Sanctions & Export Control Archives - Regulatory & International Trade

Would the Transfer of a Sanctioned Entity’s Shares to a Trust be Effective Enough to Ensure an EU Company’s Shares are No Longer Under the Control of, or Related to, a Sanctioned Shareholder?

by Sabine Naugès and Fabio Cozzi | Sep 5, 2024 | Sanctions & Export Control

Given the depth of the Russian sanctions, some EU companies that are directly or indirectly owned by sanctioned entities have considered transferring the company’s shares to a trust. This divestment mechanism allows for a temporary transfer of ownership, with the trust assets isolated in an autonomous entity, separate from the settlor’s own assets. The overall objective is that the company’s shares are no longer under the control of, or related to, a sanctioned shareholder.

An Italian court has just requested a preliminary ruling from the Court of Justice of the European Union (CJEU) on the ownership/control of assets in discretionary trusts. Without anticipating on the ruling, but based on previous Italian case law, the ownership/control may exist not only in cases of “formal or direct” ownership/control of the asset by designated persons, but also in cases of “substantial or indirect” ownership/control. Thus, the vesting of the assets in the trust would not break the substantial ownership link.

This is the second time that an Italian court has referred the interpretation of Article 2(1) of Regulation (EU) No 269/2014 to the ECJ. On April 2023, the Tribunale Amministrativo Regionale per il Lazio (Case No. C-483/23, not yet decided by the Court) [...]

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Quarterly Sanctions Update | Q2 2024

by Sabine Naugès, Raminta Dereskeviciute and Michal Chajdukowski | Jul 8, 2024 | Sanctions & Export Control

On June 24, 2024, the European Union adopted its 14th sanctions package.

While the focus of this package was to curb the violation and circumvention of sanctions through the introduction of due diligence obligations for non-EU subsidiaries, or the expansion of “no re-export to Russia” clause requirement, ample other amendments were also introduced, such as those relating to transfer of IP rights, or divestment. The list of restricted goods has also been significantly expanded and additional persons and entities have been added to the list of sanctioned persons.

On June 29, 2024, the EU also expanded its sanctions against Belarus in order to align with the goals of the 14th sanctions package. Additional sanctions under the Hamas and Palestinian Islamic Jihad and Sudan regimes were also published.

In this Quarterly Sanctions Update, we summarise the most recent and significant amendments introduced, or proposed, by the EU and the United Kingdom between April and July 2024.

Click here to read the full [...]

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Export Controls in the Aeronautics, Space and Defense Sector | Conference Key Takeaways

by Sabine Naugès | Jun 20, 2024 | Sanctions & Export Control, Transport & Logistics

Export control in the aerospace and defense (ASD) sector is a critical and complex issue.

At the European level, one of the main standards for export control in the ASD sector is the regulation governing dual-use goods. However, within the European Union, regulations can vary significantly between Member States.

This regulatory landscape indicates the necessity for businesses in the ASD sector to navigate a “manifold control” environment, where multiple authorizations may be required, reflecting the sector’s strategic complexity and the importance of compliance with diverse export control regime.

In our latest event, organized in partnership with the French Compliance Society, we discussed these issues and more with Philippe Clerc, Emmanuel Dupic and Edouard Leeleea.

Click here to download our key takeaways for a full overview of the session. [...]

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Spotlight on the “Partner Countries” Exemption from Sanctions against Russia

by Raminta Dereskeviciute, Fabio Cozzi, Sabine Naugès, Dr. Alexa Ningelgen, Renate Prinz, Michal Chajdukowski, Benoit Feroldi, Kai Grandpierre and Dr. Tim Oliver Weill | Jun 7, 2024 | Sanctions & Export Control

From June 20, 2024, EU companies with a presence in Russia will no longer be able to rely on the “partner countries” exemption and will be required to obtain, or rely on, a licence to provide business services and/or software to their Russian entities.

Competent authorities of the EU Member States responsible for granting licences required pursuant to EU sanctions have taken markedly different approaches in implementing this change.

At the same time, UK sanctions against Russia never contained the “partner countries” exemption and UK companies providing business services to their Russian entities were always required to apply for a licence. In this article, we analyse how the German, French, Italian and the UK regimes are addressing this issue.

Click here to read our full article.

German Authorities Take Action to Accelerate Export Control Procedures

by Dr. Alexa Ningelgen and Dr. Tim Oliver Weill | May 24, 2024 | Sanctions & Export Control

The authorities responsible for export controls in Germany are currently focused on simplifying and accelerating their existing administrative procedures. Since fall 2023, they have enacted three packages of measures, which, among other things, significantly expand the catalog of general export authorizations (GAs). This offers companies substantial time and cost advantages, as the export projects covered by the GAs do not have to undergo individual licensing procedures anymore. The following provides an initial overview of the legislative amendments in this regard.

European Union Criminalizes Violations of Sanctions

by Sabine Naugès, Raminta Dereskeviciute and Michal Chajdukowski | May 2, 2024 | Sanctions & Export Control

As announced in our last Quarterly Sanctions Update, on April 12, 2024 the Council of the European Union adopted a directive criminalizing sanctions violation at the European Union (EU) level. In this post, we provide a summary of the key provisions of this directive, to be followed by a second post focusing on its potential implementation in EU Member States.

Quarterly Sanctions Update | Q1 2024

by Raminta Dereskeviciute, Sabine Naugès and Michal Chajdukowski | Apr 8, 2024 | Sanctions & Export Control, Trade Control & Customs

The EU and the UK continue in their efforts of tightening sanctions against Russia, particularly in the context of the second anniversary of the Russia’s invasion of Ukraine and the sudden death of the Russian opposition leader Alexei Navalny. In this Quarterly Sanctions Update, McDermott Sanctions and Export Controls team summarizes the most recent and significant legislative amendments, as well as changes to the existing guidance, introduced between December 2023 and April 2024.

Notably, EU companies with presence in Russia will no longer be able to rely on the “partner countries subsidiary” exemption after 20 June 2024 and will be required to obtain individual licences to provide business services to their Russian entities. The processing time, information and documents relating to licence applications may vary depending on the EU Member State; for example the French competent authority requires operators to provide company specific information as well as description of services as of April 20, 2024 via Téléservice platform. Licences will also be required under a new prohibition relating to the provision of software for the management of enterprises, industrial design, or manufacture. Finally, EU exporters will need to ensure that they insert “no Russia clauses” in their agreements, prohibiting [...]

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French Ministry of Economy Publishes List of New Dual-Use Items & Technologies Subject to Approval Before Export

by Sabine Naugès | Mar 25, 2024 | Sanctions & Export Control

Regulation (EU) 2021/821 of May 20, 2021 is known as the “Dual-Use Regulation” and its purpose is to establish an EU regime governing the export, brokering, technical assistance, transit and transfer of dual-use items. According to Article 9 of this regulation, EU Member States must, for reasons of public security (e.g. prevention of terrorism, protection of human rights), prohibit the export of dual-use items not listed in Annex I of the Dual-Use Regulation, or at the very least make any such export subject to an authorization requirement.

Given this legal requirement, Member States might decide to adopt a national control list of any such items and so on February 2, 2024the French Ministry of Economy published an order (arrêté) establishing a national list of dual-use items and technologies subject to prior authorization. The Ministry focuses on exports to third countries of goods and technologies related to quantum computing and its enabling technologies, as well as equipment for the design, development, production, testing and inspection of advanced electronic components.

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