These new EU sanctions were implemented through four Council Decisions and one Council Implementing Decision, as well as two Council Regulations and four Council Implementing Regulations. This Insight discusses these developments. 

Takeaways: 

• The measures adopted on 16 December 2024 further illustrate the growing geographic reach of EU sanctions (with the first asset freeze measures targeting entities in China in relation to Russia) and the EU’s continued commitment to cracking down on circumvention, including of the oil price cap.   
• The Council, through a recital, communicated a noteworthy message to the EU operators still operating in Russia, recommending them to consider winding down businesses in Russia and/or not to start new businesses there, extending the legal basis to wind down operations until December 2025. 
• The Council also sought to protect EU operators from actions taken by Russia through blocking provisions in litigation and arbitration arising out of measures in Russia and new rules on liability for assets of central securities depositories. 
• As noted in recent European Commission FAQs on “best efforts” and “due diligence”, EU operators should continue to assess and monitor their exposure to EU sanctions risk in their worldwide operators and take appropriate risk-based compliance measures.   

1. Individual Restrictive Measures 

New Designations

• Russia’s war efforts – The Council added 54 individuals and 30 entities to its restricted parties list through Council Regulation 2024/3183. The newly-listed persons and entities are subject to asset freezes, as well as travel bans for individuals.
  • Council Regulation 2024/3183 lists a total of seven Chinese individuals and entities, including those based in Hong Kong. The EU also designated North Korean and Dutch nationals. Some of the listed individuals and entities are involved in procurement and manufacturing networks for the Russian military-industrial complex, while others are associated with supplying drone components and microelectronic components that support Russia’s war efforts.

• Hybrid threats – In addition, the Council made full use of the EU hybrid toolbox to prevent, deter and respond to Russia’s hybrid activities by designating, for the first time, three entities (registered in Russia and Togo) and 16 individuals (including Russian, Georgian, Ivorian, Moldovan) under the latest sanctions program adopted on 8 October 2024 against Russia hybrid threats through Regulation (EU) 2024/3188, amending Regulation (EU) 2024/2642.  

• Belarus – In view of the gravity of the situation in Belarus, 26 individuals (all Belarusian and/or Russian) and two entities (both registered in Belarus) were  added to the EU restricted parties list under Council Regulation 765/2006, through the adoption of Council Regulation 2024/3177. 

• North Korea – The Council also designated two senior officials from the North Korean regime, for their support to Russia's war of aggression through the deployment of North Korean troops to Russia, under Council Implementing Regulation (EU) 2024/3152.

We note that, on 16 December 2024, the Council also designated individuals and entities under the Sudan and Haiti sanctions programs.  

New Derogation

• Amendment of a former derogation – Under the new Article 6b (5f), the former derogation allowing the National Competent Authorities (“NCAs”) to authorize the release of certain frozen funds or economic resources or the making available of certain funds or economic resources to Arkady Romanovich Rotenberg, Boris Romanovich Rotenberg and Gennady Nikolayevich Timchenko, has been extended until 30 June 2025 (instead of 30 June 2024). 
  • We also note that Petr Olegovich Aven, Mikhail Maratovich Fridman, German Borisovich Khan, Alexey Viktorovich Kuzmichev and Igor Albertovich Kesaev are excluded from this derogation. 

2. Divestment and Litigation 

Extended derogation for divestment 

• Divestment from dealings with 5aa targeted entities – NCAs have now until 31 December 2025 (instead of 31 December 2024) to authorise:
  • Divestment from a joint venture (“JV”) with an entity listed in Annex XIX; and  
  • 5aa targeted entities to divest from an entity established in the EU. 

• Satisfaction of a claim (Article 11 “no claims clause”) – NCAs have now until 31 December 2025 (instead of 31 December 2024) to authorise the satisfaction of a claim made by a Russian person, if this is strictly necessary for the divestment of an EU operator from Russia.   

• Trade of controlled items – Provided it is strictly necessary for the divestment from Russia, NCAs have now until 31 December 2025 (instead of 31 December 2024) to authorise:
  • the sale, supply or transfer of items listed in Annexes II, VII, X, XI, XVI, XVIII, XX and XXIII to Regulation 833/2014 and in Annex I to Regulation (EU) 2021/821; 
  • the sale, supply or transfer of items listed in Annexe II to Regulation 833/2014 provided it is strictly necessary for the divestment from a JV, operating a gas pipeline infrastructure between Russia and third countries, involving a Russian entity;
  • the import of items listed in Annexes XVII and XXI to Regulation 833/2014; and 
  • the provision of services listed under Article 5n of Regulation 833/2014.

While the wind-down periods were extended for one more year, the Council, in the Recital 9, noted: 

“Operators should be aware that Russia is a country where the rule of law is not applied anymore, and that the Russian Federation has adopted several pieces of legislation targeting assets of companies from ‘unfriendly countries’, including Member States. That could lead to Union assets being stranded in Russia without the possibility for orderly withdrawal. Because of the risks of maintaining business activities in Russia, Union operators should consider winding down businesses in Russia and/or not to start new businesses there. The exceptional extension of the divestment derogations is necessary to enable Union operators to exit as swiftly as possible from the Russian market. The extended derogations are granted on a case-by-case basis by Member States and focused on allowing an orderly divestment process, which would not be possible without the extension of these deadlines.”

Litigation

• Protection against Russian anti-suit injunctions and fines – The Council now prohibits the recognition or enforcement within the EU of injunctions, orders, judgments or other court decisions pursuant to, or in relation to, Article 248 of the Arbitration Procedure Code of the Russian Federation or equivalent Russian legislation.
  • While these Russian judicial decisions aim to assert exclusive jurisdiction of Russian courts for affected parties in legal proceedings, the newly-revised provision lays down a prohibition to recognise or enforce them in order to protect EU entities from being negatively affected by such judicial decisions, if enforced before Member States courts. 

3. Sectoral Sanctions

Financial Sector

• New derogation toward the NSD – In the context of increasing litigation and retaliatory measures in Russia that enable certain designated entities and their underlying clients to seize assets of central securities depositories (“CSDs”) in the Union that are held in Russia, without the prior consent of those depositories, the Council introduced, in Council Regulation 2024/3183, a new derogation allowing the release of cash balances that are held by CSDs in the Union and attributable to the National Settlement Depository (“NSD”). 
  • Where a CSD maintains an account with the NSD and that the latter has debited an amount from its account pursuant to a measure (law, decree, regulation, etc.) attributable to the Russian Federation, without the prior consent of the CSD, the NCAs may grant an authorisation for the release of cash balance not exceeding the debited amount by the CSD, in compliance with Article 2.2 of Regulation 269/2014.       

• “No liability” clause for the CSDs – The Council introduced a new exemption of liability for CSDs, its directors and employees, acting in good faith, unless it was the result of negligence.  

Export-Related Restrictions

• Extension of the list of entities subject to enhanced restrictions in relation to dual-use and advanced technology items – 32 new entities have been added to the list of individuals and entities supporting Russia’s military-industrial complex. These entities are subject to tighter export restrictions regarding dual-use items (Annex I of Regulation 2021/821), as well as advanced technology items (Annex VII of Regulation 833/2014). Some of these entities are located in third countries (including China, Hong Kong, India, Iran, Serbia, and the United Arab Emirates), and have been involved in the circumvention of trade restrictions.

Transport Sector 

• New designation of vessels contributing to Russia’s ability to wage war (Annex XLII of Regulation 833/2014) – 52 vessels have been added to the list of those subject to a port access ban and ban on provision of a broad range of services related to maritime transport. These listing are imposed with the aim of curbing circumvention through the “shadow fleet”. 

Energy Sector

• Extension of the Croatian and Czech derogations
  • The Croatian NCA may authorise until 31 December 2025 (instead of 31 December 2024), the purchase, import or transfer of Russian vacuum gas oil falling under CN code 2710 19 71. 
  • The import, transfer into and the sale in Czechia of petroleum products obtained from Russian crude oil imported via pipeline into another Member State remains possible until 5 June 2025 (instead of 5 December 2024) under certain conditions.

4. Conclusion 

At the close of the Hungarian presidency of the Council, these measures illustrate the EU’s stated intention to keep the sanctions pressure on Russia and those supporting its war effort against Ukraine, even if such support occurs in third countries. While the Council has continuously expanded its measures, it has also presented provisions catering to businesses that are facing retaliatory measures by Russian institutions. As noted in recent European Commission FAQs on “best efforts” and “due diligence”, EU operators should continue to assess and monitor their exposure to EU sanctions risk in their worldwide operations and take appropriate risk-based compliance measures. Beginning on 1 January 2025, Poland will assume rotating presidency of the Council for six months. 

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