6.01.2023
By Charles-Henri Roy

Executive Summary of the 9th Sanctions Package Against Russia

Background

– On 16 December 2022, the European Union adopted its 9th sanctions package which expands the scope of economic and restrictive measures against the Russian Federation, its economy, nationals and entities. The 9th sanctions package comprises council regulations and decisions, as follows:

  • Council Regulation (EU) 2022/2474 of 16 December 2022;
  • Council Regulation (EU) 2022/2475 of 16 December 2022;
  • Council Implementing Regulation (EU) 2022/2476 of 16 December 2022;
  • Council Decision (CFSP) 2022/2477 of 16 December 2022;
  • Council Decision (CFSP) 2022/2478 of 16 December 2022;
  • Council Decision (CFSP) 2022/2479 of 16 December 2022.

– This client alert covers some of the major aspects of the sanctions package. We advise you to get acquainted with the foregoing acts in the Official Journal of the European Union (Vol. 65 of 16 December 2022).

Asset Freeze

– The EU added more Russian nationals and entities to the list of persons subject to a freezing of their assets, prohibition to makes economic resources available and a travel ban for individuals (designated persons), namely:

  • Members of the Russian Parliament;
  • Russian ministers;
  • Russian officers;
  • Russian armed forces, along with individual officers and defence industrial companies;
  • Russian proxy authorities in occupied areas of Ukraine
  • Russian political parties;
  • Banks; TV channels.

All funds and economic resources belonging to, owned, held or controlled by any natural or legal persons, entities or bodies, or natural or legal persons, entities or bodies associated with them, shall be frozen.

No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of natural or legal persons, entities or bodies, or natural or legal persons, entities or bodies associated with them.

– Along with adding the Credit Bank of Moscow and the Far Eastern Bank to the listed entities, the Russian Regional Development Bank is now subject to the transaction ban, i.e., ban to engage, whether directly or indirectly, in any transaction with it.

Restriction on the EU Nationals

Starting from 16 January 2023, the EU nationals are forbidden from holding any posts in the governing bodies of all Russian State-owned or controlled legal persons, entities or bodies located in Russia, notably:

  • a legal person, entity or body established in Russia, which is publicly controlled or with over 50 % public ownership, or in which Russia, its Government or Central Bank has the right to participate in profits or with which Russia, its Government or Central Bank has other substantial economic relationship;
  • a legal person, entity or body established in Russia whose proprietary rights are directly or indirectly owned for more than 50 % by an entity referred to hereinabove; or
  • a legal person, entity or body established in Russia and acting on behalf or at the direction of an entity referred to in foregoing points.

Holding such posts in existing JVs or similar legal arrangements as well as EU subsidiaries located in Russia may be admissible in the following cases:

  • subject to a clearance issued by a competent authority;
  • when the holding of such a post is necessary for ensuring critical energy supply, or
  • when the legal person, entity or body is involved in the transit through Russia of oil originating in a third country and the holding of such a post is intended for operations which are not otherwise prohibited.

Investments in the Russian Energy / Mining Sector

The EU further expands the scope of the already existing prohibition targeting new investments in the Russian energy sector by also prohibiting new investments in the Russian mining sector. As such, it is prohibited to:

  • acquire any new or extend any existing participation in any legal person, entity or body incorporated or constituted under the law of Russia or any other third country and operating in the mining and quarrying sector in Russia;
  • grant or be part of any arrangement to grant any new loan or credit or otherwise provide financing, including equity capital, to any legal person, entity or body incorporated or constituted under the law of Russia or any other third country and operating in the mining and quarrying sector in Russia, or for the documented purpose of financing such a legal person, entity or body;
  • create any new joint venture with any legal person, entity or body incorporated or constituted under the law of Russia or any other third country and operating in the mining and quarrying sector in Russia;
  • provide investment services directly related to the activities referred to hereinabove.

Import / Export Restrictions

List of entities connected to Russia’s military and industrial complex, on whom tighter export restrictions regarding dual-use goods and technology as well as goods and technology which might contribute to the technological enhancement of Russia’s defence and security sector are imposed, is expanded by adding 168 new entities, inter alia, Russian-controlled entities based in Crimea or Sevastopol. Total number of entities targeted by sectoral measures now stands at 410.

This will ensure that key chemicals, nerve agents, night-vision and radio-navigation equipment, electronics and IT components that could be used by the Russian Federation cannot be freely traded.

Further Ban on Consulting Services

The EU extends the existing prohibition on the provision of certain services to the Russian Federation and to legal persons, entities or bodies established in Russia by banning the provision of:

  • Advertising services;
  • Market research services;
  • Public opinion polling services;
  • Product testing services; Technical inspection services

New Grounds for Authorization to Release Frozen Funds

The EU introduces new grounds for authorization to release frozen funds. In that context, national competent authorities can authorize the release of frozen funds/economic resources or the making available of economic resources to:

  • certain listed banks (Bank Rossiya, Promsvyazbank, VEB.RF, Otkritie FC Bank, Novikombank, Sovcombank, VTB Bank, Credit Bank of Moscow and JSC Far Eastern Bank) when necessary for the purchase, import or transport of agricultural and food products, including wheat and fertilisers.
  • individuals “who held a significant role in international trade in agricultural and food products, including wheat and fertilisers, prior to their listing” if necessary for the sale, supply, transfer or export of agricultural and food products, including wheat and fertilizers, to third countries in order to address food security.
  • Sberbank if these funds or economic resources are “necessary for the completion, by 17 June 2023, of an ongoing sale and transfer of proprietary rights directly or indirectly owned by that entity in a legal person, entity or body established in the Union”.
  • Credit Bank of Moscow and JSC Far Eastern Bank if these funds or economic resources are “necessary for the termination by 17 June 2023, of operations, contracts, or other agreements, including correspondent banking relations, concluded with those entities before 16 December 2022”.

Broadcasting Ban

EU operators may not broadcast or enable, facilitate or otherwise contribute to broadcast, any content by:

  • NTV/NTV Mir;
  • Rossiya 1;
  • REN TV;
  • Pervyi Kanal.

The above restrictions also apply in the event broadcasting is effected through transmission or distribution by any means such as cable, satellite, IP-TV, internet service providers, internet video-sharing platforms or applications, whether new or pre-installed.

Any broadcasting licence or authorisation, transmission and distribution arrangement with the foregoing channels are now suspended.

Besides, it is prohibited to advertise products or services in any content produced or broadcast by such channels, including through transmission or distribution by any of the foregoing means.

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