The European Commission has updated its Guidance (the Guidance) on the requirement in Article 12g of Council Regulation (EU) No 833/2014 for EU-based exporters to include a ‘no re-export to Russia’ clause in contracts for the export of specific types of goods from the EU to certain third countries (the No Russia Clause). The Guidance also covers the ‘no-export to Belarus’ requirement under Article 8g of Council Regulation (EC) No 765/2006 (the No Belarus Clause).

For information on these requirements, please read our earlier briefings Aviation: Guidance on ‘No Re-Export to Russia’ clauses and Aviation: Sanctions Update on ‘No Re-Export to Russia’ and ‘No Re-Export to Belarus’ Clauses.

KEY DATES FOR EU EXPORTERS 

• From 1 January 2025 (that date was extended from 20 December 2024 by the fourteenth package of EU sanctions against Russia), all in-scope contracts concluded before 19 December 2023 must include a No Russia Clause unless they have already expired with no remaining obligations.
• The No Belarus Clause applies only to new contracts entered into on or after 1 July 2024 (i.e. it does not apply retrospectively to pre-existing contracts).

GUIDANCE UPDATES 

The updated Guidance now includes some welcome clarifications such as:

Adequate Remedies

While the key point remains that the remedy should be “reasonably strong and aim to deter non-EU operators from any breaches”, in addition to termination and financial penalties the Guidance now also refers to ceasing deliveries and suspending or interrupting a contract as soon as the EU exporter becomes aware of a breach of a No Russia Clause.

Public Contracts Exemption:

The Guidance clarifies the public contracts exemption introduced under the EU’s 14th package of sanctions against Russia.  Key clarifications include:

• The information to be notified to the EU exporter’s national competent authority (NCA) where the exporter is availing of this exemption.
• Regarding contracts made before 19 December 2023, the NCA may request a notification within an “appropriate timeframe” (i.e. these contracts are not exempt from the notification requirement).
• Further guidance on what the European Commission considers to be a “public authority” for the purpose of Article 12g, paragraph 2a.

Unilateral Communications:

If an EU exporter cannot include the No Russia Clause in an existing contract due to counterparty refusal, it can fulfil its obligation under Article 12g by issuing a unilateral communication prohibiting re-exportation to or for use in Russia. This option is available only in exceptional cases as detailed in the Guidance.

No Prescribed Format:

While the Guidance includes a template clause as a suggested point for negotiation, the latest update makes clear that EU exporters are free to draft their own form of a No Russia Clause as long as the requirements of Article 12g are met. For contracts concluded before 19 December 2023, general clauses aimed at respecting EU sanctions regimes may be sufficient.

Returns/Re-Exports:

The No Russia Clause is mandatory for the sale, supply, transfer or export of in-scope goods to certain third countries. The Guidance clarifies that both returns and re-exports are captured unless otherwise exempt under Article 12g.

Export Control Procedures:

Existing contracts that have been authorised in an EU Member State under an individual export control procedure aimed at prohibiting the export or re-exportation to Russia and Belarus do not need to be reopened to include a No Russia Clause or No Belarus Clause.

Intra-EU Contracts:

There is no obligation to include a No Russia Clause in intra-EU contracts on the basis that all EU operators are bound by EU sanctions.

For more information, please get in touch with our Aviation and Asset Finance Group.