Understanding the EU's "No re-export to Russia" clause: Key insights and compliance guidelines

The European Union has introduced a crucial regulatory measure aimed at preventing the circumvention of export bans to Russia. This measure, encapsulated in Article 12g of Council Regulation 833/2014, mandates the inclusion of a "no re-export to Russia" clause in contracts involving certain sensitive goods. Here, we break down the essential aspects of this regulation, based on the latest FAQs published by the EU as of July 15th, 2024.

The primary goal of Article 12g is to curb the re-export of EU-sanctioned goods to Russia through third countries. While many EU operators already incorporate "no re-export" clauses as part of their due diligence practices, Article 12g elevates this practice to a legal requirement for specific categories of sensitive goods. These include aviation-related items, jet fuel (Annexes XI, XX to the Regulation), firearms (Annex XXXV to the Regulation, as well as Annex I to Regulation (EU) No 258/2012) and common high priority items (Annex XL to the Regulation).

EU exporters are obligated to include the "no re-export to Russia" clause in their contracts at the time of export, sale, supply, or transfer of the relevant goods. They must be prepared to demonstrate compliance if requested by their national competent authorities. Furthermore, exporters must inform their authorities immediately upon discovering any breach or circumvention of this clause. Exporters should not sell their products to any non-EU operator that is not ready to incorporate a “no re-export to Russia” clause in contracts falling under the scope of Article 12g.

The requirement to include the "no re-export to Russia" clause depends on the contract's date of conclusion:

The obligation applies to contracts with operators based in any non-EU country, except for partner countries listed in Annex VIII to Council Regulation 833/2014. As of June 24th, 2024, these partner countries include the United States, Japan, the United Kingdom, South Korea, Australia, Canada, New Zealand, Norway, Switzerland, Liechtenstein, and Iceland.

To ensure the clause's effectiveness, it must include adequate remedies for breaches, such as contract termination and penalties. While operators are free to choose the wording, a recommended template is provided within the FAQ document to meet the requirements of Article 12g, particularly for contracts with operators in high-risk jurisdictions.

An exemption exists for public contracts concluded with a public authority in a third country or an international organization, as outlined in Council Regulation 2024/1745. Exporters must inform their national competent authorities of any such contracts benefiting from this exemption.

The "no re-export to Russia" clause is a critical component of the EU's efforts to enforce sanctions and prevent the circumvention of export bans. EU exporters must ensure compliance by incorporating this clause into relevant contracts and maintaining robust due diligence frameworks. By doing so, they not only adhere to legal requirements but also contribute to the broader goal of upholding international sanctions.

For more detailed information and updates, refer to the official FAQs and relevant EU regulations.

For more information on how ONESOURCE Global Trade solutions can assist you in managing sanctions and export controls, please contact your Account Manager or Client Services Manager.