The Review was prepared by the team of NAVICUS.LAW

Below is a review of Russia’s countersanctions in Section 1 and the sanctions imposed on Russia in Section 2.

1. RUSSIA’S SANCTIONS

1.1. Cash settlements and certain types of transactions

1.2. Privileges for Russian resident companies

1.3. Restrictions on the exportation of goods from Russia

1.4. Facilitation of imports of certain categories of goods

1.5. Authorisation of parallel imports in Russia

1.6. Restrictions on calling of foreign vessels at Russian ports

1.7. Sanctions in the sphere of air transportation

1.8. Reliefs in state licensing activities

1.9. Negative trends in judicial practice

1.10. Draft amendments to the Civil Code of Russia

2. SANCTIONS IMPOSED ON RUSSIA

2.1. Prohibition for Russian vessels to enter foreign ports

2.2. EU sanctions in regard to the marine equipment

2.3. Technical maintenance of Russian ships

2.4. Withdrawal of the RMRS from the IACS

2.5. Import and export prohibitions

2.6. Sanctions against the Russian banking sector

2.7. Foreign exchange sanctions

2.8. Sanctions against Russian aviation

1. Russia’s Sanctions

For Russia, the underlying document for the sanctions-related matters is Decree No. 430 of the Government of the Russian Federation dated 05 March 2022. This Decree stipulated the list of the so-called “unfriendly” countries which are subject to special economic measures in the sphere of international trade (see below).

The following countries were included in this list:

Australia Albania Andorra United Kingdom (including Jersey and controlled overseas territories – Anguilla, British Virgin Islands, Gibraltar) EU countries Iceland Canada Lichtenstein Micronesia Monaco New Zealand Norway Republic of Korea San Marino Northern Macedonia Singapore United States Taiwan Ukraine Montenegro Switzerland Japan

1.1. Sanctions in relation to cash settlements and certain types of transactions

Decree No. 295 of the Government of Russia dated 06 March 2022 stipulated the Rules on the issuance by the Government Commission of permits for the following transactions with the legal and natural persons from the “unfriendly” countries: – loans and credits; – transactions aimed at obtaining ownership of immovable property. In Russian law, marine vessels and aircraft are immovable property;

– foreign exchange transactions with foreign persons connected with the “unfriendly” countries (criteria of nationality, economic activity, and profit are used);

– the mentioned transactions with any other foreign entities in respect to property bought after 22 February 2022;

– foreign currency deposits by the Russian residents into their foreign accounts.

Permits can be obtained by an application to the Commission containing all the necessary details of the resident company shall be provided. This mechanism is a long and complex process as the decision of the Commission shall be taken unanimously and the details of the resident company’s business activities shall be provided.

1.2. Privileges for Russian resident companies in their international settlements

Decree No. 95 of the President of Russia dated 5 March 2022 established that Russian resident companies are entitled to discharge their obligations towards creditors from the “unfriendly” countries by transferring the money to the bank account denominated in rubles (RUB bank account) opened by the resident in a Russian bank in the name of the foreign creditor. Only part of the debt which exceeds RUB 10 million per month can be paid in rubles.

If the debt is denominated in foreign currency, the amount exceeding the foreign currency equivalent to RUB 10 million can be paid in rubles. The equivalent is calculated at the exchange rate of the Bank of Russia on the first day of each month.

For March, it is RUB 93.56 for 1 USD and RUB 104.48 for 1 EUR.

For April, it is RUB 83.4 for 1 USD and RUB 92.49 for 1 EUR.

Consequently, Russian companies are entitled to pay off in rubles part of their debts exceeding approx. USD 107,000 or EUR 95,700 (for March) or approx. USD 120,000 or EUR 108,000 (for April). The payment in rubles shall be made at the exchange rate of the Bank of Russia on the day of payment.

For example, a Russian company owes a debt towards a UK company amounting to USD 150,000. The date of payment due is 2 April 2022. Under Decree No. 95, the Russian company is entitled to pay off approx. USD 30,000 (150,000-120,000) in rubles at the exchange rate for 2 April 2022, which is 83.42 rubles for 1 USD. Therefore, the Russian company may partly discharge its obligations towards the foreign creditor by transferring 2,502,600 rubles (30,000 x 83.42) to the RUB bank account instead of paying the debt fully in USD as was initially stipulated in the contract.

1.3. Restrictions on the exportation of goods from Russia

Decree No. 100 of the President of Russia dated 8 March 2022 authorised the Government of Russia to approve a list of goods which cannot be exported from Russia. Decree makes a reservation that citizens of any state are entitled to export any goods for their personal use.

As part of Decree No. 100 implementation, the Government of Russia established an absolute prohibition on the exportation of certain categories of goods including various types of vessels, yachts, floating structures, ships and their components regardless of their origin.

This prohibition does not apply to the following situations: − transit transportation of goods starting and ending outside the Russian territory; − goods originating from Russia as confirmed by the ST-1 Certificate (Certificate for goods supplied to the Member States of the CIS) or a report confirming the Russian origin of industrial products issued by the Ministry of Industry and Trade of Russia;

− goods exported to the Member States of the Eurasian Economic Union (EAEU)¹ for which an authorisation procedure has been established;

− goods exported under a license of the Federal Service for Technical and Export Control, under a license and lists of the Federal Service for Military-Technical Cooperation, under the lists approved by the Ministry of Defense;

− goods (regardless of their origin) imported into the territory of the “Luhansk and Donetsk People’s Republics”, South Ossetia and Abkhazia;

− goods exported to support the activities of military forces in foreign countries; − goods exported from Russia for the purpose of completing the customs processing procedures, if such goods have not been placed under other customs procedures;

− goods originating from the EAEU Member States placed in such states under the customs procedures providing for export from the customs territory of the EAEU;

− vehicles for international transportation;

− goods exported by individuals for personal use;

− goods produced in exclusive economic zones, special economic zone, territories equated to them located in Russia, with the use of foreign goods placed under the customs procedure of a free customs zone;

− goods produced in free warehousing areas located in Russia, with the use of foreign goods placed under the customs procedure of a free warehouse;

− goods exported by Rosatom State Corporation and related companies; − goods exported to support the activities of marine vessels, structures and machines over which Russia has exclusive jurisdiction;

− goods exported as supplies;

− replacement parts and special equipment temporarily exported for the handling, protection of goods, maintenance or operation of international transport facilities;

− goods exported as part of international air transit (in case of a temporary landing at a Russian international airport without unloading prohibited goods or with a single transhipment of such goods);

− re-usable containers placed under the customs procedure of re-exportation to complete the customs procedure of temporary importation or exportation;

− goods previously imported using the ATA carnet;

− equipment placed under the customs procedure of temporary export, including using the ATA carnet, by representatives of Russian media, sports teams, participants of foreign trade activities to organise expositions at exhibitions and fairs abroad.

If certain categories of goods, including marine vessels, are exported to the EAEU countries, a preliminary permit is required in accordance with Decree No. 312 of the Government of Russia dated 09 March 2022. Such permits are issued by the Ministry of Agriculture, the Ministry of Transport, the Ministry of Industry and Trade, the Ministry of Digital Development, and the Ministry of Natural Resources depending on the category of goods. The procedure for obtaining relevant permits for the export of vehicles, their parts and components is established by the Order of the Ministry of Transport of Russia No. 99 dated 29 March 2022.

This authorisation procedure also does not apply to the exclusions listed above, to certain other categories of goods (for instance, radio-navigation equipment), to the export to the Republic of Belarus within the Union State.² For all such cases, the exportation of goods is free.

Decree No. 313 of the Government of Russia dated 9 March 2022 establishes a prohibition on the exportation of certain categories of goods to the “unfriendly” countries: wood materials, waste and scrap of corrosion-resistant steel, alloyed steel and tungsten.

This situation makes it impossible to export certain categories of goods, including vessels and their components, from Russia to foreign countries.

Special attention should be placed on the fact that the return of vessels sailing under bareboat charters should not be qualified as the exportation of goods from Russia since the basis for the departure of a vessel from a Russian port is not her purchase. It is questionable whether the bareboat chartered vessels will be equated in real practice to goods.

There could be difficulties in returning seagoing vessels from the Russian bareboat charter due to restrictions on calling foreign ports for vessels that are somewhat connected with Russia or whose last / next destination is Russia.

1.4. Facilitation of imports of certain categories of goods

Under Decision No. 37 of the Economic Commission of the EAEU dated 17 March 2022, zero customs rates are established for the importation of certain categories of goods in the EAEU, including goods used in the transport industry, namely:

1) Internal combustion engines with spark ignition, rotary or reciprocating piston movement;

2) Turbojet and turboprop engines, other gas turbines;

3) Engines and other propulsion systems; 4) Radars and other radar equipment; 5) Compasses for determining direction; navigational instruments and other instruments.

The zero rates will be valid until 1 October 2022.

1.5. Authorisation of parallel imports in Russia

Under Decree of the Government of Russia No. 506 dated 29 March 2022, the Ministry of Industry and Trade shall adopt a list of goods which can be imported into Russia by retailers without the trademark or patent owner’s permission if these goods have been put on the foreign market by this owner or with his consent. The according provisions of the Civil Code of Russia restricting parallel imports will not apply to the goods from the list. The list of such products has not yet been adopted.

1.6. Restrictions on calling of foreign vessels at Russian ports

Federal Law No. 56-FZ dated 14 March 2022 amended the Federal Law dated 31 July 1998 “On Inland Sea Waters, Territorial Sea, and Contiguous Zone of the Russian Federation” to allow the Government of Russia to impose restrictions on the entry of foreign vessels into Russian marine and inland water ports on a reciprocal basis. In this regard, the broadest possible understanding of a foreign vessel is used, including the vessels exploited by a person “in any way” connected with a foreign state which imposed any restrictions on the Russia-related vessels.

Decree No. 418 of the Government of Russia dated 21 March 2022 stipulated the Rules for preparing and adopting decisions on the relevant restrictions. Under the Decree, the decision to impose or cancel the restrictions shall be made by the Order of the Government of Russia. The basis for the preparation of a draft order is that the Ministry of Transport of Russia has the information on the imposition or cancellation of the restrictions on calling of the vessels connected with Russia at foreign ports. Moreover, the timeframe for adopting the reciprocal restrictions is quite short (up to 5 days for the Ministry of Transport to prepare a draft order and up to 4 hours to negotiate it with other state bodies).

No order has yet been adopted to restrict the calling of foreign vessels at Russian ports.

1.7. Sanctions in the sphere of air transportation

Under Information Statement of the Federal Air Transport Agency dated 28 February 2022, Russia closed the airspace for aircraft of the UK and its controlled territories, EU countries, Switzerland, Iceland, Norway, and Canada. Flights from these countries can be carried out under a special permit issued by the Agency or the Ministry of Foreign Affairs of Russia.

What is more, the Federal Law No. 56-FZ dated 14 March 2022 allowed Russian companies to re-register aircraft leased from foreign companies in the Russian Register.

It is connected to the fact that foreign companies are seeking to recover aircraft leased by Russian companies amid the closure of airspace for aircraft controlled by Russian companies.

The impossibility to export such aircraft from Russia is connected to Decree No. 311 of the Government of Russia (see clause 2.3 above), which prohibits the exportation of aircraft as goods. Additionally, aircraft cannot leave Russia due to the closure of airspace.

Consequently, an amendment was adopted to allow the re-registration of such aircraft in the Russian Register to ensure that they can be used in Russian aviation.

In our view, the situation is different as regards the seagoing vessels. They can leave Russian ports and enter (through neutral waters) a foreign port where allowed. In other words, thanks to the existence of neutral waters, seagoing vessels still can sail abroad when the ports are closed.

1.8. Reliefs in state licensing activities

Decree No. 353 of the Government of Russia dated 12 March 2022 “On Peculiarities of Licensing Activities in the Russian Federation in 2022” established a special regime for licensing activities which favours certain types of business.

This Decree empowers Russian authorities to decide on: − the reduction of time for issuing a license (permit); − the reduction of the list of documents required to obtain a license; − the reduction of mandatory license requirements; − the right of the applicant to declare the conformity of the activity with mandatory requirements;

− the cancellation of on-site and off-site inspections; − the possibility of carrying out the assessments required for the various procedures related to obtaining, confirming or renewing a license after such a license has been granted;

− the possibility of carrying out the assessments required for the various procedures related to obtaining, confirming or renewing a license in a remote format;

− the prolongation of the necessary inspections by up to 12 months; − the right to carry out activities without the license necessary;

− the right to submit and accept license applications online; − the recognition of foreign licenses in Russia; − the reduction of the grounds for suspension and termination of license; − the abolition of the obligation to pay state fees.

These formal reliefs apply, inter alia, to licenses for vessels radio facilities, vessel classification and surveys, issuance of identity cards to seafarers, and licenses for cabotage and towing and other merchant shipping activities of the vessels sailing under the flag of a foreign state.

As for the maritime industry, the Ministry of Transport and the Federal Agency for Maritime and River Transport have not yet adopted the relevant documents. Nevertheless, this situation makes it possible to use the vessels without the necessary inspections or after the simplified inspections.

It reduces the risks of the abandonment by the vessels of their activities and also promotes shipowners to proceed with shipping. However, such a decision may adversely affect maritime safety and create additional risks for shippers and passengers. Moreover, additional restrictions may be imposed on the operation of foreign-flagged vessels in Russia.

1.9. Negative trends in judicial practice on the unconditional refusal to protect rights of legal entities associated with the “unfriendly” countries

There is an emerging trend in the Russian courts that refuse to protect the rights of legal entities from “unfriendly” countries with reference to the “abuse of right”.

By the Judgement of the Commercial Court of Kirov Oblast No. A28-11930/2021 dated 03 March 2022, the claim of the foreign entity was dismissed on the ground that “taking into account the imposition of restrictive measures [that is, sanctions] … the court deems the claimant’s actions [filing the claim] as abuse of right”. It is possible that this judgement will be reversed by the appellate court. However, the emergence of such cases indicates the extremely unfavourable prospects for the development of the Russian judicial practice for foreign legal and natural persons.

It should be emphasised that the foreign claimant’s right arose, and the claim was filed before the crisis and sanctions imposed on Russia, that is, the abuse of right was applied with the “retroactive effect”.

A similar trend can be seen in the Resolution of the Commercial Court of the Moscow District to suspend enforcement of the judgement in case No. A40-149699/2021. In this Resolution, the court pointed out that since the Siemens Group, which controls the claimant (the Russian legal entity Siemens Energy LLC), supported the sanctions imposed on Russia, it would be “difficult” for the Russian legal entity to recover the sums paid in case of the “restitution upon reversal of judgement”. This approach was also taken against the Russian DHL Group subsidiary in the Resolution of the Commercial Court of the Moscow District in case No. А40- 33406/2021 dated 18 March 2022. The meaning of these two examples is basically the suspension of what was already adjudged by the first and appellate courts.

Finally, given the previous practice of Russian courts, there is a high risk that the Russian courts will refuse to recognise and enforce foreign arbitral awards due to the “inconsistency with the Russian public order”. In this case, public order may be interpreted in terms of the need to reverse the awards made in favour of legal and natural persons from the “unfriendly” countries or somehow connected to the “unfriendly” countries.

In this regard, the Supreme Court of Russia has already stated that the mere existence of sanctions imposed on the Russian legal entity by the state of the place of arbitration indicates a violation of the principle of arbitrators’ impartiality. In this case, the Russian legal entity is entitled to ignore the arbitration clause and file a claim to the Russian court (see: the Ruling of the Judicial Chamber on Economic Disputes of the Supreme Court No. 309- ES21-6955(1-3) in case No. A60-36897/2020 dated 09 December 2021).

1.10. Important Draft amendments to the Civil Code of Russia

On 23 March 2022, the relevant Committee of the Russian State Duma proposed amendments to the Russian Civil Code (RF CC). The Draft is very likely to be adopted in the proposed wording. It is proposed that the Draft will have the retroactive effect and apply to legal relations arising from 24 February 2022.

The Draft includes the following rules.

1) If the performance of an obligation becomes objectively impossible in whole or in part due to unfriendly acts of foreign states and companies, the obligation shall be terminated in whole or in part. In fact, this rule repeats Article 416 of the RF CC which has been in force for a long time;

2) A person who fails to fulfil an obligation or fulfils it improperly will not be liable (no fines, penalties, forfeits, etc.) if he proves that proper performance was objectively rendered temporarily impossible by sanctions and unfriendly acts. This rule also repeats Article 401 of the RF CC;

3) A party to an obligation is entitled to withdraw from the contract (performance of the contract) if the other party has failed to fulfil or improperly fulfilled its obligation due to an objective impossibility to fulfil it because of sanctions. Once again, this rule coincides with the provision of Article 416 of the RF CC;

4) A party authorised to withdraw from a contract (from the performance of the contract) is obliged to give the other party notice of its intention to exercise its right of withdrawal within a reasonable time before the withdrawal takes place. The same rule currently follows from Article 450 of the RF CC;

5) The Draft introduces payments in shares or other bonds of Russian companies instead of cash.

In particular, under an agreement parties entered into after 23 February 2022, a security payment may consist of the deposit of shares, bonds, other securities or things defined by generic characteristics, whether or not they are to be transferred under the secured obligation.

It is allowed to use loans to the benefit of the foreign lender instead of the repayment of all or part of the loan by means of an additional issue of shares in a Russian joint stock company. It possible in the event of a) “unfriendly actions” of foreign states and international organisations against Russian citizens and legal entities, and b) the term and (or) other conditions are due, and c) these conditions were stipulated by the contract of loan granted to the Russian joint stock company by a foreign entity controlling it.

6) Special rules are introduced in relation to trademarks and patents transferred temporarily under licence agreements, namely, the validity terms of licence agreements are extended by operation of law until the sanctions are lifted. – In the case of “unfriendly actions”, it is not allowed to exercise the right provided by law or contract to unilaterally change or terminate the agreements relating to the exercise and protection of intellectual property rights, except for the cases when the other party to the agreement is in material breach of its obligations.

– The term of the agreement under which a Russian legal entity or individual was entitled to use the intellectual property rights shall be extended for the period of “unfriendly actions” unless the Russian legal entity or individual notifies the other party to the agreement of a unilateral refusal to extend the obligation.

New rules are not intended to apply to persons who have facilitated “unfriendly actions” of foreign states and organisations. This is the most important provision which poses the question of how the novelties repeating the existing provisions of the RF CC relate to each other. It is unclear whether these provisions mean that the obligations of Russian persons will be terminated by the inability to fulfil the obligations while the foreign entities’ obligations will not.

2. Sanctions Imposed on Russia

2.1. Prohibition for Russian vessels to enter the ports of foreign countries

Two countries have banned Russian-flagged vessels and foreign-flagged vessels controlled by Russian shipowners from entering their ports:

1) United Kingdom (including the port of Gibraltar; amendments to the Russia (Sanctions) (EU Exit) Regulations 2019 were made on 01 March 2022). Exceptions to the ban include: 1) port entry direction has been given in relation to the ship under regulation 57C (movement of ships); 2) calling at a port in a case of emergency;

2) Canada (Regulations Amending the Special Economic Measures (Russia) Regulations (SOR/2022-047) of 06 March 2022). An exception to the prohibition is entering a port or passing through Canada in order to preserve human life or to ensure the safety of navigation.

Other countries have expressed their intention to close their ports for vessels sailing under the flag of Russia, including:

1) EU countries (European Parliament resolution of 1 March 2022 on the Russian aggression against Ukraine (2022/2564(RSP)) was adopted; it calls on the EU countries to block ports for ships sailing under the Russian flag, as well as for ships whose previous or subsequent port of call is in Russia);

2) United States (an announcement on the closure of ports for ships flying the Russian flag was made on 02 March 2022).

2.2. EU sanctions in regard to the marine equipment

Council Regulation (EU) 2022/394 of 9 March 2022 prohibited any transactions with maritime navigation and radio-communication goods and technology in relation to Russian persons and bodies, for use in Russia, or for the placing on board of a Russian-flagged vessel, as well as technical assistance, brokering services or other services and financing or financial assistance in relation to the same.

The EU has also authorised the competent authorities to allow these operations, but only for non-military purposes and after determining that the goods, technology, etc. are intended for maritime safety.

2.3. Private companies’ refusal of technical maintenance of Russian ships

UK class society Lloyd’s Register announced on March 10 that it had started withdrawing class from all Russian controlled, owned, or managed ships while DNV has started winding down some of its Russian class activities and will cease all new business activities in Russia.³

Lloyd’s Register Voyage Rus LLC has stopped selling and updating its products and services in Russia.⁴ This situation is alarming because Lloyd’s Register supplied navigation equipment, namely C-MAP electronic navigation charts, to most Russian vessels. Suspension of sales and refusal of support for already sold products can make it impossible for ships to leave the port since without proper equipment they will not be released by port authorities in Russia as well as in foreign jurisdictions. Alternative solutions should be sought also for ships under construction.

ILWU, which serves vessels in the U.S. and Canadian ports, refused to render its services to Russian ships.⁵ Consequently, Russian vessels (even those that were able to enter the ports of these states) will not be able to get proper service.

Since entering the ports of the U.S. and Canada is possible only in exceptional cases, vessels will likely be “stuck” in foreign ports without proper service.

2.4. Withdrawal of the Russian Maritime Register of Shipping from the IACS

Russian Maritime Register of Shipping (RMRS) was excluded from the International Association of Classification Societies (IACS) by the IACS Council decision dated 11 March 2022. At the same time, the RMRS remains a Recognized Organization, that is, the organisation which is authorised to carry out surveys of vessels and issue relevant international certificates on behalf of the Maritime Administration. The RMRS states that the IACS Council decision does not affect the class status of the RMRS-certified ships and the validity and terms of the issued certificates.

Nevertheless, many insurance contracts contain a requirement that the vessel shall be classified by an IACS member (for instance, see Institute Classification Clause CL.354 01/01/2001). The latter affects the performance of the insurance contract. Depending on the contract’s terms, the insurer may be entitled to withdraw unilaterally from the contract. As far as new insurance contracts are concerned, it might be more complicated to obtain insurance cover or be forced to pay an increased premium for the RMRS-certified vessels. A similar requirement is often contained in various charterparties and might be contained in the vessel purchase and sale agreements, which might also lead to the non-fulfilment of contractual obligations.

2.5. Import and export prohibitions against Russian-related persons, entities, and bodies

Executive Order dated 11 March 2022 prohibited the importation into the U.S. of the following products of Russian origin: fish, seafood, and preparations thereof; alcoholic beverages; non-industrial diamonds; and any other products of Russian origin as may be determined by the Secretary of the Treasury. The companies that entered into an agreement prior to the Executive order shall import the prohibited goods by 25 March 2022.

The Executive Order also prohibits the exportation, re-exportation, sale, or supply, directly or indirectly, of certain luxury goods to any person located in Russia. The list of luxury goods includes, inter alia, certain types of marine engines and parts for them (Rule of the Industry and Security Bureau dated 11 March 2022).

Council Regulation (EU) 2022/428 dated 15 March 2022 imposes a prohibition on sale, supply, transfer, and exportation, directly or indirectly to any person, entity, or body in Russia or for use in Russia of luxury goods. The list of luxury goods includes, inter alia: cruise ships and other vessels similarly designed for the transport of persons; ferryboats of all kinds; yachts; other vessels for the transport of goods and other vessels for the transport of both persons and goods.

In addition, Council Decision (CFSP) 2022/430 dated 15 March 2022 imposes sanctions on certain Russian shipbuilding and ship repair companies. They are subject to export restrictions regarding dual-use goods and technology as well as goods and technology which might contribute to the technological enhancement of Russia’s defence and security sector.

Pursuant to the recent amendments to The Russia (Sanctions) (EU Exit) Regulations 2019, export, supply and delivery, making available or acquiring, transfer, technical assistance, financial and brokering services relating to restricted goods and restricted technology from the UK to Russia are prohibited.

General Trade Licence granted by the Secretary of State came into force on 17 March 2022. The Licence permits export, supply, and delivery, the provision of technical assistance, financial services and funds, and brokering services relating to certain vessels, their components and technology related to such vessels. The permission applies if: a) the vessel is moving from a third country to Russia, or to the UK or a third country from Russia, or transiting Russian territorial waters; b) the vessel is moving under its own power; c) the movement is not for the purpose of transfer of ownership of the vessel or its component parts, or a change of the operator of the vessel.

In the case of insurance services, the permission applies only if (a) the Provider does not reinsure any of their obligations to provide those insurance services or (b) reinsures any of their obligations to provide those services and no such reinsurance cover has been rendered unenforceable, suspended, frustrated, or prohibited.

2.6. Sanctions against the Russian banking sector

On 24 February 2022, the Office of Foreign Assets Control of the U.S. Treasury Department (OFAC) included certain Russian banks in the SDN-list under EO 14024 of Russian Parties. The Russian banks VTB, Otkritie, Novikombank and Sovcombank as well as their subsidiaries are prohibited to make any transactions in USD and any transactions with counterparties from the U.S.

On 24 February 2022, Directive No. 2 was adopted, according to which Sberbank and its affiliates were included in the CAPTA-list. All U.S. financial institutions shall close correspondent accounts or payable-through accounts of and reject any transactions involving Sberbank and its affiliates.

Council Decision (EU) 2022/346 and Council Regulation (EU) 2022/345 dated 01 March 2022 imposed sanctions on 7 Russian banks. VTB, Otkritie, Novikombank, Promsvyazbank, Rossiya, Sovcombank, VNESHECONOMBANK (VEB) were excluded from SWIFT from 12 March 2022, which complicates their international payments.

Visa and Mastercard have suspended all operations in Russia making it impossible for cardholders to make cross-border operations if the card was issued in Russia.

2.7. Foreign exchange sanctions

Council Decision (EU) 2022/346 and Council Regulation (EU) 2022/345 dated 01 March 2022 stipulated the prohibition of sale, supply, transfer or export from 12 March 2022 euro denominated banknotes to Russia or to any person, entity or body in Russia or for use in Russia.

Executive Order dated 11 March 2022 stipulated the prohibition of the exportation, re-exportation, sale, or supply, directly or indirectly, from the U.S., or by a U.S. person, of U.S. dollar denominated banknotes to the Russian Government or any person located in Russia.

2.8. Sanctions against Russian aviation

Certain countries closed the airspace for Russian aircraft, including:

1) United Kingdom (The Russia (Sanctions) (EU Exit) (Amendment) (No. 6) Regulations 2022 dated 08 March 2022);

2) United States (NOTAM FDC 2/9510 (KFDC A0048/22) dated 02 March 2022, NOTAM FDC 2/2415 (KFDC A0049/22) dated 08 March 2022);

3) EU countries by separate acts at the level of each state (see also non-binding Council Regulation (EU) 2022/334).

In addition, Council Regulation (EU) 2022/328 dated 25 February 2022 imposed several restrictions related to the aviation industry. Aircraft-related sanctions prohibit direct or indirect use of aircraft and aircraft parts or technology to any person in Russia or for use in Russia; direct or indirect provision of insurance or reinsurance in relation to aircraft and aircraft parts or technology to any person in Russia or for use in Russia; provision of certain activities related to aircraft (overhaul, repair, inspection, replacement, modification or defect rectification); provision of related technical assistance, brokering services, other services, financing or financial assistance. The restrictions do not apply to the contracts concluded before 26 February 2022 and executed until 28 March 2022.

The Russia (Sanctions) (EU Exit) (Amendment) (No. 6) Regulations 2022 dated 08 March 2022 stipulated the prohibition of direct or indirect provision of insurance or reinsurance services relating to aviation and space goods or aviation and space technology.

Not so strict, but significant sanctions were imposed by the U.S. The application of License Exception AVS was limited: any aircraft registered in, owned, or controlled by, or under charter or lease by Russia or a national of Russia would require a license for export, re-export or in-country transfer from the U.S. (Rule of the Industry and Security Bureau dated 02 March 2022). ■

Notes