22 April 2014 UPDATE: Developments in the Ukraine Practice Group(s): Further to the alerts circulated on 10, 18, and 21 March 2014, below is an update on International developments in the EU and U.S. regarding sanctions. Arbitration European Regulatory/ EU Sanctions UK Regulatory On 14 April 2014, the EU Foreign Affairs Ministers identified four additional individuals as International Trade responsible for misappropriation of Ukrainian state funds and added them to the list, Global Government subject to restrictive measures in view of the situation in Ukraine. The individuals, Solutions together with the reasons for their inclusion in the list of persons subject to the restrictive measures as described in the EU legislation, are as follows: 1. Serhiy Arbuzov (d.o.b 24.03.1976, former Prime Minister of Ukraine) Person subject to investigation in Ukraine for involvement in crimes in connection with the embezzlement of Ukrainian State funds and their illegal transfer outside Ukraine. 2. Yuriy Ivanyushchenko (d.o.b 21.02.1959, Party of Regions MP.) Person subject to investigation in Ukraine for involvement in crimes in connection with the embezzlement of Ukrainian State funds and their illegal transfer outside Ukraine. 3. Oleksandr Klymenko (d.o.b 16.11.1980, former Minister of Revenues and Charges.) Person subject to investigation in Ukraine for involvement in crimes in connection with the embezzlement of Ukrainian State funds and their illegal transfer outside Ukraine. 4. Edward Stavytskyi (d.o.b 4.10.1972, former Minister of Fuel and Energy of Ukraine.) Person subject to investigation in Ukraine for involvement in crimes in connection with the embezzlement of Ukrainian State funds and their illegal transfer outside Ukraine. The legislative acts were published on the morning of 15 April which means that these four persons are now subject to an EU asset freeze and prohibition on making economic resources available. This brings the total number of persons subject to such EU measures in connection with embezzlement of Ukrainian public funds to 22. No further sanctions against Russia were imposed by the Council of the EU during this meeting. The Council has repeatedly stated that any further steps by the Russian Federation to destabilise the situation in Ukraine would lead to additional and far-reaching consequences for relations in a broad range of economic areas between the EU and its Member States, on the one hand, and the Russian Federation, on the other hand. In this respect, the preparatory work by the European Commission and the Member States is under way on possible targeted measures, as requested by the European Council in March, so that further steps can be taken should events require. Please click here to read our alert dated 21 March 2014. The Council has indicated that the EU is ready to assist Ukraine in the field of civilian security sector reform. All options will be examined, including a possible mission under the Common Security and Defence Policy. A decision will be taken at the next Foreign Affairs Council meeting on 8 May. The European Parliament has expressed its support for the Council’s readiness to assist Ukraine in this area. During the meeting, the Council of the EU also adopted: UPDATE: Developments in the Ukraine • a decision providing up to €1bn in macro-financial assistance to Ukraine to support its economic stabilisation and its structural reform agenda, supplementing resources made available under a financial arrangement with the IMF; and • a regulation granting unilateral trade preferences to Ukraine, providing for the temporary reduction or elimination of customs duties in accordance with a schedule of concessions set out in an annex to the EU-Ukraine association agreement. On 17 April, the European Parliament passed a non-binding resolution asking the Council to strengthen the second phase of sanctions (sanctions against Russian individuals) and be ready for the third phase (economic sanctions), which should be applied immediately. The members of the European Parliament noted that there should also be measures against Russian companies and their subsidiaries, particularly in the energy sector, as well as Russian investments and assets in the EU. The European Parliament considers that the current situation requires the Council to strengthen the second phase of sanctions and be ready for the third phase (economic sanctions), which should be applied immediately. Furthermore, it called on the Council to swiftly apply an arms and dual-use technology embargo. The European Parliament also asked that all agreements with Russia are reviewed with a view to their possible suspension. With regard to Crimea, the European Parliament asked for the introduction of economic, trade and financial restrictions in respect of Crimea and its separatist leadership where such restrictions should be implemented rapidly on the basis of the Commission’s analysis of the legal consequences of Crimea’s annexation. The resolution has been forwarded to the Council, the European Commission, the Member States, Ukraine, Georgia, Moldova, the Council of Europe, the OSCE and Russia. As the resolution is non-binding, it remains to be seen what effect it will have. During the meeting on 17 April, the United States, the EU, Russia and Ukraine reached an agreement on immediate steps to ease the crisis in Ukraine. It was agreed that: • illegal groups should be disarmed; • illegally occupied buildings should be returned to rightful owners; • all parties confirmed strong support to the Organisation of Security and Cooperation in Europe’s special monitoring mission in Ukraine; • Ukraine confirmed that amnesty will be granted to anti-government protestors apart from those who have been found guilty of a capital offence; and • Ukraine confirmed that it is committed to address regional autonomy concerns and is currently working on a proposal on constitutional reforms. The U.S. and EU were hoping for immediate implementation of the agreement, failing which, further sanctions would be imposed. Putting the agreement into practice is already at risk as pro-Moscow separatists are showing no sign of surrendering arms and vacating seized government buildings. Also on 17 April, the President of the European Commission, José Manuel Barroso, sent a letter to the President of Russia, Vladimir Putin, agreeing on Russia’s proposal for trilateral discussions between the EU, Russia and Ukraine with regard to security of gas supply and transit. 2 UPDATE: Developments in the Ukraine U.S. Sanctions Pursuant to Executive Order 13660, dated March 6, 2014, the Office of Foreign Assets Control (“OFAC”) within the U.S. Department of the Treasury on April 11, 2014 ordered the blocking of the property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of any United States person of the following individuals and entities, which have been added to OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN list”): 1. Aleksei Mikhailovich Chaliy (d.o.b 13.06.1961, Chairman of the Coordination Council for the Establishment of the Sevastopol Municipal Administration, Mayor of Sevastopol); (a.k.a. CHALIY, Aleksei; a.k.a. CHALIY, Aleksei Mikhailovich; a.k.a. CHALIY, Aleksey Mikhailovich; a.k.a. CHALIY, Aleksey Mykhaylovych; a.k.a. CHALIY, Alexei; a.k.a. CHALIY, Mikhailovich Oleksiy; a.k.a. CHALY, Aleksey Mikhailovich; a.k.a. CHALY, Alexei; a.k.a. CHALYI, Aleksei; a.k.a. CHALYI, Aleksiy); POB Sevastopol, Ukraine; (individual) [UKRAINE]. 2. Mikhail Grigorevich Malyshev (d.o.b 10.10.1955, Chair of the Crimea Electoral Commission); 15/9 Ulitsa Turgeneva, Apt. 9, Simferopol, Crimea, Ukraine; POB Simferopol, Crimea (individual) [UKRAINE]. 3. Valery Kirillovich Medvedev (d.o.b 21.08.1946, Chair of the Sevastopol Electoral Commission); 22 Ulitsa Oktyarskoi Revolutsii, Building 9, Apt. 14, Sevastopol, Crimea, Ukraine; POB Russia; (individual) [UKRAINE]. 4. Rustam Ilmirovich Temirgaliev (d.o.b 15.08.1976, Crimean Deputy Prime Minister, Deputy Chairman of the Council of Ministers of Crimea); POB Ulan-Ude, Russia (individual) [UKRAINE]. 5. Sergey Pavlovich Tsekov (d.o.b 28.09.1953); POB Simferopol, Crimea, Ukraine (individual) [UKRAINE]. 6. Yuriy Gennadievych Zherebtsov (d.o.b 19.11.1969, Counselor to the Speaker of the Crimean Rada); (a.k.a. ZHEREBTSOV, Yuriy Gennadyevich; a.k.a. ZHEREBTSOV, Yury), 23 Ulitsa Koltsevaya, Yevpatoria, Crimea, Ukraine; POB Odessa, Ukraine (individual) [UKRAINE]. 7. Pyotr Anatoliyovych Zima (d.o.b 29.03.1965, Head of the Crimean SBU (Security Service of Ukraine)); (a.k.a. ZIMA, Petr Anatolyevich; a.k.a. ZYMA, Petro), 18 Ulitsa D. Ulyanova, Apartment 110, Simferopol, Crimea, Ukraine; POB Russia (individual) [UKRAINE]. 8. CHERNOMORNEFTEGAZ (a.k.a. CHORNOMORNAFTOGAZ; a.k.a. NJSC CHORNOMORNAFTOGAZ); Kirova / per. Sovnarkomovskaya, 52/1, Simferopol, Crimea 95000, Ukraine; this designation refers to the entity in Crimea at the listed address only, and does not include its parent company. [UKRAINE]. OFAC also corrected the entry on the SDN list for the following individual: 9. Valery Kirillovich Medvedev, (d.o.b 21.08.1946, Chair of the Sevastopol Electoral Commission); 22 Ulitsa Oktyabrskoi Revolutsii, Building 9, Apt. 14, Sevastopol, Crimea, Ukraine; POB Russia (individual) [UKRAINE]. In addition to the action taken by OFAC, on 11 April 2014, the Bureau of Industry and Security (“BIS”) within the U.S. Department of Commerce added Chernomorneftegaz to the Entity List under the Export Administration Regulations (“EAR”). Generally, the Entity List consists of entities determined by BIS to present an unacceptable risk of diversion into programs relating to the development of weapons of mass destruction, terrorism, or 3 UPDATE: Developments in the Ukraine other activities contrary to U.S. national security or foreign policy interests. As a result of the Entity List designation, BIS has imposed a license requirement for the export, re- export or in-country transfer of items subject to the EAR by any person to the company, with the presumption of denial.