Sanctions continue to impact all aspects of international trade. The sanctions packages from e.g. EU are becoming more and more complex and comprehensive and the prohibitions affect companies exporting to any country and even domestic sales. Russia’s procurement networks start in EU and even Sweden. In addition, compliance expectations from various stakeholders continue to increase. In sum, compliance add business value.
We also refer to our previous sanctions updates which can be found here.
On 23rd April, EU Member States agreed on a new sanctions package. Reportedly, Hungary and Slovakia have blocked the package for some time but did agree after Ukraine resumed the flow of Russian oil through the Druzhba pipeline. The main elements of the package are as follows:
Oil, gas and shipping
Finance
Trade measures
Protection of EU operators
The package also contains various provisions aimed at deterring countries, companies and individuals from assisting Russian interests seeking enforcement of legal claims in their countries and punishing those that do. There is also an expansion of the protection under the ‘no claims clause' to cover also claims from certain third-country persons, as well as a transaction ban against those who use intellectual property rights of EU operators in Russia without their consent or otherwise use the fact that EU operators have been subject to de facto expropriations in Russia, including the direct and indirect beneficiaries of such measures. The EU also empowers Member State courts to order the discontinuation of abusive proceedings in Russia and to impose penalties on Russian actors who seek orders from Russian courts unlawfully forcing Union operators to resolve disputes in Russia.
The texts of the package can be found here.
The EU Sanctions Helpdesk is a service function implemented by the EU Commission whose objective is to help primarily small and medium-sized enterprises to comply with EU sanctions. The Helpdesk will hold four webinars in the near future on the theme of due diligence which are free of charge and open to the public:
Advocate General Biondi of the Court of Justice of the European Union makes a broad interpretation of the “no claims clause” of Regulation 833/2014 in his opinion in Case C-802/24, Riebel. The case concerns a claim by a Russian company (JSC VO Stankoimport) in Swedish arbitration proceedings against a Belgian company (NV Reibel), where Stankoimport had paid for goods which Reibel could not supply due to sanctions. According to the Advocate General, Article 11 of Regulation 833/2014 is worded in broad terms and aims to protect EU economic operators from sanctions-related claims. It should thus be interpreted as including claims for repayment of an advance sum. The Advocate General also took position on two other important issues, proposing that; (1) arbitral tribunals may hear claims arising from contracts affected by Regulation 833/2014, but must not satisfy them; and that (2) the “no claims clause” is part of EU public policy and hence should be considered and applied on its own motion by national courts and tribunals. It remains to be seen if the court will agree with the proposals by the General Advocate.
Two employees at Kubal, Sweden’s only alumina plant, are being investigated for suspected gross sanctions breach. Media reports suggest that the alleged infraction consisted in making funds available to a person in breach of an EU asset freeze. Kubal, indirectly owned by a company which in turn is 44.95 % owned by a sanctioned Russian oligarch, has been a contentious issue for the Swedish government (and Swedish banks) for many years due to the connection with the oligarch. The crux of the matter from a legal point of view is that any company which is more than 50% owned, or otherwise controlled, by a sanctioned person is in effect also considered a sanctioned person. Notably, as reported in a previous Sanctions Update, Swedish administrative courts held in November of 2022 that at that time it had not been established that Kubal was controlled by a sanctioned entity.
On 12 March 2026, the Court of Justice of the European Union rendered a judgment in Case C-84/24, EM SYSTEM, that serves as a useful reminder of the mechanism that should apply when private companies freeze funds of sanctioned entities. Asset freeze provisions generally provide that assets owned or controlled by sanctioned entities shall be frozen and this prompts e.g. banks to freeze funds belonging to companies that they deem are controlled by a sanctioned person. In the present case, Lithuanian authorities had published a list claiming that the company concerned (EM System UAB) was controlled by a sanctioned entity. As a result, the company’s bank had frozen EM System’s funds. The Court concluded that even if there were a presumption that EM System’s funds were controlled by the sanctioned person and hence should be frozen in the first instance, non-designated companies must always be able to challenge that assessment on a case-by-case basis. The court emphasized the right of non-sanctioned companies to effective judicial protection, which actually is less apparent compared to the corresponding right of sanctioned companies for which there is an established avenue to appeal a listing decision. The case will now continue before the Lithuanian courts.
