Further to our previous sanctions newsletters we herewith inform about recent sanctions developments as follows.
Two administrative courts have issued judgments which overturn decisions issued by, respectively, the Swedish Customs Agency and the Swedish Energy Agency. The agencies had prohibited transactions with certain Russian companies on the basis that the companies are controlled by entities targeted by sanctions pursuant to Council Regulation 269/2014. The courts found in both instances that the respective agency had failed to meet its burden of proof to show that the sanctioned entities exercised a sufficient level of control (the Administrative Court of Uppsala, case number 4830-22, the Administrative Court of Linköping, case number 3271-22 and 3909-22), see below. The judgments are a reminder that the “control-test” is a question of fact and, ultimately, evidence
On December 5, 2022, the ban on import of Russian crude oil (CN 2709 00) entered into full force. The ban is part of the sixth package of sanctions, which was presented in June 2022 (see Article 3m in Regulation 833/2014). This package of sanctions also includes a ban on import of refined oil products (CN 2710), such as gasoline and diesel, which will enter into force on February 5, 2023. As of December 5, a ban was also introduced for EU operators to transport Russian crude oil to third countries and also to provide various types of services, including technical assistance, brokering services, financing and financial assistance, in relation to such transport (Article 3n in Regulation 833/2014).
• Russian crude oil imported to the EU via pipelines is excluded until the Council decides otherwise. Furthermore, if oil supply via pipelines to a Member State is interrupted then temporary seaborne import is allowed.
• Various exceptions apply for Czech Republic, Slovakia, Hungary, Bulgaria and Croatia.
• None of the prohibitions apply to crude oil from Russia that has been refined in a third country and is shipped by vessels to the EU.
• The prohibition in Article 3n in Regulation 833/2014 as to various transport related services (see above) does not apply to crude oil purchased below USD 60 per barrel. Since the purchase price generally is unknown to various parties involved in the transportation such as ship owners and insurers, compliance with this provision is inherently difficult. The price cap has been agreed upon within the G7 and further guidance can be found at page 215 in EU Commission consolidated FAQ .
The Commission has presented a proposal to criminalise violations of EU sanctions through a directive. The directive will harmonise criminal offences and penalties for violations of EU sanctions within the Member States’ legislation. This will also cover the circumvention of sanctions. The Commission further proposes that an individual may become liable to a maximum penalty of five years in prison, and a company may face penalties of up to 5% of their total worldwide turnover. Before the proposal enters into force it will have to go through the ordinary legislative procedure and be negotiated within the Council and Parliament.
On 8 December, the Commission put forward a proposal for a ninth package of sanctions. This package includes the designation of almost 200 additional individuals and entities to the sanctions lists, with a focus on inter alia Russia’s armed forces. Sanctions will further be imposed against three additional Russian banks, as well as four additional television channels which will be removed from all distribution platforms. With regards to exports, the new package contains further export controls and restrictions for dual-use goods, as well as an export ban for drone engines to Russia and to third countries that could supply drones to Russia. Further economic measures against the Russian energy and mining sector, including a ban on new mining investments in Russia are also included in the new package of sanctions. The Commission’s proposal has been submitted to the Council for discussion and adoption. Hence, it is not yet clear when it will enter into force and if there may be any changes.