On 16 October 2024, the Swiss Federal Council announced the adoption of further measures included in the EU’s 14th package of sanctions against Russia of 24 June 2024, which entered into force on 17 October 2024 (the official media release is available here). This marks the second, and for now last, round of measures adopted in alignment with the 14th EU package, with certain limited measures having already entered into force on 27 August 2024 (covered by our previous blog post available here). While this latest update to the Ordinance on Measures in Connection with the Situation in Ukraine (“Ordinance“) brings Swiss sanctions, to a large extent, back in line with those imposed by the EU, the Swiss Federal Council has, as expected, explicitly refrained from implementing certain measures, especially the EU’s new “best efforts” provision in the context of anti-circumvention measures via third-country subsidiaries.
Newly adopted measures
Extension of lists of items subject to export/import restrictions
- The Swiss Federal Council has introduced a number of new export restrictions on goods intended to strengthen Russia’s industrial sector (Annex 23), as well as its military and technological capabilities (Annex 1).
- Significantly, helium has been included in Annex 20 (covering economically significant goods), meaning that its purchase and import from Russia into Switzerland is now prohibited under Article 14c of the Ordinance.
- In addition, over 60 new entities have been added to Annex 2, which lists persons to which SECO will refuse to grant exemptions for the export of certain goods under Article 6 of the Ordinance. Around half of these entities are located in third countries and are linked to the Russian military complex. With the latest revision of Annex 2, a number of entities have been delisted from Annex 2.
New intellectual property rights-related restrictions (“No Russia IP” clause)
In January 2024, the Swiss Federal Council introduced Article 14f of the Ordinance stipulating that companies must contractually prohibit the reexport to Russia of certain critical goods (so-called Common High Priority Items) listed in Annex 31 when exporting to third countries. The newly introduced Article 14g of the Ordinance extends this obligation to the transfer of intellectual property rights and trade secrets.
Article 14g of the Ordinance will enter into force on 26 December 2024. According to this provision, when selling, licensing or otherwise transferring intellectual property rights or trade secrets, the use of such rights and secrets intended for sale, supply, export, transportation and transit to or use in Russia must be contractually prohibited to the counterparty (paragraph 1). Further, such counterparty must be required to prohibit such use by potential sublicensees. If the restrictions according to Article 14g paragraph 1 of the Ordinance are violated, SECO must be immediately notified.
Measures in the financial sector
- Under a new Article 27a of the Ordinance, it is prohibited to connect directly to the financial messaging system of the Central Bank of the Russian Federation or to equivalent specialized payment messaging services established by the Central Bank of the Russian Federation. Consequently, banks are prohibited from using certain specialized financial messaging services for payment transactions (i.e., alternatives to SWIFT). This measure applies from 25 June 2025 onward.
- A new Article 24c of the Ordinance introduces a prohibition on conducting business directly or indirectly with persons and entities providing crypto services listed in (new) Annex 15b or persons or entities acting on behalf or under instruction of persons or entities listed in Annex 15b. This measure targets providers that facilitate transactions supporting Russia’s defense industry and aims to curb the ability of the Russian government to channel funds to finance its war machine.
Sanctions targeting liquified natural gas (LNG)
- Investment in Russian LNG projects: With the introduction of a new Article 10a of the Ordinance, the sale, supply, export, transit and transportation of goods as well as the provision of related services for the completion of LNG projects under construction to or for use in Russia is prohibited.
- Import of Russian LNG:A new Article 12e of the Ordinance further prohibits the purchase, import, transit and transportation of LNG from or originating in Russia via terminals not connected to the natural gas network in the EU. Similarly, providing related services to such activities is prohibited as well. However, according to Article 35 paragraph 34 of the Ordinance, these restrictions will not apply to transactions that were contractually agreed before 17 October 2024 and are completed by 17 January 2025.
- Transshipment of Russian LNG: A new Article 12f of the Ordinance further prohibits the transshipment of LNG and holds that the provision of services of any kind as well as the granting of financial resources in connection with the onward loading in the territory of the EU of LNG from or originating in Russia is prohibited. This restriction, however, does not apply to transactions that were contractually agreed before 17 October 2024 and are completed by 14 April 2025 (cf. Article 35 paragraph 33 of the Ordinance).
Possibility to claim damages and satisfaction of claims
- Under a new heading 4d titled “Compensation and protection for Swiss individuals and organizations,” the Swiss Federal Council has introduced Article 30f of the Ordinance. This article grants Swiss nationals, residents as well as legal persons, entities and bodies established in Switzerland the right to claim compensation from persons targeted by sanctions in legal proceedings before the competent Swiss courts for costs incurred as a result of the Swiss sanctions regime. Such costs must be the result of claims brought before courts in third countries or Russia in connection with contracts or transactions the performance of which has been directly or indirectly prevented or impaired by Swiss sanctions measures against Russia. The same applies to Swiss individuals and companies whose assets have been unlawfully expropriated in Russia.
- Generally, Swiss operators may not satisfy claims made by Russian persons or entities in connection with a transaction, the performance of which has been affected by the Swiss sanctions on Russia. However, a new Article 30c-bis of the Ordinance now allows SECO in consultation with the competent authorities to grant exemptions until 31 December 2024 from the prohibition on the fulfillment of claims, if this is necessary for the withdrawal of investments from Russia or the conclusion of transactions in Russia.
Further measures
- Additional exemption grounds were introduced in Article 9 of the Ordinance in relation to the sale, delivery, export or transit, directly or indirectly, of the goods listed in Annex 3 and likely to be used in the aerospace industry.
- A new Article 12d of the Ordinance introduces an array of prohibitions including import, export and the supply of services regarding ships listed in a new Annex 33.
- Trade in historical, cultural, religious or scientific goods of Ukrainian origin is prohibited under a new Article 14e-bis of the Ordinance if there are reasonable grounds to suspect that these cultural goods were unlawfully removed from Ukraine.
- According to a new Article 24b of the Ordinance, it is generally prohibited to do business directly or indirectly with claimants in Russian arbitration proceedings listed in a new Annex 15a.
- With the intention of limiting Russia’s influence on democratic processes in Switzerland, a new Article 28g prohibits political parties, NGOs and providers of media services from directly or indirectly accepting donations, economic benefits or support from the Russian government or affiliated entities.
- Further restrictions were introduced in relation to the flight ban in Article 29a of the Ordinance.
Measures not implemented
“Best efforts” anti-circumvention measures
As part of its anti-circumvention efforts, the EU’s 14th sanctions package introduced an obligation for EU persons to “undertake their best efforts” to ensure that their owned or controlled subsidiaries in third countries do not engage in activities that “undermine” the EU’s Russia sanctions. The interpretation and implementation of this new measure has been the cause of much confusion and uncertainty among its addressees and competent authorities.
The Swiss Federal Council has decided not to implement this measure, opting instead for a pragmatic approach by referring to existing Swiss law that already allows for the prosecution of companies circumventing sanctions through use of their subsidiaries. While Swiss law typically only covers situations that occur on Swiss territory, extraterritorial attempts at circumvention may be prosecuted where, for example, payments or instructions are issued from within Switzerland. This is particularly the case where foreign group entities are directed or instructed out of Switzerland, i.e., when they are legally or operationally dependent on a Swiss parent company in line with SECO practice. The Swiss Federal Council further underlines the effectiveness of the existing regime by referring to ongoing investigations by SECO of Swiss companies suspected of violating sanctions through their subsidiaries abroad.
Restrictions on the registration of intellectual property rights
The Swiss Federal Council has further decided not to adopt the restrictions imposed by the EU on competent member state authorities regarding applications for the registration of certain intellectual property rights by Russian nationals and companies, because there have been to date no intellectual property rights violations committed by Russia against Swiss companies. However, the Swiss Federal Council will continue to monitor the situation.
Conclusion
In summary, four months after the 14th EU sanctions package entered into force, the Swiss government has confirmed its pragmatic stance and “Swiss finish” of EU sanctions, both for conceptual and political reasons. Moreover, the mere fact of the unusual delay (surprisingly also in respect of updating annexes of controlled items, thereby creating a gap to the corresponding EU annexes) and intense exchanges between certain Swiss economic sectors and the Swiss authorities, but also between Swiss agencies, made it clear that Switzerland would no longer integrally align with EU sanctions. This will create further discrepancies (and room for interpretation) for affected companies navigating between US, UK, EU and Swiss sanctions.
