International sanctions are an instrument of influence against entities whose activities violate the principles and norms of international law and pose a threat to regional or global peace and security.
In response to military aggression against Ukraine, the EU, the US and the UK, among others, imposed extensive, unprecedented sanctions on the Russian Federation, Belarus and certain economic and individual actors.
The war in Ukraine triggered sanctions that affected the Polish economy and Polish businesses on such a scale for the first time. In addition to the threat of penalties for non-compliance with sanctions and the restrictions which apply to those included on sanctions lists, entrepreneurs are experiencing product boycotts and a decline in the value of their companies on the stock market. It is estimated that many organisations have needed to abandon cooperation with a contractor following the introduction of sanctions against Russia and Belarus as a result of the war in Ukraine.
It is not only the war in Ukraine. Sanctions are also currently in place against undemocratic regimes in Burma, Iran, North Korea, Cuba and Syria. The sanctions aim to pressure the authorities to change their policies through economic methods, such as restricting access to technology, stopping access to credit and loans, economic boycotts. This has powerful effects on the sanctioned country’s economy and on its companies and their international counterparties.
Sanctions related to the war in Ukraine include:
- Restrictions on importing selected groups of goods from Russia and Belarus into the EU, and Russian fossil fuels into the USA
- Prohibiting exports of certain products and services to Russia and Belarus
- Restricting exports of products made with the help of US resources
- Individual sanctions on selected Russian and Belarusian entities and individuals (asset-freezing; preventing payments to related entities; temporary receivership to divest shares that may be used to support Russian aggression against Ukraine or human rights violations in Russia and Belarus)
- Restricting investment in the Russian energy sector
- Restricting a significant part of Russia’s banking sector (freezing the funds of certain banks; prohibiting their clients from making transfers to the EU; exclusion from the SWIFT system; limiting the amount of permissible deposits kept in financial institutions within the EU)
- Prohibitions imposed on the Central Banks of Russia and Belarus, the governments of Russia and Belarus, the National Fund of Russia and the Direct Investment Fund on their financial/banking activities
- Prohibitions on selected Russian and Belarusian companies conducting equity or debt trading, and related prohibitions on lending funds to such companies
- Restrictions on currency trading
- Closure of airspace, bans on ships berthing in ports (UK)
- Broadcasting bans imposed on selected Russian media
- Geographical sanctions on Ukraine’s Donetsk (DNR) and Luhansk (LNR) regions.
Which penalties can apply to those who violate these restrictions?
- Imprisonment for at least 3 years (Polish sanctions)
- Administrative fine up to PLN 20 million (Polish and EU sanctions)
- Forfeiture of goods used to commit an offence
- Penalty of a fine or imprisonment for breaching sanctions
- Non-tariff penalties imposed pursuant to the Fiscal Penal Code
- Penalties and sanctions deriving from a foreign jurisdiction
How can we help?
Advice on sanctions covers many practices and is often interdisciplinary.
It may include:
- commercial contract law,
- regulation in the area of AML/CFT,
- relations with financial institutions or litigation strategies.
Areas of advice
- Assessing whether sanctions apply to a particular entity within your client base or to one of your business activities or products. We use specialised tools which take account of dozens of sanctions lists.
- Examining whether your transactions and counterparties comply with the sanctions.
- Identifying opportunities to counteract the negative consequences of the sanctions regime.
- Analysing your contracts to ensure their compatibility with the sanctions regime, including whether/how they can be lawfully performed or terminated.
- Helping you to apply to the relevant authorities for exemptions to carry out particular transactions.
- Reforming your internal processes and procedures to ensure compliance with AML legislation.
- Advising entities active on financial markets, including on how sanctions affect the operation of the banking system, on structuring AML obligations and whistle-blower reporting.
- Advising on pre-litigation and litigation strategies regarding claims concerning compliance with sanctions.
- Assessing actions and recommending further actions to ensure that your business complies with newly imposed sanctions.
- Defending your company against allegations regarding sanctions infringement.
Credentials
Prepared three legal opinions on sanctions for Energomedia (Orlen Group).
Prepared two legal opinions on sanctions for a large Polish industrial energy company which produces, distributes and sells energy utilities.
Advised a Polish company which imports, exports, re-exports, intermediates and distributes domestic and foreign raw materials and semi-finished products for the rubber industry, including by assessing how sanctions affected the client's business and performance of existing contracts (with recommendations for further action), sanctions screening of key counterparties and their products (report and recommendations for further action).
Advising a European leader in upholstered furniture production, including by assessing the compliance of transactions with selected counterparties, including sanctions screening of key counterparties and their products (report and recommendations for further action).
Advising a leading chemicals manufacturer in Poland on whether its transactions comply with the sanctions regime, including sanctions screening of key counterparties and their products (report and recommendations for further actions).
Advising a Polish aluminium-profile manufacturer on sanctions imposed by the Office of Foreign Assets Control (the division of the US administration responsible for sanctions) on a Russian counterparty in 2018. We assessed the scope of the restrictions and their practical impact on the client's business, identified risks and recommended further actions. Our also advice covered practical aspects of applying sanctions exemptions to the relevant transactions, including drafting commercial agreements and implementing solutions and communications with the relevant banks, as well as monitoring the status of the relevant sanctions. We advised on this project for 2 years.
Advising the clients of a Spanish credit insurance operator (a leader in domestic and export credit insurance) on the legality of transactions and agreements concluded with the clients' counterparties.
Advising the Polish Insurance Association on the interpretation of regulations governing the application of sanctions in the insurance market.
Advising the Polish Banks Association on of AML and cross-border verification of beneficial owners with regard to financial market entities included on the sanction lists.
Delivering workshops and Q&A sessions for insurance companies on practical aspects of the sanctions regime.
Advising financial market entities on regulatory requirements, including AML and sanctions, in various distribution channels for financial products.
