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Volume XII, Number 146

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UPDATE: UK Announces Expansion of Trade Sanctions Against Russia and Belarus

On 9 May, the UK government announced it was targeting Russia and Belarus with a 35% increase in import tariffs to be imposed on precious metals, including platinum and palladium. It also announced a ban on exports, including chemicals, plastics, rubber and machinery, worth an estimated £250 million and aimed at disrupting Russia’s manufacturing and heavy machinery sectors.

The legislation necessary to implement this latest wave of trade-related sanctions, impacting on approximately £1.7 billion worth of goods, is not yet in force, and a timetable for implementation is not known. However, once implemented, 96% of imports of goods from Russia may be hit by restrictions, and more than 60% of exports of goods to Russia may be under whole or partial restriction, bringing the total value of products subject to full or partial import and export sanctions on Russia to more than £4 billion. The Department for International Trade commented that Russia was highly dependent on the UK as a market for exports of these precious metals. Chancellor Rishi Sunak stated that trade sanctions are “doing significant damage to Putin’s war effort”.

Takeaways

Russia is one of the world’s largest producers of palladium and platinum, accounting for approximately 40% of global mine production of palladium in 2020 and approximately 15% of global mine production of platinum in the same year.

While the legislation to implement these measures will come into force “in due course”, these new import tariffs may not come within the protection provided by section 44 of the UK’s Sanctions and Anti-Money Laundering Act 2018 (SAMLA). Section 44 protects a person who may be subject to civil proceedings as a result of a “reasonable belief” that they were acting in compliance with regulations in force at the time. The intention behind Section 44 is to protect people who may be faced with, for example, a breach of contract or other adverse claim for the supply of goods that are prohibited from export as a result of sanctions. The consistent element that will afford protection under section 44, is that the trade sanctions in question are prohibitory: for example, preventing the export of goods of a prescribed description; or preventing goods or technology of a prescribed description from being available.

By imposing increased tariffs on certain Russian goods, the UK government is not prohibiting the import of these goods. The protection afforded to persons under section 44 will not, therefore, be available to those who decide not to honour their contractual agreements. By increasing tariffs by 35%, importing these goods will likely be financially unfeasible and, as referenced in the UK government’s announcement, will encourage “all importers that use Russian imports to source alternative supplies”; thereby achieving the UK government’s stated aims.

This announcement will have an immediate chilling effect, discouraging UK purchasers from ordering the targeted goods and placing them in potential difficulty as regards current contractual obligations with suppliers. Consideration should be given to force majeure clauses, other early release mechanisms and insurance contracts in light of these measures.

©2022 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XII, Number 131
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About this Author

Of Counsel

Jo Rickards is the Chair of the London office’s White Collar Crime & Investigations Group where she represents a wide range of companies and individuals. Jo is recognised as a leading individual in her practice area advising clients in investigations involving allegations of corruption, cartels, tax and investment fraud and contentious financial services. She has advised directors and companies in the UK and internationally for over 20 years. She represents companies and individuals investigated by the SFO, FCA, CMA and HMRC and those who are subject to mutual legal...

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Senior Associate

Gavin Costelloe is a senior associate in Greenberg Traurig’s White Collar Defense & Special Investigations Practice in London. Gavin is a former lawyer and prosecutor for the UK’s Serious Fraud Office (SFO). Gavin advises companies and individuals on internal, government and regulatory investigations and compliance issues related to the UK Bribery Act, fraud, market manipulation, anti-money laundering, economic sanctions, and other serious and complex cross-jurisdictional matters. Gavin has considerable experience assisting with diligence for mergers, acquisitions,...

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Kara Bombach, Greenberg Traurig, Washington DC, International Trade and White Collar Defense Attorney
Shareholder

Kara Bombach assists companies to lawfully export goods, technology and services around the globe. She places significant emphasis on helping clients achieve practical, workable solutions to complex regulatory situations arising under anti-corruption and anti-bribery measures (U.S. Foreign Corrupt Practices Act (FCPA) and OECD Convention), export control laws (EAR and ITAR), anti-boycott laws, and special sanctions (embargoes) maintained by the U.S. government (OFAC and other agencies) against various countries (including Iran, Cuba and Sudan), entities and individuals....

202-533-2334
Erik de Bie, Greenberg Traurig Law Firm, Amsterdam, Corporate and Tax Law Attorney
Shareholder

Erik de Bie is an attorney-at-law specilized in international trade, customs and VAT matters. Erik counsels clients in European trade, export control, sanctions, customs, VAT and excise duty related matters, including litigation. He focuses his practice on developing and implementing European savings programs, setting up and restructuring European distribution and supply chains, improving and structuring customs, excise duty and VAT related compliance, and limiting risks and liabilities. Given the developments in European legislation and the needs of his clients, Erik is...

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