Preconsultatie modernisering van het Nederlandse sanctiestelsel

EU adopts 14th package of sanctions against Russia

5 July 2024

There have been important new developments on EU sanctions against Russia and Belarus. In addition, Frank Mattheijer recently published an article on the limitation of liability of EU parties for sanctions violations. This could have a significant impact on Dutch sanctions cases that are already pending and anticipated.

EU's 14th package of sanctions against Russia

Last week, the EU adopted the 14th package of sanctions against Russia. This package imposes a new obligation on EU operators who hold a controlling stake in an entity based outside the EU, such as a Russian subsidiary. EU operators are now required to 'undertake their best efforts' to prevent the said entity from engaging in activities that undermine EU sanctions against Russia. According to the explanatory note, this includes taking all suitable and necessary actions to avoid undermining EU sanctions. However, the specifics of what this entails are not clear. For example, it could include "appropriate policies, controls and procedures to mitigate and manage risk effectively, considering factors such as the third country of establishment, the business sector and the type of activity" of the non-EU entity. At the same time, it is indicated that "only actions that are feasible for the Union operator in view of its nature, its size and the relevant factual circumstances" are required. This particularly includes the extent to which the EU operator has effective control over the entity. At this stage, there is no further guidance providing more specific details about this requirement. Consequently, EU operators with subsidiaries in Russia must largely assess for themselves whether they are taking sufficient measures to demonstrate that they are 'undertaking their best effort' to prevent violations by the subsidiary.

In addition to introducing the aforementioned obligation, the package contains some new measures and amendments to existing ones. These include adjusting the already existing obligation to include a ‘No Russia' clause when exporting sensitive goods to most non-EU countries. The package also extends the deadline for certain exemptions and authorisation grounds. These include authorisation grounds to enter into transactions with Russian entities that are normally prohibited. Also, the temporary exemption permitting the provision of specific services to Russian subsidiaries of EU operators has been extended until 30 September 2024.

EU extends sanctions against Belarus

Shortly after adopting the 14th package of sanctions against Russia, the EU further extended sanctions against Belarus. These sanctions bear some similarities to the existing sanctions against Russia. These include several new export bans and a ban on various forms of business services.

Frank Mattheijer's article 'Limitation of liability for sanctions violations'

In the Netherlands, EU sanctions are enforced exclusively through criminal law. Criminal enforcement was enhanced substantially after Russia invaded Ukraine, as mentioned in an earlier published article. Under Dutch criminal law, the fundamental principle is that a suspect can be held liable even if they were unaware that an act was prohibited. Moreover, a suspect can, in principle, be prosecuted if they thought the act was legal, but only to later discover it was not. However, in specific situations where a defendant relied on advice from an independent specialist, there may be room to invoke 'error of law', potentially allowing the defendant to avoid liability.

In a recent article (in Dutch) in the Journal of Sanctions Law and Business (Tijdschrift voor Sanctierecht & Onderneming), Frank Mattheijer argues that these principles may not necessarily apply to the criminal enforcement of EU sanctions in the Netherlands. This is because most EU sanction regulations include a special no-liability clause that sets a higher threshold for liability than the Dutch standard. This clause means that a defendant may not be held liable if they were unaware and had no reason to suspect that they violated EU sanctions. Frank argues in his article that this provision could be particularly relevant if a company has relied on guidance from entities such as the European Commission or Dutch authorities, but is subsequently prosecuted. In such a scenario, the high threshold for error of law may not have been met, partly because such guidance is not formally binding. However, in this situation, the no-liability clause can likely be invoked, potentially allowing the company to escape liability. Given the large number of impending sanctions cases and the many uncertainties in practice regarding the interpretation of EU sanctions, this clause could play a significant role in practice. Thus, no-liability clauses could also indirectly encourage both European and Dutch authorities to provide more clarity on the many unresolved questions that currently exist in practice regarding the interpretation of EU sanctions.

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