The European Union (“EU”) has recently agreed to an additional higher level of sanctions against Russia. A big impact is to be expected from the new “sectoral sanctions” set out in EC Regulation No. 833/2014 which was published on July 31, 2014 and will go into effect immediately.
Effective as of August 1, 2014, this new regime:
- restricts access to capital markets for Russia state banks as defined in Annex III of the Regulation (including their subsidiaries established outside of the EU and other entities acting on behalf or at the direction of such institutions) by setting out prohibitions on purchasing, selling, providing brokering or other assistance in the issuance of or otherwise dealing in debt or equity securities or money market instruments with a tenor exceeding 90 days, in each case if issued after August 1, 2014.
- prohibits the importing from and exporting to Russia of military goods and related material (subject to the grandfathering of contracts concluded before August 1, 2014).
- prohibits exporting dual-use goods and technology (these are goods and technology that can be used for both civil and military purposes) to Russia military end-users (subject to the grandfathering of contracts concluded before August 1, 2014); and
- curtails Russian access to sensitive technologies (as listed in Annex II of the Regulation), particularly in the oil sector.
Further, the Regulation prohibits a number of ancillary services in relation to the aforementioned (including brokering and direct or indirect financial or technical assistance in relation to goods that are objects of the embargo).
These prohibitions apply not only within the territory of the EU, its vessels and aircrafts, but also to EU incorporated businesses and nationals of EU Member States, as well as with respect to any business done within the EU.