EU extends and updates Russia/Ukraine sanctions

The EU has extended its sanctions on people and entities that are said to be undermining the territorial integrity of Ukraine for 6 months until 15 March 2018.  It has also added Crimean Sea Ports to its list of designated people and entities, amended the sanctions to include a derogation for payments to Crimean Sea Ports for certain services, and updated the listing information for several people subject to the sanctions.

See Council Regulation 2017/1547 amending Council Regulation 269/2014, Council Implementing Regulation 2017/1549 implementing Council Regulation 269/2014, and Council Decision (CFSP) 2017/1561 amending Council Decision 2014/145/CFSP. The EU’s notice to listed persons is here.

Russian court rejects Siemens’ application to seize gas turbines shipped to Crimea

A Russian Court has dismissed an application brought by Siemens for an injunction to seize gas turbines it produced with Russian firm Technopromexport, shipped to Crimea by the Russian firm in alleged contravention of EU sanctions (see previous blog). EU people and entities are prohibited from providing certain technology to Crimea for use in its energy sector.

The turbines are crucial for providing electricity to the Crimea region, which was promised a stable power supply by the Russian government but has endured frequent blackouts. Siemens says that there was a written agreement with its Russian partner not to export the turbines to Crimea. Preliminary hearings in Siemens’ case against Technopromexport are due to begin next month.

EU sanctions those involved in the illegal export of turbines to Crimea

Last month, we reported that Germany-based firm Siemens had brought proceedings against Russian firm Technopromexport for exporting Siemens-built power turbines to Crimea in apparent violation of EU sanctions (see previous blog).  The EU has now sanctioned Technopromexport for exporting the turbines to Crimea, along with 2 other entities and 3 people connected with the export.

See Council Implementing Regulation (EU) 2017/1417 implementing Council Regulation (EU) 269/2014 and Council Decision (CFSP) 2017/1418 amending Council Decision 2014/145/CFSP. The EU’s notice is here, and the UK’s notice is here.

President Trump signs new sanctions on Russia, Iran, DPRK into law

President Trump today signed a bill passed by Congress last week, which imposes new sanctions on Russia, Iran, and North Korea (see previous blog). The Countering America’s Adversaries Through Sanctions Act restricts the President’s ability to lift sanctions without Congressional approval.  President Trump’s statement on signing the Act makes the following remarks:

“…the bill remains seriously flawed – particularly because it encroaches on the executive branch’s authority to negotiate…  By limiting the Executive’s flexibility, this bill makes it harder for the United States to strike good deals for the American people, and will drive China, Russia, and North Korea much closer together.  The Framers of our Constitution put foreign affairs in the hands of the President.  This bill will prove the wisdom of that choice.

Yet despite its problems, I am signing this bill for the sake of national unity.  It represents the will of the American people to see Russia take steps to improve relations with the United States.  We hope there will be cooperation between our two countries on major global issues so that these sanctions will no longer be necessary… I built a truly great company worth many billions of dollars.  That is a big part of the reason I was elected.  As President, I can make far better deals with foreign countries than Congress.”

In response to the bill passing through Congress, Russia ordered the expulsion of 755 US diplomatic staff from the country.

EU re-lists Arkady Rotenberg on Russia sanctions

The EU has re-listed Arkady Rotenberg on the EU’s sanctions against people said to be involved in undermining or threatening the territorial integrity of Ukraine.

In November last year the General Court found that the reasons for Mr Rotenberg’s original listing were unlawful, and that the reasons for his second listing were in part unlawful (see previous blog).  This was because the EU could not show that he was “associated with people responsible for undermining the territorial integrity of Ukraine”, and because one of the reasons said to show that he “benefitted from decision-makers who were responsible for the annexation of Crimea” related to contracts won by Mr Rotenberg before President Putin threatened the annexation of Crimea.

The amended reasons are set out in Implementing Regulation (EU) 2017/1374 implementing Regulation (EU) 269/2014 and Decision (CFSP) 2017/1386 amending Decision 2014/145/CFSP. Maya Lester QC acts for Mr Rotenberg.

ECJ clarifies rules on bringing sanctions cases on behalf of deceased applicants

The Court of Justice held this month in Case C-505/16 P Olga Yanukovych v Council & Commission that the General Court had been right to reject an application for annulment seeking to annul the re-listing of Viktor Yanukovych, son of the former President of Ukraine, on the EU’s Ukraine misappropriation sanctions, after he had died.  Viktor Yanukovych’s widow Olga Yanukovych had tried to continue the application for annulment on his behalf after his death but the ECJ held that she had not done so in the procedurally correct manner and the application was inadmissible.

OFAC fines ExxonMobil $2,000,000 for sanctions violations

OFAC has fined US oil and gas company ExxonMobil $2,000,000 for violating US sanctions relating to the Ukraine crisis.  Between 14 May and 23 May 2014, the presidents of ExxonMobil’s US subsidiaries are said to have dealt with designated person Igor Sechin, president of Russian oil company Rosneft. Exxon signed 8 legal documents with Mr Sechin related to oil and gas projects in Russia, but has said that it believed the sanctions only prohibited doing business with Mr Sechin as an individual and not in his capacity as president of Rosneft. The deals were signed during US Secretary of State Rex Tillerson’s tenure as Exxon’s chief executive.

At the time the contracts were signed, there was a FAQ on the OFAC website stating that it was prohibited to enter into contracts signed by a SDN.  OFAC stated in its enforcement notice that although the guidance said that “different interpretations may exist among and between the sanctions programmes” OFAC administers, the FAQ clearly indicated that OFAC had in another sanctions programme involving SDNs viewed the signing of a contract with an SDN as prohibited, even if the company on whose behalf the SDN signed was not prohibited. Exxon disputes this, and has brought a lawsuit in the US attempting to stop the fine. It claims that OFAC is trying to retroactively apply a new interpretation of the sanctions that did not apply at the time the deals were signed.

Judgments on duties of EU when listing for Ukraine misappropriation

We reported in January 2016 (here) that the EU Court had annulled the designations of Mykola Azarov and Sergej Arbuzov, both former Prime Ministers of Ukraine, because the only basis for saying that they were “responsible for misappropriating Ukrainian state funds” was a letter in March 2014 from Ukraine’s Prosecutor General that gave no details of the matters alleged against them and the nature of their alleged responsibility for misappropriation of assets.

The EU Court has now upheld their re-listings on the basis that there was sufficient evidence that they are “subject to criminal proceedings by the Ukrainian authorities for the misappropriation of public funds or assets”.  Judgments here; Cases T-221/15 Arbuzov and T-215/15 Azarov.  The General Court rejected grounds for annulment based on insufficient reasons, rights of defence, misuse of powers, and disproportionate breach of fundamental rights. It held that the EU Council has to check that the listed person is facing criminal proceedings for misappropriation of state funds in Ukraine, but it does not have to question the evidence underlying those proceedings or the procedure (particularly since Ukraine is a member of the Council of Europe & ECHR) and it is up to the EU to decide it if needs additional evidence or clarification.