The EU has adopted its 11th package of sanctions against Russia. The new package is primarily intended to counter circumvention of the restrictive measures already in place. After a reportedly heated debate, the EU has agreed on a new instrument to combat circumvention practices by prohibiting exports to third countries other than Russia. It has, however, not decided on any goods or countries concerned by this new prohibition yet. This new instrument is to be used only if other individual measures and contacts with the countries concerned have no effect. Most of the new provisions entered into force on 23, respectively 24 June 2023.

Restrictions of exports to third countries and the new circumvention prevention instrument 

For the first time, the new regulation extend export and service restrictions to selected third countries other than Russia, which will in the future be listed in Annex XXXIII, to prevent further circumvention of existing sanctions. This is new compared to the previously known legal framework, as it extends potential embargo prohibitions to countries other than Russia. However, at this stage, no goods and countries are listed in Annex XXXIII, so that the new provision is mostly a political instrument for the time being.

Under the newly created Article 12f of Regulation (EU) No.833/2014, it is prohibited to sell, supply, transfer or export goods and technology, which could be listed in Annex XXXIII in the future, whether or not originating in the Union, to any person or entity in or for use in a third country, then listed in this annex. It is also prohibited to provide technical assistance, brokering services, financing and financial assistance related to such goods to any natural or legal person, entity or body in, or for use in, the then listed countries. 

The new instrument will only be used if other individual measures and contacts with the countries concerned have no effect. The Council will regularly review the content of Annex XXXIII to Regulation (EU) No 833/2014 on the basis of technical information provided by the Commission.

Introduction of additional export restrictions 

Under the new sanctions package, the list of goods contributing to Russia's military and technological build-up or to the development of its defense and security sector is expanded. 

The new amendments add further goods of the following sectors to Annex VII of Regulation (EU) No 833/2014:

• Electronics
• Computers
• Telecommunications
• Information security
• Sensors and lasers
• Navigation and avionics
• Marine
• Aerospace and propulsion
• Miscellaneous items
• Special materials and related equipment
• Materials processing

Temporary exemption from the prohibition on the provision of legal services 

The new rules introduce a temporary exemption from the prohibition on the provision of legal services: Competent authorities may authorize the provision of legal services that are legally necessary for the sale or transfer of shares in a legal person, entity or body established in the EU that is held directly or indirectly by a legal person, entity or body established in Russia. This authorization can be granted by the authorities only until March 31, 2024.

Addition of 87 new entities to the list of those directly supporting Russia's military complex

87 additional entities have been added to the list of legal persons, entities and bodies in Annex IV to Decision 2014/512/CFSP. They are subject to tighter export restrictions on dual-use items and advanced technologies. In addition to the Russian and Iranian organizations already on the list, this now includes organizations registered in China, Uzbekistan, the United Arab Emirates, Syria and Armenia.

Further measures

Moreover, the new sanctions include:

• Restrictions on IP: The new changes to Regulation 833/2014 extend the scope of the applicable prohibitions in the field of intellectual property. The amendment prohibits selling, licensing and transferring intellectual property rights or trade secrets to Russian persons and entities that relate to goods and technologies already subject to export restrictions. The prohibition also covers the granting of intellectual property rights that are used for the provision, production, maintenance and use of the goods already subject to export restrictions. There is, however, an exception to this rule. This provision should also apply to exports to the listed third countries. Accordingly, transactions may be approved by the competent authority if such sale, supply, transfer, licensing or granting of rights of access or continued use is strictly necessary for the withdrawal of investments from Russia or the termination of business activities in Russia.

• New transit ban: The transit of goods and technologies listed in Annex VII (defence and security sector) and Annex XI (aerospace and aircraft fueling) through the territory of Russia is prohibited. This also applies to items newly added to the list. Here again, the regulation provides for exceptions to this rule.

• Restrictions regarding shipment: The new provisions stipulate a prohibition on granting ships access to ports and locks in the territory of the Union if (i) they are suspected of infringing prohibitions laid down in the Regulation, or disabling their automatic ship identification system while carrying cruide oil and petroleum products or (ii) they have not notified the authorities 48 hours in advance about a ship-to-ship transfer before entering an EU port. Thisprohibition shall apply from July 24, 2023.

• Extension of export ban on luxury goods: From now on, the provision of technical assistance, brokering services, financing and financial assistance, directly or indirectly, to natural or legal persons, entities or bodies in Russia or for use in Russia in relation to luxury goods listed in Annex XVIII is prohibited.

• Tightening of import restrictions on iron and steel products: Anyone wishing to import sanctioned iron and steel products that have been processed in a third country must provide proof that the inputs used did not originate in Russia.

Entry into force

Most amendments made by the eleventh sanctions package went into force on June 24, 2023, some are even in force since June 23, 2023. Some provisions, for example the restrictions regarding shipment, provide for a grace period.

What should companies do now?

• Companies considering a divestment of shares hold by Russian entities and individuals may initiate the process for obtaining an authorization for the provision of required legal services by the competent national authorities.

• Companies that choose routes through Russia for their transports should verify whether and to what extent their goods are affected by the transit ban.

• Companies that sell intellectual property rights or trade secrets to Russia or grant their intellectual property rights for the use of goods already subject to export restrictions should immediately assess whether and how the new sanctions will affect their business activities.

• Companies providing technical assistance, intermediary services, financing and financial support in relation to luxury goods should consider the extent to which their business activities are affected by the prohibition on providing this type of service to Russian entities and persons.

• Companies exporting goods to Russia should screen their product portfolio against the newly updated Annexes.

• Companies should carry out a sanctions screening against the background of the newly sanctioned persons.

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