for performance of contracts concluded before 16 March 2022 and the ban does not apply to transactions which are strictly necessary for the purchase, import or transport of fossil fuels, in particular, coal, oil and natural gas, as well as titanium, aluminium, copper, nickel, palladium and iron ore from or through Russia into the EU (the ban therefore applies when these cargoes are not being transported into the EU) ; or to  transactions related to energy projects outside Russia in which the companies listed in Annex XIX is a minority shareholder.

Members should be aware that just because a company is not expressly listed does not mean that they will not be deemed sanctioned.    An ownership and control analysis should be undertaken to establish any impact on a company linked to the individual.  In respect of the EU sanctions, the Commission Opinion of 8th June 2021 is helpful in identifying the factors to take into account and the approach to be taken.  Guidance from the UK Office of Financial Sanctions Implementation can be found here: Financial sanctions: guidance – GOV.UK (www.gov.uk).  The US has issued FAQs to assist in the interpretation of its sanctions against entities and individuals, see:  401 | U.S. Department of the Treasury

[1] General License 16 provides that transactions prohibited ordinarily incident and necessary to the importation into the United States of crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products of Russian Federation origin pursuant to written contracts or written agreements entered prior to 8^th March 2022 are authorized through 12:01 a.m. eastern daylight time 22^nd April 2022.

Members are advised to contact a member of North’s Sanctions Advice Team for further guidance.