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01 February 2023

EU sanctions against Russia and criminal law: a mismatch?

Since the Russian attack on Ukraine in late February 2022, the European Union was quick to respond with sanctions in order to ramp up economic pressure on the Russian government and cripple its ability to finance the war. As the war continues, almost every month a tightening of the sanctions is announced. So far, the EU has enacted eight sanction packages, which include export and import bans of certain products, embargos with regard to Donetsk, Luhansk, Crimea and Sevastopol, asset freezes and prohibitions to make economic funds available to certain listed persons as well as many financial and other transactional restrictions with regard to Russian entities. The Council Regulations are directly binding on all persons under the jurisdiction of EU Member States. For example, regulations imposing freezing measures apply, among others, to EU companies, including financial and credit institutions, doing business in whole or in part in the EU, and to EU nationals.

An ever-changing landscape

Given the rapid and constant changes of the legal framework, navigating the various sanctions has been a challenge for EU companies. At the same time, many Member States have stepped up enforcement of EU sanctions. Austria, for example, has implemented an interagency taskforce that is not only in charge of locating the assets of listed persons but also with the investigation of possible sanctions violations.  Violations of import or export bans as well as embargos are punishable pursuant to Sec 79 of the Foreign Trade Act. Offenders face imprisonment of up to three years, five years if violations are committed on a commercial scale or with the aid of falsified evidence or data. The Sanctions Act, on the other hand, is much broader than the Foreign Trade Act. It applies when no other criminal provision (such as the Foreign Trade Act) provides for stricter sentences and prohibits the violation of directly applicable EU law, i.e. asset freezes and prohibitions to make economic funds available. Offenders can be jailed for up to two years.

Principle of legality

Given the severe consequences of a sanctions violation by EU citizens it does not seem unreasonable to insist that the principle of legality is adhered. This principle implies a need for clarity, predictability and accessibility for criminal prohibitions, limiting current interpretive activities at the EU level, the frequently asked questions "FAQ". Although the FAQ are a helpful tool when working with the EU sanctions, it is often overlooked in practice, that the FAQ are not a legal act, but "a working document drafted by the Commission services in order to help and give guidance to national authorities, EU operators and citizens for the implementation and the interpretation of the EC Council Regulations". Thus, national authorities may not simply rely on the FAQ but have to challenge whether the "interpretation" provided by the Commission is in line with the letter of the law.   

EU sanctions must be enforced in line with the principles of a fair trial, and most importantly in accordance with the principle of legality.

authors: Klara Kiehl, Katharina Mydza