What to consider when supplying to the Eurasian Economic Union due to sanctions against Russia

published on 14 June 2022

Many foreign companies are faced with the question of whether supplies to the Eurasian Economic Union can be indirectly affected by the sanctions imposed on Russia.

This question can be answered either 'yes' or 'no'. On the one hand, it should be stated clearly that no sanctions have been imposed and will not be imposed on Kazakhstan. Despite its membership in the Eurasian Economic Union, Kazakhstan is completely neutral both politically and economically.

Nevertheless, the attempt of some companies to use the common economic space of the Eurasian Union to bypass sanctions and supply goods to Russia is likely to be considerable.

The European Union has already clarified at the beginning of March that such a procedure, namely indirect export via third countries, such as Kazakhstan, is forbidden.

Foreign companies now must ask themselves what specific due diligence requirements the EU imposes on them as exporters. Extended requirements are likely to apply with regard to the person receiving the goods or services. The exporter has the obligation to check whether the goods he has delivered actually remain in Kazakhstan.

It can be assumed that the national customs authorities of the EU states will intensify their controls and impose stricter requirements on the evidence that the goods actually remain in Kazakhstan or in another third country.

This leads to the need for foreign companies to make amendments or even changes to existing contracts with Kazakh customers. This may not only affect the Kazakh customer's obligation to provide information about the end customer's goods but may also result in a further contractual obligation to withdraw from the contract in case of refusal to provide information.

Foreign companies are therefore advised to urgently adjust their existing supply contracts to the provisions of sanctions law. This applies in addition to the existing compliance obligation to verify whether the supply requires a national export license or could violate EU or US sanctions regulations, among others.