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Introduction of Sanctions by the Russian Federation shall not be Limited to the Available Lists


Ivan Bozhko, Attorney at Law, Insolvency Receiver

Source: Interfax-Ukraine

According to the opinion of an attorney of Ilyashev & Partners Law Firm introduction of sanctions by the Russian Federation shall not be limited to the available lists.

The application of these sanctions will not be limited to the existing lists. Firstly, this results from the fact that restrictive measures also apply to organizations being under control of the entities to which the sanctions were applied. The term “organization” in Russian legislation has a broader interpretation than in the Ukrainian laws, and covers any type of legal entity, namely, enterprises, institutions and organizations”– he told in his interview to Interfax-Ukraine.

The lawyer pointed out that in this case, the word “control” refers to the actual management of a legal entity, which may be both direct (by virtue of ownership of the share in the authorized capital) and indirect (including through trusts, nominee owners etc.).

“If a natural person, which came under the sanctions imposed by the Russian Federation, owns a participation share in the authorized charter of a company conducting its economic activities in the territory of the Russian Federation, it is highly likely that this company will also be subject to sanctions. Another issue is that up to the present moment the body that will be engaged into the search of such assets in the Russian Federation and will apply corresponding restrictive measures has not yet been defined” – I. Bozhko said.

At the same time, I. Bozhko emphasized that the issue of whether the individual persons and legal entities listed in the sanctions lists are going to suffer losses depends on whether they have assets in the territory of the Russian Federation (movable property, real estate, securities, money in banks and other financial institutions), conduct business activities in the territory of Russian Federation (directly or through affiliated companies) or carry out import/export operations with the Russian Federation.

Commenting on the possibility of denying sanctions, the lawyer noted that the procedure for appealing sanctions is possible within the framework of challenging regulatory acts, in particular, the resolutions upheld by the Government of the Russian Federation. In particular, this legal procedure may be initiated by an interested party person by filing an appeal to the Supreme Court of the Russian Federation.

There is little chance that the Russian courts will agree with the arguments of somebody of those persons who were included inti the sanctions lists. It goes rather about the instances when somebody’s name was included into the sanctions lists by mistake (for example, persons sharing the same names etc.)”, – shares his opinion I. Bozhko.

Commenting, in particular, on the risks of the influence exerted by the Russian Federation’s sanctions onto the activities of Ukrainian retail chains the lawyer pointed out that application of sanctions towards the owners of such business creates very high risks that the companies owned by them will also be slapped with sanctions.

“Introduction into the sanctions list of the owners of the Ukrainian trade distribution chain, who do not have assets in Russia, does not mean that no other assets owned by such trade distribution chain will not be arrested in Russia, and accounts in financial institutions will not be blocked. The same also applies to goods that are supplied (can be supplied) from the territory of the Russian Federation, and are owned by the sanctioned companies”, – as he pointed out.

I. Bozhko reminded that on the basis of the Decree upheld by the Government of the Russian Federation a number of individuals and legal entities (not only from Ukraine), as well as organizations controlled by them, came under the influence of three types of sanctions: blocking (freezing) of cashless monetary assets and property in the territory of the Russian Federation, blocking (freezing) of non-documentary securities and a prohibition on transferring funds (withdrawal of capital) outside the Russian Federation.

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