Sanctions update 1/2024

We refer to our previous sanctions updates which can be found here.

 “No Russia clause”

On December 18, the EU adopted the 12th package of sanctions targeting Russia. Notably, the package introduces by way of Article 12 g in Regulation 833/2014 an obligation to use a so-called “No Russia clause” which shall impose an obligation on exporters within the EU to include remedies in commercial agreements that prohibit the re-export to Russia and the re-export for use in Russia of particularly sensitive goods and technologies upon sale delivery, transfer, or export to a third country.

From when does the obligation apply?

The obligation to use a “No Russia clause” applies as of 20 March 2024. Article 12 g also includes a wind-down provision for agreements concluded prior to the adoption of the 12th package, according to which, with regard to the execution of agreements concluded before 19 December 2023, the obligation to contractually prohibit re-exportation to Russia shall not apply until 20 December 2024 or until their last expiry date, whichever is earlier.

Must a “No Russia clause” be used in trade with all countries?

No. There is no obligation to use a “No Russia clause” regarding exports to EU’s partner countries which are: USA, Japan, UK, South Korea, Australia, Canada, New Zealand, Norway, and Switzerland.

For which products must the “No Russia clause” be used?

The obligation to include remedies in commercial agreements covers sales, delivery, transfer, or exports to a third country of products including goods and technologies suitable for the use in aviation or the space industry, aviation fuel and fuel additives, firearms and other weapons and ammunition. Furthermore, the 12th sanctions package also introduces a list of new products (Annex XL) which have previously not been subject to sanctions, and to which the conduct of business with will require a No Russia clause. Here you will find links to all annexes that entail products that trigger the application of the “No Russia clause”, i.e.  Annexes XI, XX, XXXV, and XL to Regulation 833/2014 and Annex I to Regulation 258/2012.

Wording of the “No Russia clause”

Article 12 g does not prescribe a wording of the “No Russia clause”.  We recommend legal advice is retained so that the clause can be properly drafted taking into consideration the other terms of the relevant contract, as well as any other relevant circumstances.

Notification requirement

Article 12 g provides for a reporting obligation in case of a breach by the counterparties to the competent authority in the Member State where they are citizens, residents, or established. The Swedish Government has not yet to this date (6 February 2024) announced which authority that will be responsible for receiving such notices, and, as a consequence, the Swedish Government is the competent authority until the Government delegates the task to another authority.

Companies are recommended to take appropriate action to ensure compliance with the obligations provided for in Article 12 g. These obligations should be seen as a supplement to a previously published list of critical goods in relation to which companies are expected to take appropriate steps to ensure that goods are not re-exported to Russia.

In case of any questions about the above or any other Trade Compliance related issues, please contact Anders or Martin.