On 22 October 2018, Russian President Vladimir Putin signed a decree calling for countersanctions against Ukraine and instructing the Russian Government to draw up a list of companies and individuals that will be subject to economic restrictions under the new measures and also a list of the respective restrictions. The decree, “On the introduction of special economic measures in connection with the unfriendly actions of Ukraine against Russian citizens and legal entities,” entered into force as of its signing.
The decree states that it was enacted “in response to the unfriendly actions of Ukraine that contravene international law and are related to restrictive measures against Russian citizens and legal entities.” Ukraine has imposed sanctions on various Russian companies and individuals since 2014.
The decree refers to three Russian Federal Laws, among them the recently adopted No. 127-FZ “On measures (countermeasures) in response to unfriendly actions of the USA and other foreign states” dated 4 June 2018. The provisions of this law, enacted in response to sanctions imposed on Russia by the USA and other countries, will now apply against a list of individuals and companies to be compiled by the Russian Government. The restrictive measures the Russian Government may impose, subject to a decision of the Russian President, could include:
- Suspension or termination of cooperation of Russia and Russian legal entities with Ukraine and with entities affiliated with or controlled by Ukraine;
- A ban or restriction on the import of products and/or raw materials originating from Ukraine or manufactured by entities affiliated with or subject to the jurisdiction of Ukraine (the list of products and/or raw materials will be determined by the Russian Government);
- A ban or restriction on the export of products and/or raw materials by entities under the jurisdiction or control of Ukraine (the list of products and/or raw materials will be determined by the Russian Government);
- A ban or restriction on the performance of work or provision services for Russian state and municipal needs, and for the needs of certain kinds of legal entities, by entities under the jurisdiction of Ukraine (the list of works/services will be determined by the Russian Government).
- A ban or restriction on the participation of certain Ukrainian citizens and legal entities in the privatization of state and municipal property, in the performance of work or provision of services related to the sale of federal property, and/or in the performance of the functions of a seller of federal property.
- Other measures as determined by the President of Russia.
The decree further states that it may be repealed in the event that Ukraine cancels the restrictive measures it has implemented against Russian citizens and legal entities.
According to Russian Prime Minister Dmitry Medvedev, the new Russian sanctions against Ukraine will target hundreds of Ukrainian companies and citizens. The anticipated restrictions would most likely involve asset blocking, bans on capital outflows and import restrictions (in addition to food import ban already implemented by Russia with respect to Ukraine and other jurisdictions that enacted sanctions against Russia).
The decree itself does not impose any countersanctions against Ukraine. It is expected that the respective restrictive measures would be imposed by the Russian Government in the nearest future. Baker McKenzie will monitor further developments.