EU Adopts 15th Sanctions Package Against Russia, First Designations under Russia Hybrid Threats Sanctions Program, New FAQs on Ukraine-Related Sanctions, and Numerous Designations under the Haiti, Sudan and North Korea Sanctions Programs

Key Takeaways:

• The EU adopted a range of new sanctions targeting Russia and Russian interests by adopting a 15th sanctions package under the Ukraine sanctions program as well as new designations under the Belarus sanctions program and made its first designations under the October 2024 Russia Hybrid Threats sanctions program.
  • The 15th package contains both anti-circumvention measures, including a crackdown on Russia’s shadow fleet, and designations intended to further weaken Russia’s military and industrial capability.
  • The EU added 52 tankers to the list of vessels subject to a port access ban and a ban on provision of certain services, and added 32 entities to the list of those subject to enhanced export restrictions, including individuals and entities based in third countries such as China.
  • Finally, the 15th package also recognizes the challenges EU operators continue to experience when seeking to withdraw from the Russian market, and adopted additional measures to protect EU operators complying with sanctions and extends several exemptions/derogations, including the extension of the deadline applicable to certain derogations related to divestment from Russia to allow EU operators to exit from the Russian market.

• The EU also announced several new designations under the Sudan, Haiti and North Korea sanctions programs.

20 December 2024 – The European Council ended a highly active economic sanctions year for the EU with the announced adoption of new restrictive measures targeting Russia’s war against Ukraine through the adoption of its 15th package against Russia and other measures, as well as a range of new designations under other EU sanctions programs on 16 December 2024. These new measures demonstrate the central role of sanctions in pursuing the EU’s foreign policy objectives.

The objectives of the 15th EU sanctions package against Russia, which is composed of individual and comprehensive sectoral restrictive measures, are to “keep cracking down on Russia’s shadow fleet as well as combating sanctions circumvention,” and more generally to weaken Russia’s military and industrial capability (I). The continued focus on countering Russia’s destabilizing activities was also shown by the adoption of the first designations under the new October 2024 Russian Hybrid Threats sanctions program and additional designations under the Belarus sanctions program (II). Of note also are the efforts by the European Commission since the end of June 2024 to update its FAQs on Russia- and Belarus-related sanctions programs (III). Finally, the EU also made a series of new designations under the Sudan, Haiti and North Korea programs, emphasizing the fact that EU sanctions are also actively used to respond to crises and promote peace, democracy and human rights in other regions of the world (IV).

I. Adoption of 15th Comprehensive Sanctions Package Against Russia for Its Continued War of Aggression Against Ukraine

The 15th sanctions package includes 84 new designations of individuals and entities responsible for actions undermining the territorial integrity, sovereignty and independence of Ukraine (1). To combat sanctions circumvention, the EU has also adopted additional measures targeting non-EU vessels and added new entities to the list of those supporting Russia’s military and industrial complex (2 and 3). In addition, several exemptions and derogations are extended, in particular to allow EU operators to exit from Russia (4 and 5). Finally, the EU has adopted new measures to protect EU operators complying with EU sanctions (6).

These new EU sanctions were implemented through Regulations 2024/3183 and 2024/3189 for individual restrictive measures, and Regulation 2024/3192 for all other measures.

1. Individual Restrictive Measures

a. New Designations (Regulation 2024/3183)

• The EU added 54 individuals and 30 entities to its restricted parties list, including Chinese and North Korean persons and entities. The newly-listed persons and entities are subject to asset freezes, as well as travel bans for individuals.
  • Listed individuals include military officers responsible for the attack on the Okhmadyt children hospital in Kyiv, senior managers in leading energy companies, those responsible for deportation of Ukrainian children to Russia, individuals spreading propaganda regarding the Russia-Ukrainian war and individuals involved in sanctions circumvention, as well as the North Korean Minister of Defense and the Deputy Chief of the General Staff, involved in the deployment of North Korean troops to Russia.
  • Among the listed entities are Russian defense and shipping companies responsible for the maritime transportation of Russian crude oil and oil products above the price cap, Federal State Enterprise “Kamensky Combine” producing special-purpose chemical products for the Russian military industry, Russian civil airline PJSC UTAIR providing logistical support to the Russian armed forces and six entities based in China (mainland or Hong Kong) supplying drone components and microelectronic components to Russia.

• At the time of this writing, more than 2,300 individuals and entities have been placed on the EU restricted parties list pursuant to the Russia sanctions program in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.

b. New and Amended Derogations (Regulation 2024/3189)

• Reinstatement of temporary derogation for certain designated individuals – A former derogation allowed national competent authorities (NCAs) on certain conditions (see our previous alert) to authorize the release and making available of funds and economic resources for the sale and transfer of proprietary rights owned by these individuals in EU entities to certain designated individuals until 30 June 2024. This derogation was reinstated for the following individuals (i) Arkady Romanovich Rotenberg, (ii) Gennady Nikolayevich Timchenko and (iii) Boris Romanovich Rotenberg, until 30 June 2025.
• New derogation for cash balances frozen by a central securities depository (CSD) - NCAs may now authorize the release of cash balances frozen by a CSD and attributable to the National Settlement Depository or to any other entity designated in Annex I to Regulation 269/2014, under certain conditions.

2. New Entities Subject to Enhanced Export Restrictions

• Extension of the list of entities subject to enhanced restrictions in relation to dual-use (Annex I of Regulation 2021/821) and advanced technology items (Annex VII of Regulation 833/2014) to cover an additional 32 entities in Annex IV of Regulation 833/2014.
  • Some of the newly listed entities are located in third countries, such as China, India, Iran, Serbia and the United Arab Emirates, and have been involved in the circumvention of trade restrictions against Russia, including the procurement of unmanned aerial vehicles and missiles. This demonstrates the willingness of the EU to actively fight the use of companies in third countries to circumvent sanctions adopted against Russia.

3. New Tankers Added to the List of Vessels Contributing to Russia’s Ability to Wage War

• Extension of the list of vessels subject to bans on port access and provision of certain services related to maritime transport (Annex XLII of Regulation 833/2014) to cover 52 additional non-EU tankers (e.g., those sailing under the flag of Panama, Barbados, Gabon).
  • This brings the number of vessels listed in Annex XLII to 79.

4. Extension of the Croatian and Czech Derogation / Exemption from the Import Ban on Russian Oil and Petroleum Products

• 1-year extension of the derogation allowing the Croatian NCAs to authorize, under certain conditions, the purchase, import or transfer of vacuum gas oil (CN code 2710 19 71) originating in or exported from Russia until 31 December 2025 (instead of previously 31 December 2024).
• 6-month extension of the temporary exemption allowing the import, transfer and sale to Czechia of petroleum products obtained from Russian crude oil delivered by pipeline into another member state until 4 June 2025 (instead of previously 4 December 2024).

5. Extension of Divestment Derogations to Facilitate Exit of EU Operators from the Russian Market

The Council continues to encourage EU operators to exit the Russian market, emphasizing that “[b]ecause of the risks of maintaining business activities in Russia, EU operators should consider winding down businesses in Russia and/or not to start new businesses there.” To facilitate such divestments, the EU extended several divestment derogations.

a. Export and Import Restrictions (Article 12b of Regulation 833/2014)

• One year extension of the derogation allowing NCAs to authorize, for the divestment from or the wind-down of business activities in Russia, until 31 December 2025 (formerly valid until 31 December 2024), the following activities:
  • The sale, supply or transfer of goods listed in Annexes II (goods which are suitable for oil exploration and production purposes), VII (advanced technology items), X (goods and technology suited for use in oil refining and liquefaction of natural gas), XI (goods and technology suited for use in aviation or the space industry), XVI (maritime navigation goods and technology), XVIII (luxury goods), XX (jet fuel and fuel additives) and XXIII (goods which could contribute to the enhancement of Russian industrial capacities) to Regulation 833/2014 and in Annex I to Regulation 2021/821 (dual-use items);
  • The sale, licensing or transfer of intellectual property rights (IPRs) or trade secrets as well as granting rights to access or re-use any material or information protected by means of IPRs or constituting trade secrets, related to the above-mentioned items;
  • The import or transfer of goods listed in Annexes XVII (iron and steel products) and XXI (goods which generate significant revenues for Russia) to Regulation 833/2014.

• One year extension of the derogation allowing NCAs to authorize, for the divestment from a joint venture incorporated or constituted in the EU before 24 February 2022, involving a Russian entity and operating a gas pipeline infrastructure between Russia and third countries, until 31 December 2025 (formerly valid until 31 December 2024) (Article 12b of Regulation 833/2014):
  • The sale, supply or transfer of items listed in Annex II to Regulation 833/2014 (goods which are suitable for oil exploration and production purposes).

b. Restricted Services (Article 12b of Regulation 833/2014)

• One year extension of the derogation allowing NCAs to authorize the continuation of the provision of services prohibited under Article 5n of Regulation 833/2014, for the divestment from or the wind-down of business activities in Russia to and for the exclusive benefit of the entities resulting from the divestment, until 31 December 2025 (formerly valid until 31 December 2024).

c. State-Owned Entities (Article 5aa of Regulation 833/2014)

• One year extension of the exemption allowing transactions strictly necessary for the wind-down of a joint venture or similar legal arrangement concluded before 16 March 2022, involving a state-owned entity listed in Annex XIX of Regulation 833/2014, a non-EU entity owned by the latter or an entity acting on their behalf or at their direction (“SOEs subject to the transaction ban”), until 31 December 2025 (previously valid until 31 December 2024).
• One year extension of the derogation allowing NCAs to authorize transactions strictly necessary for the divestment and withdrawal by SOEs subject to the transaction ban or their EU subsidiaries from an EU entity until 31 December 2025 (formerly valid until 31 December 2024).

d. “No-Claim” Provision (Article 11 of Regulation 833/2014)

• One year extension of the derogation from the “No-Claim” provision allowing NCAs to authorize the satisfaction of claims made by Russian entities, for the divestment from or the wind-down of business activities in Russia, until 31 December 2025 (instead of previously 31 December 2024).

6. Protection of EU Operators

• New liability defense for CSDs – The new sanctions package clarifies that CSDs, and their directors or employees, are not liable for good faith actions to comply with relevant restrictions under Article 5a paragraphs 4 to 12 of Regulation 833/2014 relating to the assets of the Central Bank of Russia, unless it is proved that these actions were a result of negligence. This new liability defense was introduced to “address the increasing litigation and retaliatory measures in Russia” that result in the seizing of CSDs assets. In particular, it means that CSDs should not pay interest or any other form of compensation (beyond interest contractually due) to the Central Bank of Russia in relation to its immobilized assets.
• Protection of EU operators against anti-suit injunctions – The EU adopted a new prohibition to recognize or enforce rulings issued by Russian courts pursuant to Article 248 of the Russian Arbitration Procedure Code. This provision allows Russian courts to exercise exclusive jurisdiction over disputes involving foreign sanctions in disregard of foreign arbitration clauses and forum selection clauses. Russian courts have been relying on this provision to issue injunctions to prevent EU operators from commencing or continuing proceedings based on compliance with foreign sanctions in jurisdictions other than Russia. As such, and in order to better protect EU operators, the EU therefore now prohibits the recognition and enforcement in EU Member States of any injunction, order, relief, judgment or other court decision made pursuant Article 248 of the Russian Arbitration Procedure Code or equivalent Russian legislation. It is also prohibited to recognize and enforce any request for assistance during an investigation or other criminal proceedings and any punishment or other sanction pursuant to the Russian Criminal Code based on an alleged violation of such court decisions.

II. First Designations under the Russian Hybrid Threats Sanctions Program and New Designations under the Belarus Sanctions Program

On 16 December 2024, the EU also made its first designations under the Russian Hybrid Threats Sanctions Program (1) and new designations under the Belarus sanctions program (2).

1. First Russian Hybrid Threats-Related Designations (Regulation 2024/3188)

• For the first time, the EU relied on this framework to designate 16 individuals and three entities. The new Hybrid Threats Sanctions Program was adopted on 8 October 2024 in response to Russia’s destabilizing activities overseas, such as election interference, threats against and sabotage of economic activities, services of public interest or critical infrastructure, disinformation campaigns, foreign information manipulation, malicious cyber activities, and the instrumentalization of migrants (see our previous alert).
  • Listed individuals include collaborators of the Russian government in France, officers of newly-listed entities (see below), as well as individuals involved in the “Doppelganger” disinformation campaign.
  • Listed entities include (i) GRU Unit 29155, a covert unit within the Russian military intelligence agency involved in foreign assassinations and destabilization activities, (ii) the Groupe Panafricain pour le Commerce et l’Investissement, a disinformation network carrying out pro-Russian covert influence operations in the Central African Republic and Burkina Faso, and (iii) African Initiative, a news agency spreading Russian propaganda and disinformation on the African continent.

2. New Belarus-Related Designations (Regulation 2024/3177)

• The EU added 26 individuals and two entities to its restricted parties list.
  • Newly Listed Individuals include members of the judiciary, heads and deputy heads of various correctional institutions, the head of a medical unit in one of these institutions, as well as business owners, part-owners, associates, or members of boards of directors who benefitted from the Lukashenko regime and who are alleged to have contributed to the circumvention of EU sanctions.
  • Newly Listed Entities include (i) Vlate Logistik LLC, a Belarusian transport and storage company which owns two border checkpoints on the EU-Belarus border, and (ii) Ruzekspeditsiya LLC, a Belarusian company participating in the delivery of cars from the EU to Belarus in violation of sanctions.

• As of the time of this alert, a total of 287 individuals and 39 entities are designated by the EU under the Belarus program.

III. New Updates to the FAQs on Sanctions Against Russia and Belarus

Since our last alerts on Russia- and Belarus-related sanctions programs, the Commission has made several updates to its FAQs on the implementation of Regulations 833/2014, 269/2014 (Russia program) and 765/2006 (Belarus program) on its dedicated webpage, in particular:

• On 18 December 2024, the Commission updated its FAQs on the “no-re-export to Russia” clause (Article 12g of Regulation 833/2014), which requires EU operators to include provisions prohibiting the re-exportation to Russia or for use in Russia when exporting, selling, supplying or transferring certain listed sensitive items in third countries. Among the changes, we note the following:
  • The Commission clarified that (i) a general clause prohibiting the re-exportation to countries subject to EU sanction might be sufficient provided it meets all other requirements (in particular the inclusion of adequate remedies), and that (ii) the “no-reexport to Russia” clause can be included in general terms and conditions if they are validly incorporated into the contract and all other requirements are met;
  • The updated FAQs emphasize that adequate remedies in the “no-re-export to Russia” clause must be “reasonably strong” to deter potential breaches of the clause. This may include, for instance, (i) the suspension, interruption or termination of the contract, (ii) the application of financial penalties, or (iii) the specification in the contract of a competent court able to recognize the re-export as in breach of the contract;
  • The Commission (i) clarified that the exemption for public contracts concluded with a public authority in a third country or with an international organization applies to both existing and future contracts, (ii) reminded that this exemption does not exempt operators from their obligation to notify NCAs of new public contracts within two weeks of their conclusion, and (iii) specified that for contracts concluded before the entry into force of the 12^th sanctions package, NCAs may request a notification within an appropriate timeframe. According to the Commission, the notification should include information on (i) the legal basis of the notification (Article 12g paragraph 2b of Regulation 833/2014), (ii) the contracting partner (i.e., the public authority or international organization concerned), and (iii) the subject matter of the contract (i.e., the listed items concerned);
  • For contracts concluded before 19 December 2023, the updated FAQs state that in case of refusal from the third party to include the “no-reexport to Russia” clause, the obligation would be met if the operator issues a unilateral communication to its client prohibiting re-exportation to Russia or for use in Russia. However, this would only apply in exceptional circumstances where, for instance, the EU operators can demonstrate it made its best efforts to include the clause, adequate due diligence has been conducted on the third-party, or local law prevents the inclusion of the clause.

• On 11 December 2024, the Commission published new FAQs on enhanced due diligence for operators manufacturing and/or trading with common high priority (CHP) items which should be conducted by EU operators to comply with Article 12gb of Regulation 833/2014. The Commission notably clarified the following:
  • The measures that EU operators should implement when selling, supplying, transferring or exporting CHP items, in particular:
    • the risk indicating that their CHP items might be re-exported to or for use in Russia that they should identify and assess when conducting their risk assessment;
    • policies, procedures and controls designed to mitigate such risks;
  • The measures that they should implement to ensure that non-EU entities that they own or control comply with this provision. The Commission clarified that this need only cover measures that are feasible for the EU operator in view of its nature, its size and the relevant factual circumstances, in particular the degree of effective control over the non-EU entity;
  • The fact that NCAs may carry out checks to verify whether EU operators are implementing this provision.

• On the same day, the Commission updated its FAQs on circumvention and due diligence, specifying that sanctions due diligence should be proportionate and include various controls at several levels. According to the Commission, this due diligence should at least include (i) screening of all parties to the transaction, (ii) control of the goods and services, and (iii) risk analysis of the transaction. A plain reading of this new FAQ could be interpreted as requiring risk analyses of all transactions, which would appear inconsistent with the risk-based approach recommended in pre-existing guidance. More detailed guidance on the scope of such due diligence appears necessary to help guide EU operators in appropriately implementing their due diligence obligations.

• On 22 November 2024, the Commission published the new FAQs on the “best efforts” obligation (see our recent alert).
  • Finally, the Commission introduced changes to the following FAQs:
  • Restrictions on diamonds (last updated on 20 December 2024);
  • Divestment from Russia (last updated on 17 December 2024);
  • IPRs (last updated on 5 November 2024);
  • Provision of services (last updated on 5 September 2024);
  • Asset freeze and prohibition to provide funds or economic resources (last updated on 5 September 2024);
  • Export-related restrictions for dual-use and advanced technology items (last updated on 26 July 2024);
  • Imports, purchase and transfer of listed goods (last updated on 26 July 2024);
  • CSDs (last updated on 24 July 2024);
  • Chemicals (last updated on 24 July 2024);
  • Donetsk, Kherson, Luhansk and Zaporizhzhia oblasts (last updated on 12 July 2024);
  • State owned enterprises (last updated on 2 July 2024);
  • Targeted vessels (last updated on 2 July 2024); and
  • Other general questions (last updated on 2 July 2024).

IV. New Designations under the Sudan, Haiti and North Korea Programs

Finally, on 16 December 2024, the EU made additional designations under the Sudan (1), Haiti (2) and North Korea (3) sanctions programs.

1. New Sudan-Related Designations (Regulation 2024/3156)

• The EU included four additional individuals for its restricted parties list under the Sudan Sanctions program which was adopted by the EU on 9 October 2023 in response to ongoing armed conflict in that country between the Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF).
  • Newly listed individuals include Mohamed Ali Ahmed Subir and Salah Abdalla Mohamed Salah on the SAF side, as well as Osman Mohamed Hamid and Tijani Karshom on the RSF side.
• As of the time of this alert, a total of 10 individuals and six entities have been placed on the EU restricted parties list under the Sudan program in view of activities undermining the stability and political transition of that country.

2. New Haiti-Related Designations (Regulation 2024/3138)

• The EU sanctions concerning Haiti are based on the UN Security Council resolution 2653 adopted on 21 October 2022 in response to growing gang violence and criminal activities in this country. These sanctions have been reinforced by the Council on 28 July 2023 to allow the EU to impose restrictive measures on those responsible for threatening the peace, security or stability of Haiti, or for undermining democracy or the rule of law in Haiti.
• The EU included three additional individuals for its restricted parties list in response to the escalating gang violence in Haiti.
  • Listed individuals include three gang leaders (i.e., Jonel Catel, Gabriel Jean-Pierre and Ferdens Tilus) engaged in criminal activities and violent actions in Haiti.
• As of the time of this alert, a total of eight individuals are designated by the EU under the Haiti sanctions program in view of the situation in that country.

3. New North Korea-Related Designations (Regulation 2024/3152)

• The EU added 1 entity to its restricted parties list in response to North Korea’s continued nuclear and ballistic missile-related activities.
  • The newly listed entity is Royal Shune Lei, a Myanmar company reported by the UN Panel of Experts as working as an intermediary for the armed forces of Myanmar for the supply of military equipment from North Korea.
• In total, as of the time of this alert, a total of 157 individuals and 96 entities have been placed on the EU restricted parties list under the North Korea sanctions program.

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Hughes Hubbard’s Paris-based EU Economic Sanctions and Export Controls team, part of the firm’s Sanctions, Export Controls and Anti-Money Laundering practice, is well-positioned to assist EU operators in navigating, in a practical and pragmatic way, EU sanctions against Russia, Belarus and other thematic or country-based programs. Please contact us if you have any questions about the 15th package or any of the topics of our prior client alerts.