The European Union has introduced a new package of sanctions in response to the escalation of aggression by Russia against the Ukraine. These sanctions were adopted unanimously by all 27 member states at the end of an extraordinary meeting of foreign affairs ministers in Paris on 22 February 2022. Minister Simon Coveney had indicated in a statement made on 21 February 2022 that “Ireland supports a clear and strong EU response, including additional sanctions measures”.
The sanctions package targets individuals and entities from a range of sectors, including political, business and military. These individuals will be subject to asset freezes and will not be permitted to enter or transit through EU territory. The asset freeze will also include a prohibition on making funds available to them.
In addition to the individual and entity sanctions noted above, a number of limitations have been placed on the Russian government’s access to the EU’s capital and financial services markets. These include:
- measures targeting banks financing military or other operations in separatist-controlled regions;
- banning Russian bond trades in the EU;
- blocking all trade from the two breakaway regions of Donetsk and Luhansk to and from the EU.
The European Commission has noted that the EU is Russia’s largest trading partner, accounting for 37.3% of the country’s total trade in goods in 2020. 36.5% of Russia’s imports came from the EU and 37.9% of its exports went to the EU. Restrictive measures against Russia have been in place since March 2014 in response to the annexation of Crimea and deliberate attempts to destabilise Ukraine.
On the basis that additional EU sanctions are likely in the absence of a significant de-escalation of hostile activity, Irish companies should continue to monitor all relevant sanctions lists and screen any counterparts in the Ukraine and Russia accordingly.
Where Irish companies are a party to contracts which are connected to Russia or Ukraine, these contracts should be reviewed in order to ascertain the impact of any supply chain / operational issues which may impact the performance of that contract.
Finally, for any new transaction or contract contemplated by an Irish entity, particular care should be taken at due diligence stage to ensure that any implications of these sanctions are identified quickly.
We will issue further updates in the event of any material developments. Please get in touch with your usual William Fry contact or Stephen Keogh if you have any queries or require advice on this matter.
Contributed by Julie Murray
