On 4 June 2018, President Putin signed the Federal Law “On Measures (Countermeasures) in Response to Unfriendly Actions of the USA and (or) other Foreign States” (“О мерах воздействия (противодействия) на недружественные действия Соединенных Штатов Америки и иных иностранных государств”, Federal Law 127-ФЗ, the “Law on Countersanctions”). The Law on Countersanctions entered into force on the date of its publication (i.e., on 4 June 2018).

Specifically, the Law on Countersanctions includes the following potential countermeasures:

  1. Suspension or termination of international cooperation of Russia and Russian legal entities with (i) unamicable states, (ii) entities subject to the jurisdiction of unamicable states that are directly or indirectly controlled by, or affiliated with, unamicable foreign states (in accordance with the decision of the President of Russia);
  2. Import ban or import restrictions with respect to products and/or raw materials (i) originating from unamicable states, or (ii) manufactured by entities subject to the jurisdiction of unamicable states that are directly or indirectly controlled by, or affiliated with, unamicable foreign states (the list of products and/or raw materials will be determined by the Russian Government).
  3. Export ban or export restrictions with respect to products and/or raw materials, if exported by (i) citizens of unamicable states, (ii) entities subject to the jurisdiction of unamicable states that are directly or indirectly controlled by, or affiliated with, unamicable foreign states (the list of products and/or raw materials will be determined by the Russian Government).
  4. Prohibition or restriction on the provision (in Russia) of works/services for state and municipal needs and for the needs of certain kinds of legal entities, if such works/services are provided by entities subject to the jurisdiction of unamicable states that are directly or indirectly controlled by, or affiliated with, unamicable foreign states (the list of works/services will be determined by the Russian Government).
  5. Prohibition or restriction on (i) privatization of state and municipal property, (ii) provision of works/services related to the organization for the sale of federal property and/or (iii) performance of the functions of the seller of federal property for entities subject to the jurisdiction of unamicable states that are directly or indirectly controlled by, or affiliated with, unamicable foreign states.
  6. Other measures as determined by the President of Russia.

Additionally, the Law on Countersanctions empowers the President of Russia to introduce a special national regime (and exceptions to it) for goods and services originating from unamicable states if such states introduce any restrictions for goods and services originating from Russia.

According to the Law on Countersanctions, import ban or import restrictions shall not cover vital goods analogues to which cannot be found in Russia and imports of articles for personal use by Russian and foreign citizens and persons without citizenship.

For the purposes of the Law on Countersanctions, “unamicable foreign states“ should be understood as the USA and other foreign countries committing “unamicable actions“ with respect to Russia or its citizens or legal entities. The Law on Countermeasures does not provide for a straightforward definition of “unamicable actions.” Article 1(1) of the Law on Countermeasures only states that unamicable actions may occur through the imposition of political or economic sanctions against Russia and/or Russian citizens and/or Russian legal entities; however, unamicable actions may take the form of other actions “threatening the territorial integrity of Russia or aimed at economic and political destabilization of Russia.”

Open sources do not contain any information with respect to products and/or raw materials that could potentially fall under import and/or export ban/restrictions. The decision on this question, as well as on the list of “unamicable foreign states” is yet to be formally taken by the Russian President and Government.

As a part of the countersanctions package, the State Duma is considering imposition of administrative and/or criminal liability for compliance with international sanctions. However, up to the moment it is not clear how the administrative and/or criminal offence in such draft bills will look like.

For additional information, please contact Alexander Bychkov or Vladimir Efremov.