New European Union sanctions on Russia and Belarus

We have outlined key measures introduced below, but noting that this is not an exhaustive summary of all measures and amendments introduced.

Russia – new sanctions regime to combat the deterioration of the human rights situation in Russia

Separately to the existing sanctions regime targeting Russia, as part of the EU’s response to the accelerating and systematic repression in Russia as well as the continuing deterioration of the human rights situation in Russia, on 27 May 2024, the Council adopted a new framework for restrictive measures in view of the situation in Russia. This new framework includes measures implemented through Council Regulation (EU) 2024/1485 of May 27, 2024 concerning restrictive measures due to the situation in Russia. These measures have come into force on 28 May 2024.

Export restrictions:

• Prohibition on the sale, supply, transfer or export of equipment which might be used for internal repression. Related technical, financial and other assistance is also prohibited. Introduction of a catch-all prohibition for any equipment, technology or software not listed which is intended, in whole or in part, for use in internal repression in Russia, which is also subject to the export, sale, supply and transfer restrictions.
• Prohibition on the sale, supply, transfer or export, directly or indirectly, of certain telecommunications equipment, technology and software. Related services are also prohibited.

Asset freeze measures:

• 19 individuals and 1 entity have been designated, including several judges, prosecutors and members of the judiciary who played a key role in the imprisonment and ultimate death of Alexei Navalny and the sentencing of Oleg Orlov and artist Alexandra Skochilenko, as well as the Federal Penitentiary Service of the Russian Federation, which is the central authority managing the Russian prison system. The individuals lited are also subject to a travel ban.

Russia – 14th Sanctions Package

The restrictive measures introduced in the 14^th sanctions package targeting Russia are implemented through Council Regulation (EU) 2024/1745 of 24 June 2024 amending the Council Regulation (EU) 833/2014 and Council Regulation (EU) 2024/1739 of 24 June 2024 amending the Council Regulation (EU) 269/2014. These measures came into force on 25 June 2024.

Compliance:

• EU companies must ensure their foreign subsidiaries do not engage in activities that undermine EU sanctions. EU companies will have to undertake their "best efforts" to ensure this.

• “No Russia” clause for Intellectual Property Rights transfers to prevent the use of industrial know-how for manufacturing Common High Priority (“CHP”) goods for Russia.

• Due diligence requirements for CHP goods.

Trade:

• Exports: Expanded restrictions on dual-use and advanced technology items, strengthened bans on key industrial sectors (chemicals, plastics, vehicle parts, machinery).

• Imports: Ban on helium imports, adjustments to Russian diamond restrictions and adding 61 entities linked to Russia’s military-industrial complex to the sanctions list.

Energy:

• Ban on supplying goods, technology, or services for new LNG projects in Russia.

• Ban on Russian LNG transhipment through EU ports.

• Ban on importing Russian LNG into terminals not connected to the EU gas network.

• Listing of vessels involved in supporting Russian warfare.

Financial Sector:

• Ban on EU banks outside of Russia using the Central Bank of Russia’s Financial Messaging System (“SPFS”).

• Ban on transactions with third-country banks using SPFS to prevent financial circumvention.

• Ban on transactions with banks and crypto asset providers in Russia and third countries supporting Russia’s defence industry.

Transport:

• Aviation: Ban on non-scheduled flights directed by Russian persons; mandatory disclosure of flight details to avoid sanctions evasion.

• Road: Tightening the ban on transporting goods by road within the EU.

• Maritime: Ban on port access and services for 27 vessels supporting Russian military operations.

Protection of EU Operators:

• New measures enabling EU operators to seek compensation for damages caused by Belarusian entities linked to sanctions.

• Ban on transactions to safeguard arbitration processes.

Intellectual Property Rights:

• Ban on accepting new trademark and patent applications from Russian persons and residents.

Combatting Russian Interference:

• Ban on EU political parties, NGOs and media from accepting financing from the Russian state and its affiliates.

Asset Freeze Measures:

• 69 individuals and 47 entities have been designated, including members of the army and the judiciary, public figures, business persons, and propagandists, companies involved in circumventing EU sanctions, companies providing dual-use technologies used in the battlefield and transporting weapons and military personnel, several companies part of the Russian military-industrial complex, and several companies in the energy sector. Companies designated include Sovcomflot, Russia's largest shipping company, and Volga Dnepr Group, a leading Russian air carrier holding company, and its subsidiaries. See here for a full list of the designations.

Additional Measures:

• Ban on EU and Member States funding to all Russian entities, aligning with public procurement restrictions.

• Ban on importing stolen Ukrainian cultural heritage items.

Russia – New designations under the EU’s cyber-attacks sanctions regime and under the EU’s regime targeting Iran’s military support to Russia

The Council designated 7 new targets to the EU’s asset freeze and travel ban measures:

• 6 individuals, connected to Russia, have been designated under the cyber-attacks sanctions regime. These individuals are listed due to being responsible for, or were involved in, cyberattacks with a significant effect, which constitute an external threat to the EU or its Member States. See here for a full list of the designations.
• The Islamic Revolutionary Guard Corps Research and Self-Sufficiency Jihad Organisation (IRGC SSJO) has been designated under the EU’s regime targeting Iran’s military support to Russia. See here for full information on the designation.

Belarus – Expansion of the already existing EU Belarus sanctions regime

The new restrictive measures targeting Belarus are implemented through Council Regulation (EU) 2024/1865 of 29 June 2024 amending Regulation (EC) No 765/2006. These measures have came into force on 1 July 2024.

Compliance:

• EU firms must prevent their foreign subsidiaries from undermining sanctions, undertaking their "best efforts".

• Ban on transit of sensitive goods via Belarus with the inclusion of a “no-Belarus clause” in new contracts.

• Council can impose measures on individuals or entities circumventing sanctions.

Trade:

• Extended export restrictions on dual-use and advanced technology goods, new bans on goods enhancing Belarusian industrial capabilities.

• Ban on imports of goods that diversify Belarusian revenue sources, including gold and diamonds.

Professional Business Services:

• New restriction on the provision of services to Belarus, its government, and related entities, including: accounting, auditing including statutory audit, bookkeeping or tax consulting services; business and management consulting or public relations services; architectural and engineering services; legal advisory services; IT consultancy services; market research and public opinion polling services; technical testing and analysis services; and advertising services.

Road Transport:

• Extended restrictions to include Belarusian-registered trailers or semi-trailers; ban on transporting goods by road in the EU now also applies to EU companies with 25% or more Belarusian ownership.

Other:

• New measures enabling EU operators to seek compensation for damages caused by Belarusian entities linked to sanctions.

Russia and Belarus – The decision to deny the Energy Charter Treaty’s protection to investments and investors from Russia and Belarus

The Energy Charter Treaty (the “ECT”) is a multilateral trade and investment agreement applicable to the energy sector that was signed in 1994 and entered into force in 1998. The ECT contains provisions on investment protection, trade and transit in energy materials and products, and dispute settlement mechanisms. The ECT also sets up a framework for cooperation in the energy field between its Contracting Parties.

Neither the Russian Federation nor the Republic of Belarus is a Contracting Party to the ECT. However, investors from these countries could use corporations established in the territory of a Contracting Party to the ECT to allege that the European Union or its Member States have acted inconsistently with the investment protection obligations of the ECT and hence bring investor-state dispute settlement proceedings against the EU or its Member States.

The EU has decided, as a matter of caution, to explicitly deny the protections of the Energy Charter Treaty (ECT) to any legal entity that is owned or controlled by Russian or Belorussian citizens or nationals and to investments and investors from Russia and Belarus, in order to reinforce the application of EU sanctions against these countries.

Next steps

These new measures augment an already extensive and complex sanctions regime targeting Russia and Belarus. Hogan Lovells will continue to monitor the ongoing developments regarding this and future sanctions packages.

Please contact any of the Hogan Lovells contacts listed above with any questions or concerns regarding the potential implications of these updates and other related sanctions and export controls.