On 25 March, in line with its previous announcement concerning further sanctions imposed against Russia (see blogpost here), the Swiss Federal Council implemented a revision of the Ordinance on Measures connected with the Situation in Ukraine (the “Ordinance“) which entered into force at 11 PM on the same day. The new measures have further aligned Swiss sanctions with those imposed by the EU, specifically reflecting the EU measures adopted on 9 and 15 March (see blogposts here and here). The expanded list of individuals and entities targeted by restrictive measures announced by the EU on 9 and 15 March 2022 was already incorporated by Switzerland into Annex 8 of the Ordinance on 16 March 2022 (see blogpost here).
The newly adopted measures include:
- new definitions of the terms “Securities”, “Rating”, “Rating activities” and “Energy sector”;
- export restrictions on goods for the energy sector;
- trade restrictions concerning iron and steel;
- export restrictions on luxury goods;
- export restrictions on maritime goods and technologies;
- the introduction of further exemptions to the prohibition on transferring funds or economic resources to designated parties listed in Annex 8 of the Ordinance;
- restrictions on transactions with certain state-owned enterprises as listed in a new Annex 15 of the Ordinance;
- restrictions on the provision of credit rating services; and
- new investment restrictions in the Russian energy sector.
The newly introduced sanctions include the following measures:
TRADE RESTRICTIONS
Restrictions on the export of maritime goods and technologies
The revised Ordinance includes a new prohibition on the sale, provision, delivery, export, transit and transport of goods and technology for maritime navigation in accordance with Annex 16 of the Ordinance to or for use in Russia or a vessel flying the Russian flag. Such exports to the Ukraine or to vessels flying the flag of Ukraine are now subject to authorisation. The usual prohibition on providing services of any kind in connection with such goods and technology also apply.
The prohibitions do not apply where the goods and services are intended for non-military purposes, to non-military end users, for humanitarian purposes, public health emergencies, the urgent prevention or mitigation of an event that is likely to have serious and substantial effect on human health and the environment or for the management of natural disasters. SECO may grant further exceptions if the goods and technology or the related technical or financial assistance are intended for maritime security.
New export restrictions on goods for the energy sector
Switzerland has now prohibited the sale, supply, transfer or export, directly or indirectly, of goods for the energy sector as listed in Annex 5 of the Ordinance to any natural or legal person, entity or body in Russia, including its Exclusive Economic Zone and Continental Shelf, or for use in Russia, including its Exclusive Economic Zone and Continental Shelf. Standard prohibitions on providing technical and financial assistance apply as well.
Exceptions to the above prohibition include supply (and relating assistance) of goods and technology necessary for:
- the transport of fossil fuels, in particular coal, oil and natural gas, from or through Russia to Switzerland or the European Economic Area (EEA); or
- the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment.
Moreover, insurance and retroactive insurance coverage in favour of a company founded or registered under Swiss law or the law of an EEA member state in relation to its activities outside the Russian energy sector are excluded from the prohibition.
Additionally, SECO, in collaboration with the relevant public authorities, may grant licenses in the event the supply of goods and services is necessary to secure the energy supply of Switzerland or an EEA member state in the event of an imminent or existing serious shortage, or the goods or services are intended for the exclusive use of organisations owned or controlled in whole or in part by an organisation incorporated or registered under Swiss law or the law of an EEA member state.
The prohibition does not apply to contracts entered into before 26 March 2022 and fulfilled by 17 September 2022.
Trade restrictions concerning iron and steel
The import, transport and purchase of iron and steel products in accordance with Annex 17 of the Ordinance from or originating in Russia are prohibited. The direct or indirect provision of technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and reinsurance in connection with such activities is also prohibited.
The prohibition does not apply to contracts entered into before 26 March 2022 and fulfilled by 17 June 2022.
Restrictions on export of luxury goods
The new sanctions measures include a prohibition on the sale, supply, export, transport and transit of luxury goods listed in Annex 18 of the Ordinance to persons, enterprises or entities in, or for use in, Russia. Exceptions apply for the official activities of diplomatic or consular representations of Switzerland or its partners in Russia or international organisations that enjoy immunity under international law or if such goods are intended for the personal use of staff of such representations and organisations
FINANCIAL SANCTIONS
Designated parties
The provisions on asset freezes of designated parties and the prohibition on transferring funds or economic resources to designated parties set out in Art. 15 of the Ordinance (which has not yet been amended to reflect the usual wording, e.g., of Art. 12 of the Belarus Ordinance) have been supplemented with an exception stating that the prohibition on transferring funds to such designated parties do not apply where the transfer of funds or the making available of funds or economic resources is necessary:
- for the implementation of humanitarian activities or for the support of the civilian population in connection with the situation in Ukraine by public bodies or companies and organisations that receive federal contributions for the implementation of humanitarian activities or for the support of the civilian population; or
- for the performance of official activities of diplomatic or consular representations of Switzerland and for the performance of official missions of the Confederation.
SECO may exceptionally grant exemptions from the prohibitions on transferring funds or economic resources in order to enable the implementation of humanitarian activities or support for the civilian population in connection with the situation in Ukraine.
Extended prohibition on accepting deposits
The existing prohibition on accepting deposits from Russian citizens or natural persons resident in Russia or from companies or organisations established in Russia has been extended to also include banks established in Russia.
The exceptions to this prohibition have been extended to (i) deposits by nationals of an EEA Member State and natural persons holding a temporary or permanent residence permit of an EEA Member State; and (ii) deposits necessary for the non-prohibited trade in goods and services between Switzerland and the EEA, as well as between the EEA and Russia.
Extended prohibition on transactions with the Russian Central Bank
The existing prohibition on transactions in connection with the management of reserves and funds of the Central Bank of Russia has been extended and now explicitly includes the Russian National Wealth Fund.
SECO may now also grant exceptions to terminate transactions, contracts or other agreements, including the corresponding banking relationships, no later than by 4 May 2022, which were concluded with the corresponding banks, companies or organisations before 6 PM on 4 March 2022.
Restrictions on transactions with certain state-owned enterprises
The new regulation provides for a blanket ban on directly or indirectly engaging in any transaction with: (a) banks, companies or organisations domiciled in Russia in accordance with Annex 15 of the Ordinance; (b) their non-Swiss subsidiaries directly or indirectly owned for more than 50%; and (c) companies and organisations that act on behalf of or on the instructions of banks, companies or organisations in accordance with (a) or (b).
The following companies are currently included in Annex 15:
- OPK OBORONPROM
- UNITED AIRCRAFT CORPORATION
- URALVAGONZAVOD
- ROSNEFT
- TRANSNEFT
- GAZPROM NEFT
- ALMAZ-ANTEY
- KAMAZ
- ROSTEC (RUSSIAN TECHNOLOGIES STATE CORPORATION)
- JSC PO SEVMASH
- SOVCOMFLOT
- UNITED SHIPBUILDING CORPORATION
Exceptions are made for transactions:
- which are strictly necessary for the purchase, import or transport of fossil fuels, in particular coal, oil and natural gas, as well as titanium, aluminum, copper, nickel, palladium and iron ore from or through Russia to Switzerland or to an EEA Member State;
- related to energy projects outside Russia in which banks, companies or organisations as defined in Annex 15 are minority shareholders;
- executed for the implementation of humanitarian activities or for the support of the civilian population in connection with the situation in Ukraine; and
- executed for the performance of official activities of diplomatic or consular representations of Switzerland and for the performance of official missions of the Confederation.
The prohibition does not apply to contracts entered into before 26 March 2022 and which are fulfilled by 15 May 2022.
Restrictions on providing credit rating services, as well as access to subscription services in relation to credit rating activities
The provision of credit rating services and the granting of access to subscription services in connection with credit rating services to Russian nationals or natural persons, banks, companies or organisations resident in Russia is now prohibited. This does not apply to Swiss nationals, nationals of an EEA Member State and natural persons holding a temporary or permanent residence permit of Switzerland or of an EEA Member State.
New investment restrictions in the Russian energy sector
The following activities related to participations in companies in the Russian energy sector are now prohibited:
- the acquisition of new or the expansion of existing participations in legal entities, companies or organisations established or incorporated under the laws of a state outside Switzerland or the EEA and operating in the energy sector in Russia;
- the provision of, or participation in, loans, credits or other financial resources, including equity capital, to or for the financing of legal persons, undertakings or entities incorporated or constituted under the laws of a State outside Switzerland or the EEA and operating in the energy sector in Russia;
- the establishment of joint ventures with legal entities, companies or organisations established or incorporated under the law of a state outside Switzerland or the EEA and operating in the energy sector in Russia;
- the provision of investment services directly or indirectly related to the activities referred to in points 1 – 3 above.
Notwithstanding these new investment prohibitions, SECO may authorize such activities if they are necessary for ensuring critical energy supply within Switzerland and the EEA as well as transport of fossil fuels from or through Russia into Switzerland and the EEA or they exclusively concern an entity operating in the energy sector in Russia owned by an entity which is incorporated or constituted under the law of Switzerland or an EEA member state.
MEDIA RELATED SANCTIONS
It should also be noted, that the Federal Council took the decision not to implement the EU measure of 1 March 2022 suspending the broadcasting of contents from certain Russian media outlets, namely Sputnik and Russia Today. Despite the fact that these outlets are used in Russia to spread propaganda and disinformation, the Federal Council considers that it is more effective to counter untrue and harmful statements with facts instead of preventing them from being broadcast at all.
