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A Price Worth Paying...

A Price Worth Paying...

In response to the Ukraine crisis, two weeks ago MEPs voted that the EU must step up and be ready to impose economic sanctions against Russian firms and their subsidiaries, especially in the energy sector. The UK Foreign Secretary, William Hague, has said that more far reaching measures are being prepared and that the damage to the UK economy of trade sanctions on Russia would be “a price worth paying”. EU diplomats are meeting this week to discuss further sanctions against Russia. The political wheels are in motion, the tension surrounding the Ukraine crisis is rising and imminent oil and gas related sanctions on Russian firms are becoming increasingly likely.

In this political climate is your organisation doing enough to prepare for any imminent sanctions? Do you know who you are dealing with? Are you able to quickly identify which clients and associated parties would be affected by any Russian sanctions which come into force? Have you checked your contracts with Russian firms or firms owned and controlled by Russian persons for termination provisions in these circumstances? Do you have an exit strategy?

The US has also suggested that extensive sanctions against Russia are imminent if Russia does not change its behaviour. The resultant sanctions may differ in scope to any imposed by the EU. If your organisation may be subject to US law, attention must also be paid to the US sanctions. Just two weeks ago a European subsidiary came to a $6 million settlement with the US Office of Foreign Assets Control for breaches of the US Cuban Assets Control Regulations which apply to US persons as well as non-US companies owned or controlled by US persons.

A sanctions compliance policy is easy to implement yet very few businesses have one in place. Failure to comply with EU or US sanctions is really not a price worth paying.

If you would like further information on dealing with the current sanctions in force or on implementation of a sanctions compliance programme, please contact the HSE team.

Fran Hutchison
Senior Solicitor