Current EU sanctions issues after the 13th sanctions package

published on 3 June 2024 | reading time approx. 4 minutes

As the second anniversary of Russia’s invasion of Ukraine has come, the European Commission on 21 of February announced that EU has agreed on the 13^th sanctions package against Russia.

The following measures to be adopted:

2000 new entities and individuals to be added to a sanctions list
More Russian companies to be banned from purchasing dual-use goods from EU companies (Annex IV of Council Regulation (EU) No 833/2014)
New restrictions on drones supply to Russia
No new measures on certain economic sectors to be imposed
No new import bans which most likely are expected to come up later with the 14^th sanctions package

Following the implementation of the 12^th sanctions package, which was adopted less than two months ago, companies should currently keep an eye on the following sanctions issues:

Software exports bans

As per adopted Council Regulation (EU) 2023/2878 of 18 December 2023 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine, the existing prohibition on the provision of services which is stated in Article 5n of Council Regulation (EU) No 833/2014 extended in a way to also include the prohibition to sell, supply, transfer, export, or provide, directly or indirectly, software for the management of enterprises and software for industrial design and manufacture as listed in Annex XXXIX of Council Regulation (EU) No 833/2014 to the Government of Russia or legal persons, entities or bodies established in Russia.

The new Annex XXXIX of Council Regulation (EU) No 833/2014 indicates exact software which falls under the restrictions:

1. Software for the management of enterprises, i.e. systems that digitally represent and steer all processes happening in an enterprise, including:

Enterprise resource planning (ERP)
Customer relationship management (CRM)
Business intelligence (BI)
Supply chain management (SCM)
Enterprise data warehouse (EDW)
Computerized maintenance management system (CMMS)
Project management software
Product lifecycle management (PLM)
Typical components of the above-mentioned suites, including software for accounting, fleet management, logistics and human resources

2. Design and Manufacturing Software used in the areas of architecture, engineering, construction, manufacturing, media, education and entertainment, including:

Building information modelling (BIM)
Computer aided design (CAD)
Computer-aided manufacturing (CAM)
Engineer to order (ETO)
Typical components of above-mentioned suites

No Russia contractual clause

Council Decision (CFSP) 2023/2874 requires that exporters contractually prohibit re-exportation to Russia and re-exportation for use in Russia of sensitive goods and technology as listed in Annexes XI, XX and XXXV to Regulation (EU) No 833/2014, common high priority items, or firearms and ammunition as listed in Annex I to Regulation (EU) No 258/2012.

The following legal conditions must be met according to the Article 12g of Council Regulation (EU) No 833/2014:

When selling, supplying, transferring or exporting to a third country, with the exception of partner countries listed in Annex VIII to this Regulation, goods or technology as listed in Annexes XI, XX and XXXV to this Regulation, common high priority items as listed in Annex XL to this Regulation, or firearms and ammunition as listed in Annex I to Regulation (EU) No 258/2012, exporters shall, as of 20 March 2024, contractually prohibit re-exportation to Russia and re-exportation for use in Russia
The above requirement shall not apply to the execution of contracts concluded before 19 December 2023 until 20 December 2024 or until their expiry date, whichever is earlier
The exporters shall ensure that the agreement with the third-country counterpart contains adequate remedies in the event of a breach of a contractual obligation (No Russia clause)
If the third-country counterpart breaches any of the contractual obligations (No Russia clause), exporters shall inform the competent authority of the Member State where they are resident or established as soon as they become aware of the breach.

The following goods and technologies fall under the No-Russia contractual clause:

Aircraft, spacecraft, and parts thereof as listed in Annex XI of Council Regulation (EU) No 833/2014
Jet fuel and fuel additives as listed in Annex XX of Council Regulation (EU) No 833/2014
Firearms and other arms as listed in Annex XXXV of Council Regulation (EU) No 833/2014
Common high priority items, e.g., 8542.31 Electronic integrated circuits, as listed in the new Annex XL of Council Regulation (EU) No 833/2014
Firearms, their parts and essential components and ammunition as listed in Annex I to Council Regulation (EU) No 258/2012.

The contractual prohibition of selling, supplying, transferring or exporting to a third country is not applicable for partner countries listed in Annex VIII of Council Regulation (EU) No 833/2014: USA, Japan, UK, South Korea, Australia, Canada, New Zealand, Norway, Switzerland.

Updated FAQ

On February, European Commission updated the Consolidated FAQs on the implementation of Council Regulation No 833/2014 and Council Regulation No 269/2014 regarding the above mentioned software ban. What could be important is that the prohibition to sale, supply, transfer, export, and the provision of the software listed in Annex XXXIX also covers software updates. Also, assistance or advice relating to software updates and upgrade, as well as bespoke software updates and upgrades were already subject to a prohibition to provide IT Consultancy services to the Russian Government or Russian entities, according to Article 5n(2). In addition, the intention of Article 5n(2b) is to deprive the Government of Russia and legal persons, entities or bodies established in Russia of the latest software development. The prohibition in Article 5n(2b) does not affect the sale, supply, transfer, export, and the provision of the software in question to entities in other third countries, which are not targeted by the provision. However, it is also a crucial part that EU operators must carry out relevant due-diligence to avoid participating in circumvention.

Also, other important FAQs which were updated are related to these topics: