Retaliatory Special Economic Measures Have Been Introduced in Russia Against Certain Persons

16 May 2022
Polina Vodogreeva
Kirill Evstifeev
Junior Associate

Presidential Decree No. 252 of 03.05.2022 (the “Decree”) introduced special economic measures due to unfriendly actions of some foreign states and international organizations. These measures are introduced because of illegal deprivation or restriction of the property rights of Russians and Russian companies to their property abroad.

Under the Decree, a ban is imposed on certain transactions performed by state bodies, local self-government bodies, legal entities and individuals under the jurisdiction of the Russian Federation in relation to legal entities, individuals and organizations under their control, in respect of which special economic measures are applied (“Persons under sanctions”), namely:

  • Making transactions (including foreign trade contracts);
  • Discharge of obligations under the concluded contracts;
  • Conducting financial transactions if their beneficiaries are Persons under sanctions.

The Decree authorises the Government of the Russian Federation to determine the list of the Persons under sanctions and additional criteria for classifying transactions as prohibited transactions in accordance with the Decree.

The Decree also establishes a ban on the export outside Russia of products and/or raw materials that are produced and/or mined in the territory of Russia, if such products and/or raw materials are supplied in favor of Persons under sanctions and/or by Persons under sanctions in favor of other persons.

Pursuant to the Decree, the list of legal entities in respect of which special economic measures are applied has been approved by Government Decree No. 851 of 11.05.2022 (“Resolution”). Special economic measures are also applied to organizations under the control of the entities from the specified list.

The Resolution establishes the following additional criteria for classifying transactions with Persons under sanctions as prohibited transactions in accordance with the Decree:

  • Transactions made in favor of Persons under sanctions;
  • Transactions involving the entry into the ports of the Russian Federation of vessels owned and/or chartered by Persons under sanctions, in their interest or on their behalf;
  • Transactions involving payments, transactions with securities with the participation and/or in favor of Persons under sanctions.

The Ministry of Finance of the Russian Federation is authorized to give official explanations of the restrictions provided for by the Decree, except for the prohibition of financial transactions – the Bank of Russia provides explanations on this issue.

Notable that the Decree provides for a complete ban on transactions and operations, without the possibility of obtaining permission to commit them.

The Decree came into force on May 3, 2022 and will remain in effect until the cancellation of the measures established by it.