International Trade

Global

Client Alert
7 March 2014
www.bakermckenzie.com For further information please contact London Trade Group Ross Denton Partner Tel: +44 (0) 20 7919 1978 Sunny Mann Partner +44 (0) 20 7919 1397

EU, US and other countries impose sanctions in response to events in Ukraine

In light of the recent political crisis in Ukraine and the presence of Russian troops in the Ukrainian region of Crimea, a number of jurisdictions -- the EU, United States, Switzerland, Austria, Lichtenstein, and Canada -- have issued sanctions targeting key senior figures in the former Ukrainian Government and others involved in the unrest. The UK Department for Business, Innovation and Skills ("BIS") has also taken steps to restrict the supply of equipment that may be used for internal repression. A brief overview of these measures follows. As the situation on the ground develops, it is possible that additional sanctions could be imposed.

ross.denton@bakermckenzie.com

Sanctions Against Individuals and Entities

On 5 March 2014, the EU Foreign Affairs Council decided to adopt sanctions targeted at freezing and recovering misappropriated Ukrainian state funds. On this basis, Council Regulation (EU) No 208/2014 designated 18 individuals whose assets within the EU will be frozen and with whom further dealings are restricted. The designated individuals include the former president, Yanukovych, his family and people connected to him. These type of measures are generally aimed at punishing the political class that contributed to the violence in the Ukraine (akin to EU sanctions issued in 2011 against Egypt, Libya and Tunisia). It is possible that the EU may designate additional individuals and entities in due course. A consolidated list of all EU and UK designated persons is published by HM Treasury (but note that designations are subject to changes in light of new political developments). Yesterday, Canada enacted regulations prohibiting persons in Canada and Canadians outside Canada from dealing, directly or indirectly, in any property, wherever situated, of any of the 18 individuals named under the regulations (which are the same individuals as those sanctioned by the EU). The new regulations prohibit entering into or facilitating, directly or indirectly, any financial transaction related to such dealings, or providing financial services or other related services in respect of such property. Last month, Switzerland, Austria and Lichtenstein issued similar freezing orders. In February, the United States imposed a visa ban on 20 Ukrainian officials deemed to be complicit in the violence that month in Kiev. Yesterday, President Obama expanded the visa ban and also signed a Presidential Executive Order authorising the US Treasury Department to designate individuals and entities who, among other things, have been involved in efforts to undermine the security or territorial integrity of Ukraine or have asserted control over any part of Ukraine (including Crimea) without authorisation of the Government of Ukraine. Although this Executive Order lays the foundation for potential future sanctions, no specific individuals or entities have been designated yet under this new authority.

sunny.mann@bakermckenzie.com

Jennifer Revis Of Counsel Tel: +44 (0) 20 7919 1381 Tristan Grimmer Senior Associate +44 (0) 20 7919 1476 James Robinson Senior Associate +44 (0) 20 7919 1631

jennifer.revis@bakermckenzie.com

tristan.grimmer@bakermckenzie.com

james.robinson@bakermckenzie.com

Ben Smith Associate +44 (0) 20 7919 1088 ben.smith@bakermckenzie.com Mayuko Roald Associate +44 (0) 20 7919 1080

mayuko.roald@bakermckenzie.com

Sven Bates Associate +44 (0) 20 7919 1173 sven.bates@bakermckenzie.com

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Laura Philippou Associate +44 (0) 20 919 1042

EU/UK Suspension of Licenses

On 20 February 2014, the EU Council announced that EU Member States agreed to suspend export licences on equipment which might be used for internal repression and reassess export licences in connection with military goods and technology. Accordingly, on 24 February, BIS issued a notice that it was reviewing extant licences to determine which are for equipment which might be used for internal repression and would therefore be subject to suspension. BIS is also assessing which exports would provoke or prolong armed conflicts or aggravate existing tensions. Exporters will be notified by BIS directly if a licence is to be suspended.

laura.philippou@bakermckenzie.com

Alexandra Demper Associate +44 (0) 20 919 1075 alexandra.demper @bakermckenzie.com Claire Rivington Associate +44 (0) 20 919 1785

claire.rivington@bakermckenzie.com

Amsterdam Trade Group Jasper Helder Partner Tel: +31 20 551 7579

Potential for Additional Sanctions

Press reports speculate that the US and EU may issue further sanctions if the situation in Ukraine does not improve. Indeed, the US White House press secretary was quoted as stating: Depending on how the situation develops, the United States is prepared to consider additional steps and sanctions as necessary. Although the earliest sanctions were a reaction to the political violence in Kiev and generally targeted Ukrainian persons, the focus is now turning to Russia's military intervention in Crimea. The EU formally stated yesterday that it will suspend bilateral talks with Russia on visa matters and the participation of the EU institutions in the G8 Summit. The EU has stated that if Russia does not negotiate with Ukraine, it may adopt other measures at a later date. In light of the constantly changing facts on the ground, it is difficult to speculate the form additional sanctions would take. We are closely monitoring this situation.

jasper.helder@bakermckenzie.com

Chiara Klaui Senior Associate +31 20 551 7812 chiara.klaui@bakermckenzie.com Barcelona Trade Group Valeria Enrich Partner +34 93 20 608 44

valeria.enrich@bakermckenzie.com

Frankfurt Trade Group Ulrich Ellinghaus Partner +49 (0) 69 29 908 251

Recommended Actions
Given the current uncertainty regarding events in Ukraine, companies should closely monitor further developments in order to ensure compliance with the current measures. Companies should exercise diligence when conducting transactions involving Ukraine and Russia, including by taking the following steps: screen (and regularly re-screen) counterparties, end-users, banks and other third parties potentially benefiting from the transaction to verify that they are not a designated person (and are not owned or controlled by a designated person); assess whether any products or technology being sold or supplied might be used for internal repression. In this context, we note that the EU or national authorities could potentially take a wide interpretation of the type of equipment which might be used for internal repression. Indeed, this has happened in the past in respect of sanctions against Libya (e.g., where protective equipment and simulators for training in the use of firearms, were in-scope). exercise caution in the negotiation of contracts with parties that could be the target of any US and/or EU sanctions against Russia (including the State-owned financial and energy sectors). This would include supplementary contractual language addressing sanctions risks and export control compliance, for example.

ulrich.ellinghaus@bakermckenzie.com

Julia Pfeil Associate +49 (0) 69 29 908 513 julia.pfeil@bakermckenzie.com Stockholm Trade Group Mattias Hedwall Partner +468 566 177 33

mattias.hedwall@bakermckenzie.com

Olof Konig Associate +46 8 566 177 55 olof.konig@bakermckenzie.com Zurich Trade Group Philippe Reich Partner +41 44 384 1382

philippe.reich@bakermckenzie.com

EU, US and other countries impose sanctions in response to events in Ukraine 7 March 2014

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Washington, DC Outbound Trade Group Edward E. Dyson Partner +1 202 452 7004

The foregoing is intended only to provide a general overview of the new sanctions imposed against Ukraine. Please do not hesitate to contact us if you have any questions about how these changes might affect your company or if you require advice on any specific transactions or plans.

edward.dyson@bakermckenzie.com

Nicholas F. Coward Partner +1 202 452 7021

nicholas.coward@bakermckenzie.com

Janet K. Kim Partner +1 202 835 1653 janet.k.kim@bakermckenzie.com Sylwia A. Lis Partner +1 202 835 6147 sylwia.lis@bakermckenzie.com Jonathan C. Poling Partner + 1 202 835 6170

jonathan.poling@bakermckenzie.com

Steven F. Hill Of Counsel +1 202 835 6121 steven.hill@bakermckenzie.com Kerry B. Contini Associate +1 202 835 6100 kerry.contini@bakermckenzie.com Lise S. Test Associate +1 202 835 6131 lise.test@bakermckenzie.com Alexandre Lamy Associate +1 202 835 1862

alexandre.lamy@bakermckenzie.com

Maria van Wagenberg Associate +1 202 835 6118

maria.vanwagenberg @bakermckenzie.com

Joseph A. Schoorl Associate +1 202 835 1647

joseph.schoorl@bakermckenzie.com

Hannah Zarkar Associate +1 202 835 6155 hannah.zarkar@bakermckenzie.com

EU, US and other countries impose sanctions in response to events in Ukraine 7 March 2014

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Chicago Trade Group Bart M. McMillan

Partner +1 312 861 2808 bart.mcmillan@bakermckenzie.com

Paul E. Amberg

Associate +1 312 861 8675 paul.amberg@bakermckenzie.com

Eunkyung Shin

Associate +1 312 861 8211 eunkyung.shin@bakermckenzie.com

San Francisco / Palo Alto Trade Group John F. McKenzie

Partner +1 415 576 3033 john.mckenzie@bakermckenzie.com

Alison Stafford Powell

Of Counsel +650 856 5531 alison.staffordpowell @bakermckenzie.com

Kathryn Anderson

Associate +1 415 984 3825 kathryn.anderson@bakermckenzie.com

Toronto Trade Group Paul Burns

Partner +1 416 865 6912 paul.burns@bakermckenzie.com

Brian Cacic

Associate +1 416 865 2327 brian.cacic@bakermckenzie.com

Lisa Douglas

Associate +1 416 865 6972 lisa.douglas@bakermckenzie.com

Sydney Trade Group Penny Ward

Partner +61 2 8922 5167 pennyj.ward@bakermckenzie.com

Anne Petterd

Special Counsel +61 2 8922 5221 anne.petterd@bakermckenzie.com

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EU, US and other countries impose sanctions in response to events in Ukraine 7 March 2014