Sanctions and Counter-Sanctions Advisory: Legal Risk Assessment

In the current environment, sanctions can be broadly categorized into two primary groups: (1) restrictions imposed against Russia by foreign jurisdictions, and (2) counter-sanctions implemented by Russia as retaliatory measures. These measures directly impact the commercial operations of foreign corporations and fundamentally affect all residents of the Russian Federation, ranging from domestic enterprises to end consumers. It is critical to recognize that sanctions regimes are highly fluid, necessitating continuous regulatory monitoring and risk assessment. Furthermore, special attention must be paid to the state-backed economic relief frameworks introduced to support domestic commerce during these restrictive periods. Below is a comprehensive overview of the primary sanctions currently imposed against Russia, alongside the counter-sanctions enacted by the Russian Federation targeting unfriendly states.

Legal Representation and Business Support under Sanctions and Restrictions

Following February 24, 2022, the assets of the majority of key Russian financial institutions (including VTB, Bank Rossiya, Otkritie, Novikombank, Promsvyazbank, Sovcombank, and VEB.RF) were frozen, and these entities were subsequently disconnected from international financial messaging networks (such as SWIFT). Additionally, access to payment platforms like Apple Pay and Google Pay was suspended, and the United States implemented a comprehensive prohibition on any transactions involving the Central Bank of the Russian Federation. Concurrently, the European Union continually expands its asset-freeze schedules and travel bans targeting Russian citizens.

Subsequently, strict prohibitions were enacted targeting the importation of Russian timber, fertilizers, seafood, and alcoholic beverages. In April 2022, the EU implemented its fifth sanctions package, which introduced a full embargo on Russian coal imports effective August 2022.

A sweeping prohibition was also enforced banning vessels flying the Russian flag from entering EU maritime ports, with narrow exemptions carved out exclusively for ships transporting agricultural products, food supplies, and humanitarian aid. Furthermore, transit restrictions across EU territory have been expanded, excluding essential pharmaceuticals, medical devices, agricultural and food commodities, as well as road transport designated for humanitarian purposes.

Moreover, Russian corporate entities are currently barred from participating in public procurement procedures within the European Union. In response to these geopolitical pressures, a significant number of multinational corporations have either suspended their operations in the Russian market (e.g., PepsiCo, Mastercard) or executed complete market divestments (e.g., Apple, Boeing, DHL, Coca-Cola).

Legal Management of Counter-Sanctions and State Support Initiatives

In response to these international restrictions, Russia has actively deployed retaliatory counter-sanctions. Specifically, pursuant to Decree of the President of the Russian Federation No. 592 dated December 22, 2018, "On the Application of Special Economic Measures in Connection with the Unfriendly Actions of Ukraine Toward Citizens and Legal Entities of the Russian Federation" (as amended), specific schedules of individuals and corporate entities have been established. Under these regulations, the importation of designated goods originating from or transiting through Ukraine is permitted exclusively subject to strict traceability requirements utilizing the GLONASS satellite-based identification and sealing system.

It should be noted that a significant volume of counter-sanctions has been codified to date. One of the most commercially impactful measures is the mandate requiring EU buyers to settle payments for Russian natural gas imports exclusively in the domestic currency (Russian rubles).

Furthermore, a Presidential Decree mandated that resident participants in foreign economic activity execute the mandatory sale of 80% of foreign currency revenues credited to their accounts under foreign trade contracts with non-residents. This rule applies to contracts involving the transfer of goods, provision of services, execution of works, or the assignment of intellectual property rights (including exclusive rights) to non-residents. Such sales must be executed no later than three business days from the date the foreign currency is credited. Additionally, a separate Presidential Decree enacted a strict prohibition on the exportation from Russia of physical foreign currency notes and foreign-currency-denominated monetary instruments exceeding an aggregate equivalent of $10,000 USD, calculated at the official exchange rate of the Central Bank of the Russian Federation on the date of export.

Legal Counsel for Corporate Adaptation to Sanctions Regimes

Additionally, import restrictions on specific agricultural products, raw materials, and food supplies originating from jurisdictions that enacted or joined economic sanctions against Russian legal entities or individuals have been extended.

Simultaneously with these counter-sanctions, the Russian government is actively rolling out regulatory relief measures designed to sustain domestic commercial enterprises.

As highlighted in the Letter of the Chamber of Commerce and Industry of the Russian Federation (CCI RF) No. PR/0181: "A substantial portion of the technical equipment, electronics, machinery, and other complex goods supplied by domestic manufacturers to the Russian market relies heavily on components manufactured outside the Russian Federation, the supply of which is now subject to foreign prohibitions and embargoes. Foreign vendors are refusing to supply the sanctioned goods, whereas these specific components are not manufactured domestically and are generally unique in nature. This dynamic forces many domestic enterprises to suspend the delivery of intermediary or finished products within existing manufacturing and supply chains, as the underlying components essential for production have become unavailable. Unfortunately, pursuant to Paragraph 3 of Article 401 of the Civil Code of the Russian Federation, default or breach of obligations by a debtor's counterparties and the absence of goods necessary for performance on the market are explicitly excluded from the statutory definition of force majeure. Consequently, this statutory framework creates severe complications in recognizing the aforementioned disruptions as force majeure events." In response, legislative proposals aim to broaden the statutory definition of force majeure to encompass the actions of third parties not privy to the contract but subject to US, EU, or other foreign sanctions, provided that performance is rendered impossible without their involvement. This bill has been submitted to the Government of the Russian Federation, the Ministry of Economic Development, and the Ministry of Industry and Trade. Pending legislative review, regional chambers of commerce have been instructed to stay administrative proceedings regarding the certification of force majeure certificates linked to foreign component and equipment embargoes.

Furthermore, pursuant to CCI RF Order No. 24 "On the Suspension of Tariffs Applied by Authorized Chambers of Commerce and Industry in Certifying Force Majeure Events under Contracts Executed within Domestic Economic Activity," the collection of fees for certifying force majeure circumstances was temporarily suspended.

Tax enforcement frameworks have also been adjusted to provide regulatory relief. The Federal Tax Service (FTS) of Russia announced that tax authorities may consider the operational difficulties caused by active sanctions regimes as mitigating factors or grounds for exemption from liability for specific tax non-compliance. To ease the administrative burden on corporate entities and individual taxpayers, tax authorities have temporarily suspended audits concerning compliance with currency control regulations.

Additionally, due to structural barriers delaying cross-border wire transfers from foreign banks to the Federal Treasury for VAT payments on digital services, the FTS recommends that domestic corporate buyers purchasing electronic services from foreign vendors independently withhold and remit the applicable VAT directly to the budget.

In an Information Letter "On the Restructuring of Foreign Currency Loans," the Bank of Russia recommended that commercial lending institutions approve borrower applications submitted by individual consumers to convert the denomination of pre-existing consumer loans (executed for non-business purposes) from foreign currencies into Russian rubles.

Recognizing the risk of systemic telecommunications disruptions reported by network operators, the Ministry of Digital Development, Communications and Mass Media of the Russian Federation issued an advisory recommending that telecom operators restrict the sale of unlimited data plans to prevent traffic imbalances and ensure even network load distribution.

Furthermore, pursuant to Resolution of the Government of the Russian Federation No. 448, regulatory audits and inspections targeting accredited IT companies—otherwise mandated under federal statutes governing state and municipal control—have been temporarily stayed.

Customs procedures have also been simplified for participants in international trade. In accordance with Federal Law No. 74-FZ "On Amending Certain Legislative Acts of the Russian Federation and Suspending Certain Provisions of Legislative Acts of the Russian Federation," the importation of multi-component equipment is now permitted across multiple distinct foreign trade transactions (whereas legacy regulations restricted such imports to a single transaction). These simplified parameters are slated to remain effective until January 1, 2029. Additionally, the Russian Government has been authorized to designate specific categories of importers eligible for non-standard customs duty payment timelines.

Pursuant to Government Resolution No. 393, qualifying corporate entities within the pharmaceutical, apparel, furniture, and natural gas sectors may secure subsidized commercial loans at a preferential interest rate of 11% per annum, subject to meeting operational benchmarks and maintaining employee retention rates.

The aforementioned and supplementary state-backed relief initiatives are continuously adjusted to align with shifting geopolitical realities. In this fluid environment, performing continuous legal monitoring of evolving sanctions, counter-sanctions, and state support mechanisms is a commercial imperative to minimize corporate losses. Failing to systematically evaluate sanctions risk exposure can result in catastrophic financial liabilities and severe operational disruption.

Comprehensive Sanctions and Compliance Legal Services

1. Advising international corporations and domestic enterprises on sanctions regimes enacted in connection with geopolitical events and military actions.
2. Conducting rigorous legal audits and structuring risk mitigation strategies for active commercial contracts executed with counterparties from designated unfriendly jurisdictions.
3. Delivering strategic guidance on corporate restructuring, asset protection, and regulatory compliance under fluid sanctions and counter-sanctions frameworks.