EU adopts new sanctions regime against Russia

On 8 October 2024, the Council of the European Union adopted regulations introducing a new regime of restrictive measures against Russia:

• Council Regulation (EU) 2024/2642 of 8 October 2024 (“Regulation 2024/2642”); and
• Council Decision (CFSP) 2024/2643 of 8 October 2024.

We outline below the main provisions of the new EU sanctions regime.

Further criteria for imposing blocking sanctions

Regulation 2024/2642 introduces new grounds for imposing EU blocking sanctions against Russian persons.

Blocking sanctions may now be imposed on natural or legal persons, entities or bodies that are, in the EU’s view, responsible for, implementing, supporting, or benefitting from actions or policies by the Government of the Russian Federation which undermine or threaten democracy, the rule of law, stability or security in the EU or its Member States, in an international organisation or in a third country, or which undermine or threaten the sovereignty or independence of EU Member States or of a third country through any of the following actions:

• planning, directing, engaging in, directly or indirectly, or otherwise facilitating:
• the obstruction or undermining of the democratic political process, including by obstructing or undermining the holding of elections or attempting to destabilise or overthrow the constitutional order;
• violent demonstrations;
• acts of violence, including activities to silence, intimidate, coerce or exact reprisals against persons critical of the actions or policies of the Russian Federation;
• the use of coordinated information manipulation and interference;
• any actions (1) targeted at the functioning of democratic institutions, economic activities or services of public interest, including by unauthorised entry into the territory of a Member State, including its airspace, or (2) aimed at interfering with, damaging or destroying, including through sabotage or malicious cyber activities as part of hybrid activities, critical infrastructure, including submarine infrastructure; and
• instrumentalisation of migrantsAccording to article 1(4)(b) of Regulation (EU) 2024/1359 of 14 May 2024, “a situation of instrumentalisation could arise where a third country or a hostile non-state actor encourages or facilitates the movement of third-country nationals or stateless persons to the external borders or to a Member State, with the aim of destabilising the Union or a Member State, and where such actions are liable to put at risk essential functions of a Member State, including the maintenance of law and order or the safeguard of its national security”.;
• exploiting an armed conflict, instability or insecurity, including through the illicit exploitation or trade of natural resources and wildlife in a third country;
• instigating or facilitating an armed conflict in a third country.

EU freezing sanctions may also be imposed on those associated with or supporting the persons listed above.

As a reminder, the EU blocking sanctions have the following consequences:

• EU PersonsEU sanctions apply: (i) within the territory of the EU; (ii) on board any aircraft or vessel under the jurisdiction of a Member State; (iii) to any natural person inside or outside the territory of the EU who is a national of a Member State; (iv) to any legal person, entity or body which is incorporated or constituted under the law of a Member State; and (v) to any legal person, entity or body in respect of any business done in whole or in part within the EU (jointly “EU Persons”). are required to block (freeze) funds and economic resources owned, held or controlled by sanctioned persons; and
• EU Persons are prohibited from directly or indirectly making available funds and economic resources to or for the benefit of sanctioned persons.

EU restrictive measures also apply to legal entities that are directly or indirectly owned (50% or more) or controlled by EU designated persons.

As of the date of this publication, no EU blocking sanctions based on Regulation 2024/2642 have been imposed yet.

Other provisions of Regulation 2024/2642

In addition to the new grounds for the imposition of blocking sanctions, Regulation 2024/2642 includes provisions typical of EU sanctions regulations, largely identical to those contained, for example, in Council Regulation (EU) No 269/2014 of 17 March 2014 (“Regulation 269/2014”).

For instance, it contains the standard provisions to the effect that (1) the competent authorities may authorise the release of certain frozen assets, (2) it shall be prohibited to participate in activities the object or effect of which is to circumvent the restrictive measures, (3) designated persons shall be required to report information on their assets within the EU, and (4) no claims in connection with any contract or transaction the performance of which has been affected, directly or indirectly, by the measures imposed under Regulation 2024/2642 shall be satisfied (the so called “no claims clause”), etc.

However, due to the peculiarity of the grounds for listing under Regulation 2024/2642, the grounds for derogation from the asset freezing requirement and for authorising the release of frozen assets are broader than those of Regulation 269/2014.

Regulation 2024/2642, in particular, allows the competent authorities of the EU Member States to authorise the release of assets where they are necessary:

• for the functioning of diplomatic and consular representations of the EU and of the EU Member States or partner countries in Russia, including delegations, embassies and missions, or international organisations in Russia enjoying immunities in accordance with international law; or
• for the provision of electronic communication services by EU telecommunication operators, and for the provision of associated facilities and services necessary for the operation, maintenance and security of such electronic communication servicesHowever, under Regulation 269/2014, this ground is a derogation from the prohibition on making funds and economic resources available (i. e., making them available on this ground is a priori permissible) and does not fall within the discretion of the competent authorities of EU Member States..

In addition, Regulation 2024/2642 provides for new derogations to the prohibition on making funds and economic resources available. In particular, the prohibition shall not apply if the relevant assets are necessary for the purposes of the timely delivery of humanitarian assistance by the United Nations (“UN”), including its programmes, funds and other entities and bodies; international organisations; humanitarian organisations having observer status with the UN General Assembly; bilaterally or multilaterally funded non-governmental organisations participating in UN Humanitarian Response Plans, UN Refugee Response Plans and others.

Consequences of the new provisions

The EU’s legal methods of dealing with “external threats” to its institutions through the imposition of sanctions are not a new practice. For example, back in 2019, Council Regulation (EU) 2019/796 of 17 May 2019 concerning restrictive measures against cyber-attacks threatening the Union or its Member States was adopted.

Therefore, the adoption of Regulation 2024/2642 is not a fundamentally new step in the way EU threats are dealt with. In fact, this document only expands the existing grounds for sanctions. However, it is noteworthy that Regulation 2024/2642 allows sanctions to be imposed not only for actions detrimental to the EU or its Member States, but also to third countries. We believe that this suggests further consolidation of the actions of the EU, the US, the UK and other foreign states within the common sanctions framework.