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13 January 20255 minute read

Council of the EU adopts continuation sanctions package ahead of year end

On 16 December 2024, the Council of the European Union (Council) adopted the 15th package of sanctions targeting Russia since the beginning of the war in Ukraine. This was necessary in order to extend various existing derogations which would have lapsed on 31 December 2024. The package is limited in scope and extends existing derogations, including to allow divestments from Russia, and places new individuals and entities involved in Russia's war effort under sanctions. The 15th package can be read as a "continuation" package, with the general understanding that wider sectoral measures have been proposed for the 16th package. Discussions among Member States on the 16th package will start this week under the auspices of the Polish presidency of the Council, with formal adoption to be expected already in February 2025, to mark the two-year anniversary since the beginning of the war.

Specifically, the 15th package of sanctions includes:

New listings

  • The package places an additional 54 persons and 30 entities under asset freeze by listing them in Annex I of Council Regulation (EU) No 269/2014.

  • Companies targeted are primarily Russian defence companies, as well as shipping companies responsible for the transportation of crude oil and oil products by sea.

  • For the first time, various Chinese companies supplying drone components and microelectronic components in support of Russia’s war in Ukraine are listed.

  • Individuals added to Annex I include senior managers in major Russian energy companies and a national of the Netherlands.

Trade controls

  • The package adds 32 new entities to the list of restricted companies supporting Russia's military-industrial complex. These entities are subject to stricter export restrictions, including for dual-use goods and technologies. Some of these entities are located in third countries, including China, India, Serbia, and the United Arab Emirates, and according to the Council have been involved in the circumvention of trade restrictions or have engaged in the procurement of sensitive items used for Russian military operations, like unmanned aerial vehicles and missiles.

Vessels and circumvention

  • The package adds 52 vessels originating from third countries to the list of vessels subject to a port access ban and a ban on provision of a broad range of services related to maritime transport. This brings the total number of targeted vessels to 79. According to the Council, this measure is intended to target non-EU tankers that are part of Russia's "shadow fleet" which, inter alia, circumvent the oil price cap mechanism, transport military equipment for Russia, or transport stolen Ukrainian grain. 

Allowances and protections of EU companies

  • Eligibilities to receive authorisations under various derogations have been extended from their previous deadlines of 31 December 2024 to 31 December 2025. This includes extensions for the sale, import, and transfer of various controlled items where such transfers are necessary to divest from Russia or wind-down business activities in Russia. The Council has said that because the risks of maintaining business activities in Russia, EU operators should consider winding down businesses in Russia and/or not start new businesses there, adding that the exceptional extension of the divestment derogations is necessary to enable EU operators to exit as swiftly as possible from the Russian market (see also the next section below on recital 9). 

  • Member State authorities may now authorise the release of frozen cash balances held by EU central securities depositories (CSDs) and attributable to an entity under asset freeze. The Council said this is necessary due to increased litigation and retaliatory measures in Russia that result in the seizure of assets of EU CSDs held in Russia. The release of the frozen funds must be used to meet the legal obligations of the CSD toward its participants.

  • The 15th package introduces a prohibition on the recognition or enforcement in the EU of rulings issued by Russian courts pursuant to Article 248 of the Arbitration Procedure Code of the Russian Federation. The Council has said this is to better protect EU companies from litigation with Russian counterparts, as such rulings have been preventing the opposing party from commencing or continuing a procedure in a jurisdiction other than Russia (anti-suit injunctions), which is in violation of international legal principles and often results in disproportionately high financial penalties for EU companies. The new measure prevents those penalties from being executed against EU operators in the EU.

Recital 9 on divestment and wind-down of operations in Russia

  • Reported as a compromise for certain Member States which initially vetoed the 15th package over its lack of teeth against EU companies still operating in Russia, recital 9 was added to the text of the package. The recital states that EU "operators should consider winding down businesses in Russia and/or not to start new businesses there", and that the "exceptional extension of the divestment derogations is necessary to enable [EU] operators to exit as swiftly as possible from the Russian market." While there is no provision corresponding to the recital, it is worth noting that a further push towards divestment from Russia might be subject to discussions among Member States for the next sanctions package.
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