For example, recent figures show a very large increase in exports of electrical machinery and parts to several countries that are located close to Russia since the invasion of Ukraine.[1]
Trade in high risk goods
There are often additional obligations for exporters exporting high-risk goods to non-EU countries. These may include obligations that are mentioned in the Dual-use Regulation. According to the regulation, an exporter must carry out various checks prior to export. These checks allow the exporter to know – as far as possible – the end-user and end-use of the high-risk goods. If all requirements are met, then the CDIU often authorises – in the form of a licence – the export of the high-risk goods.
With the introduction of the 12th sanction package, a new obligation has been added since 20 March 2024 for exporters trading in specific types of high-risk goods, including goods related to aviation, aviation fuel (Annexes XI and XX of the regulation), firearms (Annex XXXV of the regulation, as well as Annex I of Regulation (EU) No 258/2012) and high-priority common goods (Annex XL of regulation(EU) 258/2012)[3].
What does it mean?
With the new obligation exporters need to add a 'No re-export to Russia' clause in all contracts related to the sale of the above-mentioned goods. Specifically, from 20 March 2024, an exporter will be obliged to contractually prohibit the re-export of certain goods to Russia and for use in Russia. In addition, exporters must ensure that the sales contract provides appropriate remedies in case of breach of the clause. If the counterparty violates the clause mentioned above, exporters are obliged to notify the competent authority of the member state in which they are resident or established. The member states then notify the European Commission about the violation.
Please note, the above obligation does not apply to the execution of sales contracts entered into before 19 December 2023 up to 20 December 2024 or until their expiry date, whichever is earlier.
Understandably, exporters are not eager for this additional obligation caused by the 12th sanction package, but on the other hand, this obligation also offers advantages for an exporter. It is of course not possible to contractually shift responsibilities and risks arising from the sanctions legislation, but the 'No re-export to Russia' clause does however offer possibilities for dissolution of the sales contract. In addition, the exporter can impose a fine on the buyer if the goods still end up in Russia.
The above clause currently only applies to the specific goods in the relevant annexes, however, this says nothing about possible extensions in the future.
Wondering whether your goods are affected by the above obligation or have another question? Please feel free to contact one of our advisers.
[1] Abnormal increase in exports of sanctioned goods
to ‘fallback’ countries - ESB
[2] Apart from infrequent exceptions such as, for
example, humanitarian aid.
[3] En firearms and ammunition as listed in Annex I to
Regulation (EU)