On 16 December 2024, the EU introduced its 15th package of sanctions against Russia, including by amending Regulation (EU) 833/2014 and Regulation (EU) 269/2014. The EU also issued the first designations under its “hybrid threats” sanctions framework, which was announced in early October 2024. Finally, the EU designated individuals and entities pursuant to EU sanctions against Belarus (Regulation (EC) No 765/2006).
This latest round of sanctions entered into force on 17 December 2024 and is more limited than some past EU sanctions packages against Russia but nevertheless introduces new measures and changes to existing measures, including:
- Extension of certain derogations necessary for divestments from Russia until 31 December 2025 (previously due to expire 31 December 2024);
- Introduction of a derogation and a “no liability” clause to allow the release of cash balances held by EU central securities depositories (“CSDs”) where the Russian National Settlement Depository (“NSD”) or another entity listed in Annex I to Regulation 269/2014 has debited an amount from the account of the CSD pursuant to Russian law without the prior consent of the CSD;
- Prohibition on the recognition or enforcement of rulings issued by Russian courts based on Article 248 of Russia’s Arbitration Procedure Code, which has resulted in high penalties for Western companies;
- Anti-circumvention designations via designation of vessels subject to a port access ban and certain other services restrictions; and
- Further additions to the list of EU Designated Persons and the list of parties determined to be supporting Russia’s military-industrial complex and are therefore subject to more restrictive trade sanctions.
We provide additional detail on these measures and the “hybrid threats” and Belarus-related designations below. Please get in touch with your usual contacts in the Baker McKenzie international trade compliance team for support as needed.
Extended Deadlines for Divestment
The EU has extended the 31 December 2024 deadline for certain derogations necessary for divestments from Russia, including the derogation found in Article 5aa(3a) and 12b authorizing EU Member States to authorize transactions strictly necessary for the divestment from Russia or the wind-down of business activities in Russia, until 31 December 2025. In its press release and in the preamble to the amending regulation, the EU labeled this an “exceptional” one-year extension and advised EU operators to consider winding down existing businesses in Russia and to avoid starting new ones. The extension aims to facilitate an orderly exit by EU businesses from the Russian market.
Derogation and “No Liability” Clause for CSDs
To further insulate European Companies from increasing litigation and retaliatory measures in Russia, the Council has introduced a derogation allowing the release of certain cash balances held by EU CSDs to allow them to fulfil legal obligations to their non-sanctioned clients. Specifically, new Article 5j in Regulation (EU) 269/2014 authorizes EU Member States to allow CSDs to release otherwise frozen cash balances attributable to the NSD or to another sanctioned entity upon determining that:
- the CSD maintains an account or accounts with the NSD;
- the NSD (or other sanctioned entity) maintains an account or accounts with the relevant CSD;
- the NSD has debited an amount from the CSD’s account(s) pursuant to a Russian law, court order, or other measure without the prior consent of the CSD;
- the CSD will use the cash balance to be released to meet its legal obligations towards its participants and the cash balance will not exceed the amount debited by the NSD; and
- the released cash balance will not be made available in breach of designated person sanctions.
Moreover, the EU has introduced a “no liability” clause for EU CSDs at Article 5a(12a) of Regulation (EU) 833/2014 to clarify that CSDs are not liable for carrying out in good faith their obligations under sanctions related to the handling of immobilized reserves and assets of the Central Bank of Russia unless it is proved that the action was a result of negligence.
Prohibition on Recognition and Enforcement of Certain Russian Proceedings
The EU introduced measures to protect European companies from litigation with Russian counterparts. Specifically, Article 11c of Regulation (EU) 833/2014 prohibits EU Member States from recognizing or enforcing injunctions, judgments, and other rulings issued by Russian courts pursuant to Article 248 of Russia’s Arbitration Procedure Code. The new rule also prohibits recognition or enforcement of requests for assistance during investigations or criminal proceedings based on an alleged violation of such rulings.
These rulings have been used to prevent the opposing party from initiating or continuing legal proceedings outside of Russia (anti-suit injunctions) even where the parties agreed to arbitration or litigation in a different forum. The rulings have resulted in high financial penalties for European companies.
Anti-Circumvention Designations
The EU has more than doubled the number of vessels banned from EU ports, specifically targeting non-EU tankers that are part of the so-called shadow fleet for circumventing the oil price cap or transporting military equipment and Ukrainian grain. The EU targeted 52 vessels from third countries under these measures, bringing the total number of designated vessels to 79. Vessels targeted under these measures are also subject to prohibitions on a broad range of services related to maritime transport.
Additional Sanctions Listings and Trade Restrictions
The EU has added 54 individuals and 30 entities to its sanctions list, subjecting them to asset freezes and travel bans, including:
- a military unit alleged to be responsible for striking the Okhmadyt children’s hospital in Kyiv;
- senior managers in energy sector companies;
- individuals alleged to be involved in the deportation of children, propaganda; and circumvention;
- two senior officials from the Democratic People’s Republic of Korea after members of the DPRK military were deployed to Russia;
- Russian defense companies;
- shipping companies transporting crude oil and oil products by sea;
- a chemical plant; and
- a civil Russian airline.
For the first time, the EU has imposed comprehensive sanctions (including travel bans, asset freezes, and prohibitions on making economic resources available) on various Chinese individuals and entities alleged to have supplied drone components and microelectronic components to Russia.
In addition, the EU added 32 new entities from countries including China, India, Iran, Serbia, and the UAE to the list of entities that support Russia’s military-industrial complex (Annex IV to Regulation (EU) 833/2014). These entities face tighter restrictions on exports and assistance involving dual-use and certain lesser-controlled goods, software, and technologies.
Russian “Hybrid Threat” Designations
The EU designated 16 individuals and three entities in connection with activities such as coordinated information manipulation/disinformation, cyber-attacks, and covert influence operations in Ukraine, Western Europe, and Africa. Further details can be found in the Council’s press release.
Belarus-related Designations
The EU designated 26 Belarusian and Russian individuals and two Belarusian entities—including judges who issued rulings against individuals who dissented against the Belarusian government and prison officials accused of inhumane treatment of political prisoners—subjecting them to asset freezes and travel bans. Further details can be found in the Council’s press release.
