On February 21 and 23, 2022, the Council of the European Union (“Council”) agreed on the new, fifth package of EU restrictive measures (sanctions) to be adopted in response to the Russian Federation’s decision to recognize the occupied regions of Donetsk and Luhansk in Ukraine as independent states. These EU sanctions are binding on nationals of an EU member state wherever located, legal entities incorporated within an EU member state, all persons located within the EU; all persons in respect of business done in whole or in part within the EU, and to all persons on board aircraft and vessels within the jurisdiction of an EU member state.

The fifth EU sanctions package formally adopted thus far includes the following measures.

1. The EU designated five individuals to its Ukrainian sanctions list on February 21, 2022. The five individuals are all members of the Russian Duma, elected to represent the Crimean Peninsula and the City of Sevastopol on September 19, 2021, as well as the head and deputy head of the Sevastopol electoral commission.

2. On the same day, it was announced that Germany would not provide the technical licenses required for the Nordstream 2 project to become operational.

3. On February 23, 2022, the EU adopted the following measures in response to the recognition of the regions of Donetsk and Luhansk as independent states:

• Additions to the EU designated persons list

The EU added to its designated persons list all 351 members of the Russian State Duma (the Russian parliament's lower house) who voted in favor of President Putin’s appeal to recognize the independence of the self-proclaimed Donetsk and Luhansk “republics”. The EU also designated 27 individuals and entities, who are said to have contributed to undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine, to its sanctions list. Among these are not only politicians or public officials in the Russian Federation, but also three prominent Russian banks: Bank Rossiya, Promsvyazbank and VEB.

Being a “designated person” in the EU means that all funds and economic resources belonging to, held or controlled by a designated person are frozen. Consequently, EU persons are prohibited from making funds or economic resources available, directly or indirectly, to or for the benefit of designated persons, or persons and entities owned or controlled by such designated persons.

• Restrictions on the ability of the Russian government and the Central Bank to access the EU’s capital and financial markets and services

EU persons are now prohibited from dealing in transferable securities and money-market instruments issued after March 9, 2022 by:

(a) the Russian government,

(b) the Russian Central Bank or

(c) any entity acting on behalf of the Russian Central Bank.

No loans or credit can be made available to these entities after 23 February 2022.

• Restrictions on economic relations with the non-government controlled areas of Donetsk and Luhansk regions

In addition to the foregoing, the following specific prohibitions have been adopted in relation to the non-government-controlled areas of the Donetsk and Luhansk regions of Ukraine (the Restricted Territories). These measures are substantially similar to those which have been adopted in relation to Crimea and Sevastopol, prohibiting:

a. Imports of goods originating in the Restricted Territories into the EU and the provision of financing in relation to such imports;

• Contracts concluded before February 23, 2022 may be executed until May 24, 2022, and ancillary contracts needed for such contracts may be performed if a notification is made to the competent Member State authority at least ten working days in advance;
• The import ban does not apply to goods having a certificate of origin under the EU-Ukraine Association Agreement;

b. Acquisition or extension of new real estate, or the financing thereof in the Restricted Territories;

c. Acquisition or extension of ownership or control over entities in the Restricted Territories, including shares and similar acquisitions;

d. Granting loans or credit to any entity in the Restricted Territories;

e. Creating joint ventures in the Restricted Territories or with any entity therein;

f. Providing investment services in relation to (a) – (e) above;

g. Sales or supply, as well as provision of technical or financial assistance in relation to specified technology, in the areas of transport, telecommunications, energy and oil, gas and mineral prospecting, exploration and production;

• Contracts concluded before February 23, 2022 may be executed until August 24, 2022, and the same holds true for ancillary contracts necessary for the execution of such a contract;

h. Provision of tourism services;

• Contracts concluded before February 23, 2022 may be executed until August 24, 2022, and the same holds true for ancillary contracts necessary for the execution of such a contract if they are notified to the competent Member State authority at least five working days in advance.

Following the publication of these sanctions, on February 24, 2022 the EU condemned the military aggression of Ukraine, with the High Representative issuing a Declaration by on behalf of the European Union on the invasion of Ukraine by armed forces of the Russian Federation. During her press conference, the European Commission President, President Ursula von der Leyen announced that further sanctions will be adopted in the course of today. It is reported that these further sanctions will focus on limiting Russian financial institutions’ access to EU financial markets and freezing Russian assets in the EU.

Dentons will continue to monitor and report on this evolving situation. Please feel free to reach out to your Dentons relationship partner if you have any questions or require assistance in sanctions compliance.