EU Sanctions Update. Chiara Klaui Senior Associate International Trade May 21, 2015

Transcription

1 EU Sanctions Update Chiara Klaui Senior Associate International Trade May 21, 2015 Baker & McKenzie LLP is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organisations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm.

2 Agenda Jurisdictional Issues Designated Parties Russia Sanctions Update Ukraine Sanctions Update Iran Sanctions Update Compliance Tips

3 Jurisdictional Issues

4 Who Must Comply with EU Sanctions? EU sanctions measures typically apply to: Any entity incorporated in an EU Member State and its EU and non- EU branches Any entity incorporated outside the EU, but only in respect of any business conducted in the EU Any directors, officers, employees, agents, etc. located in the EU (irrespective of nationality) Any directors, officers, employees, agents, etc. that are nationals of an EU Member State (even if located outside the EU) 4

5 Designated Parties

6 DP Controls EU list-based sanctions programs: EU Designated Parties ( DPs ) EU sanctions on DPs: Prohibition on making available funds or economic resources, directly or indirectly, to or for the benefit of DPs Freeze on funds and economic resources belonging to, owned, held or controlled by DPs Administered and enforced by each EU Member State Prohibition under EU sanctions in relation to acts of circumvention 6

7 Dealings with Affiliates of DPs DP Shareholder Non-DP Shareholder 60% 40% Customer Company EU: Assess whether counterparty is majority owned or controlled by one or more DPs; test is complex and subject to EU Member State interpretation Screening of counterparty s name only would not address risk of dealing with non-designated entity that is owned/controlled by DP 7

8 Russia Sanctions Update

9 Sanctions against Russia / Ukraine Includes: EU, U.S., Japan, Canada, New Zealand, Australia, Iceland, Moldova, Georgia, Norway, Switzerland, Liechtenstein, Albania and Montenegro 9

10 EU Restrictions on Oil Industry in Russia Prior authorisation is required for: Sale, supply, transfer or export listed of equipment and technology used in the oil (and gas) industry to or for use in Russia Providing related technical assistance, brokering services, financing or financial assistance Controlled equipment and technology: Listed in Annex II to the EU Russia Sanctions Focused on drilling equipment and pipelines Authorisation will not be granted if supply relates to projects in Russia regarding: Deep water oil Arctic oil Shale oil Exception: pre-1 Aug. contracts / agreements 10

11 EU Restrictions on Oil Industry in Russia (cont d) Prohibited: Provision of drilling, well testing, logging and completion services, and supply of specialised floating vessels for deep water oil exploration and production, arctic oil exploration or production or shale oil projects in Russia Carve-outs: Pre-12 Sept. contracts (includes framework agreements and ancillary contracts ) Urgent prevention or mitigation of event where likely serious and significant impact on human health and safety or the environment 11

12 EU Dual-Use Controls Against Russia Prohibit: Sale, supply, transfer or export, directly or indirectly, EU Dual-Use List items, to anyone in Russia or for use in Russia, if items are or may be intended, in whole or in part, for military use or for a military end-user (not defined) Military use is presumed if end-user is Russian military Sale, supply, transfer or export, directly or indirectly, EU Dual-Use List items to Annex IV companies (9 defence and mixed defence companies) Provision of related technical assistance, brokering services, financing or financial assistance Permitted: Pre-1 August / 12 September contracts / agreements (depending on prohibition) Provision of assistance necessary to the maintenance and safety of existing capabilities within the EU Aeronautics and space industry and existing civil nuclear capabilities for non military use and for a non military end-user 12

13 EU Arms Embargo Against Russia Prohibits: Sale, supply, transfer or export of arms and other items controlled under EU Member State Military Lists to Russia Provision of technical assistance, brokering services, financing or financial assistance, insurance and reinsurance services related to the above Import, purchase or transport of the same items from Russia Permitted: Pre-1 Aug. contracts / agreements Provision of spare parts and services for maintenance and safety of existing capabilities in the EU 13

14 EU Military End-Use Control Applies to otherwise non-controlled items Where Russia is the purchasing country or country of destination, you must obtain an export licence from/notify the relevant EU Member State authority if you have been informed by relevant authority, or are aware, that the items are or may be intended for a military end-use : Incorporation into military items listed in the EU Member State military list Use of production, test or analytical equipment and components, for the development, production or maintenance of military items listed in such lists Use of any unfinished products in a plant for the production of military list items in such lists 14

15 EU Restrictions on Access to Capital Markets Prohibited to directly or indirectly purchase, sell, provide investment services for or assistance in the issuance of, or otherwise deal with, transferable securities or money-market instruments with a maturity: Exceeding 90 days, issued after 1 Aug Sept., or Exceeding 30 days issued after 12 Sept. by: 1. Listed financial institutions (Sberbank, VTB Bank, Gazprombank, Vnesheconombank (VEB) and Rosselkhozbank (Russian Agricultural Bank) 2. Non-EU persons/ entities/bodies whose proprietary rights are directly or indirectly owned more than 50% by any of (1), or 3. Persons/entities/bodies acting on behalf or at the direction of the above Excluded are other financial services 15

16 EU Restrictions on Access to Capital Markets (cont d) Prohibited to directly or indirectly purchase, sell, provide investment services for or assistance in the issuance of, or otherwise deal with, transferable securities or moneymarket instruments with a maturity exceeding 30 days issued after 12 Sept. by: Listed persons, entities or bodies established in Russia and predominantly engaged and with major activities in the conception, production, sales or export of military equipment or services (OPK Oboronprom, United Aircraft Corporation and Uralvagonzavod); Listed persons, entities or bodies established in Russia, which are publicly controlled or with over 50% ownership, have estimated total assets of over 1 trillion Russian Roubles and whose estimated revenues originate for at least 50% from the sale or transportation of crude oil or petroleum products (Rosneft, Transneft and Gazprom Neft); Non-EU persons, entities or bodies whose proprietary rights are directly or indirectly owned more than 50% by any of (1) or (2); or Persons, entities or bodies acting on behalf or at the direction of any of (1), (2) or (3) 16

17 EU Restrictions on Access to Other Financing Prohibited to directly or indirectly make or be part of any arrangement to make new loans or credit with a maturity exceeding 30 days to any legal person, entity or body subject to the capital market access restrictions described above, after 12 Sept. Permitted: Loans or credit that have a specific and documented objective to provide financing for non-prohibited imports or exports of goods and non-financial services between the EU and any third State Loans that have a specific and documented objective to provide emergency funding to meet solvency and liquidity criteria for legal persons established in the EU, whose proprietary rights are more than 50% owned by any Annex III entity (Sberbank, VTB Bank, Gazprombank, Vnesheconombank (VEB) or Rosselkhozbank (Russian Agricultural Bank)) 17

18 Ukraine Sanctions Update

19 EU Restrictions: Crimea and Sevastopol Product Controls: Prohibition on import into the EU of goods originating in Crimea/Sevastopol (unless Ukrainian certificate of origin) Prohibition on provision of related financing or financial assistance or (re)insurance Prohibition on sale, supply, transfer or export to or for use in Crimea/ Sevastopol of items suited for use in following sectors: Transport Telecommunications Energy Prospection, exploration and production of oil, gas and mineral resources Main exemption: no reasonable grounds to determine that the items or services are to be used in Crimea or Sevastopol Prohibition on provision of related financing, financial assistance, technical assistance or brokering services 19

20 EU Restrictions: Crimea and Sevastopol Additional prohibitions in respect of targeted sectors in Crimea and Sevastopol: Acquisition of new or extending of existing participation in ownership of real estate located in Crimea or Sevastopol Acquisition of new or extending of existing participation in ownership or control of an entity in Crimea or Sevastopol Granting or being part of arrangement to grant any loan or credit or otherwise provide financing to an entity in Crimea or Sevastopol Creating any JV in Crimea or Sevastopol or with an entity in Crimea or Sevastopol Providing investment services directly related to same activities Prohibition to provide technical assistance, or brokering, construction or engineering services directly relating to infrastructure in Crimea or Sevastopol in transport, telecommunications, energy, and prospection, exploration and production of oil, gas and mineral resources sector Ban on services directly relating to tourism activities in Crimea/Sevastopol Limited exemptions do exist 20

21 Iran Sanctions Update

22 Expected EU Developments Key parameters of Joint Comprehensive Plan of Action (JCPOA) agreed upon Final text of JCPOA to be finalized by June 30 If agreement is reached, EU will terminate all nuclear-related sanctions Beware: not all current EU sanctions against Iran are nuclear-related (e.g., prohibition to supply internal repression equipment; certain inspection, interception, monitoring and jamming equipment; etc.) Question remains whether removal of EU nuclear-related sanctions will lead to a large increase of EU business with Iran given that main reason for the decline of such business often is due to the lack of payment possibilities by Iranian parties, and not due to EU sanctions prohibiting same business 22

23 Compliance Tips

24 How can you comply? Due diligence / screening on counterparties Clearly documented standardized process for screening against sanctions lists At least screen against information in your possession and in public domain Risk-based assessment of counterparties, shareholders and other third parties to screen Determine which future exports/reexports may require licenses 24

25 How can you comply? Contractual protections Obtain certifications/representations/warranties from counterparties Require screening by distributors and agents Review option to terminate or suspend contracts Stay up-to-date on sanctions developments 25

26 Any Questions?

27 EU Sanctions Update Chiara Klaui Senior Associate International Trade May 21, 2015 Baker & McKenzie LLP is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organisations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm.