The USA and other foreign countries sanctions law has come into effect

20 June 2018
Polina Vodogreeva

The Federal law No. 127-FZ “On measures (countermeasures) in response to the hostile acts of the USA and other foreign countries” (“the Law”)1 has come into effect on June 04, 2018.

The Law adjusts implementation of measures (countermeasures) in respect of:

  • the USA and other foreign states performing unfriendly acts towards the Russian Federation, its citizens or legal entities (“unfriendly foreign states”); and
  • organizations under the jurisdiction of unfriendly foreign countries, directly or indirectly controlled by or affiliated to them, officials and nationals of unfriendly foreign states, if these organizations, officials and citizens are involved in committing unfriendly acts towards the Russian Federation.

The following measures are introduced:

  1. termination or suspension of international cooperation of the Russian Federation, Russian organizations with unfriendly foreign states, as well as organizations under their jurisdiction, directly or indirectly controlled by them or affiliated to them, in specific areas determined by the decision of the Russian President;
  2. prohibition or restriction on the import2 into the territory of the Russian Federation of products3 and/or raw materials, originating from unfriendly foreign states or produced by organizations under the jurisdiction of unfriendly foreign states, directly or indirectly controlled by them or affiliated to them. The list of such products and/or raw materials is determined by the Russian Government;
  3. prohibition or restriction on the export from the territory of the Russian Federation of products and (or) raw materials by organizations under the jurisdiction of unfriendly foreign states, directly or indirectly controlled by them or affiliated to them, as well as unfriendly foreign states’ citizens. The list of such products and (or) raw materials is determined by the Government of the Russian Federation;
  4. prohibition or restriction on performance of works, rendering of services for ensuring the state and municipal needs, as well as needs of separate types of legal entities4 in the territory of the Russian Federation by organizations under jurisdiction of the unfriendly foreign states, directly or indirectly under their control or affiliated to them. The list of types of such works and services is determined by the Russian Government;
  5. prohibition or restriction on participation of the organizations under jurisdiction of unfriendly foreign states, directly or indirectly under their control or affiliated to them, citizens of unfriendly foreign states in privatization of the state or municipal property, as well as in performance of works, rendering services by them in arranging of federal property sale on behalf of the Russian Federation and (or) implementation of the seller’s functions in connection to the federal property;
  6. other measures in accordance with the decision of the Russian President.

The Law authorizes the Russian Government with the authority to introduce these measures by the decision of the Russian President.

In addition, the Law authorizes the Russian President to decide on the applying of a special national regime or exemptions from it in respect of goods and services originating from unfriendly foreign states, if such states apply a national regime or exemptions from it in respect of goods or services originating from the Russian Federation.

Thus, the Law embodies a sufficiently broad and not exhaustive list of measures to be implemented in respect of unfriendly foreign states. Consequently, the Law provisions actually legislate the possibility of introducing any measures in respect of any goods, services, cooperation areas, etc., and it is not evident, how exactly these provisions will be implemented in practice.

1Please see legal update dated April 20, 2018 regarding review of draft law’s initial wording
2This measure is not applied to those goods imported into the territory of the Russian Federation by Russian citizens, foreign citizens and stateless persons for personal use
3Excluding essential goods, having none of their analogues produced in the Russian Federation
4Specified in part 2 art. 1 of the Federal law dated July 18, 2011 No. 223-FZ “On procurement of goods, works and services by certain types of legal entities” (e.g., such legal entities include state corporations and companies, subjects of natural monopolies, etc.)