Switzerland adopted the remaining measures of the EU ninth package of sanctions on 25 January 2023
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Switzerland implemented the remaining measures of the EU ninth package of sanctions in its Ordinance on Measures Connected with the Situation in Ukraine (the "Ordinance"1), with effect from 25 January at 18:00 CET.2 These include a ban on new investments in the mining sector and a ban on services to Russian entities in the areas of product testing, advertising and market research and opinion polling services. Furthermore, Switzerland expanded the products subject to export-related restrictions to more industrial, high-tech and aviation goods. The Swiss government has also enacted a new provision regarding the arms embargo opening the space for exemptions on demining equipment for use in Ukraine, on a case-by-case basis. Divestment from Russia and international trade in agricultural and food products have now been added as grounds for derogations. Finally, Switzerland has approved the sanctioning of around 200 additional individuals and entities.3
Investment ban on the mining sector in Russia4
Switzerland extends its ban on investments to the mining sector in Russia, similar to the investment ban that already exists in relation to the Russian energy sector. The investment ban prohibits:
- Acquiring or extending participation in entities incorporated in Russia or outside Switzerland or EEA5 countries and operating in the mining sector in Russia;
- Granting or being part of any arrangement to grant new loan or credit, or otherwise provide financing – including equity capital or investment services – to entities incorporated in Russia or outside Switzerland or EEA countries and operating in the mining sector in Russia;
- Creating any new joint venture with any entities incorporated in Russia or outside Switzerland or EEA countries and operating in the mining sector in Russia; and
- Providing investment services directly or indirectly related to the above activities.
The mining sector is defined as covering the location, extraction, management and processing of non-energy mining products, including stone and earth extraction.6
An exemption (not requiring prior authorisation) applies in relation to mining activities that yield their highest value from the production of any of the materials listed in Annex 30, or whose primary purpose is the production of any of those materials.7 The materials listed in Annex 30 currently include aluminium (including bauxite), chromium, cobalt, copper, iron ores, mineral fertilisers (including potassium and rock phosphate), molybdenum, nickel, palladium, rhodium, scandium, light rare earths (cerium, lanthanum, neodymium, praseodymium and samarium), heavy rare earths (dysprosium, erbium, europium, gadolinium, holmium, lutetium, terbium, thulium, ytterbium, yttrium), titanium, and vanadium.8
Ban on market research and public opinion polling services, technical testing and analysis services and advertising services to Russian companies and the Russian Government
In previous sanctions packages, the Swiss government had already prohibited the provision of accounting, auditing, bookkeeping, tax consulting services, business and management consulting or public relations services, architectural and engineering services, non-contentious legal advisory services and IT consultancy services, directly or indirectly, to Russian entities and the Government of Russia. This ban is extended now to also cover market research and public opinion polling services, technical testing and analysis services and advertising services.9
A wind-down exemption (not requiring prior authorisation) allows for the provision of these new enlisted services if strictly necessary for the termination by 24 February 2023 of non-compliant contracts concluded before 25 January 2023.10 An exemption also applies in respect to services for the exclusive use of legal persons, undertakings or entities established in Russia that are exclusively or jointly owned or controlled by legal persons, undertakings or entities organised under the laws of Switzerland, a Member State of the EEA or the UK.11
Derogations (subject to prior authorisation) also exist for (i) services that are necessary for humanitarian purposes, (ii) civil society activities that promote democracy, human rights or the rule of law in Russia, (iii) the functioning of certain diplomatic or consular representations of Switzerland and its partners or international organisations enjoying immunities under international law in Russia, (iv) guaranteeing the energy supply of Switzerland, a Member State of the EEA or the UK, (v) the purchase for import or transportation in Switzerland, a Member State of the EEA or the UK of titanium, aluminium, copper, nickel, palladium or iron ores, (vi) or to ensure the operation of infrastructures, equipment and software that are critical for the human health and security, or for the security of the environment.12
Expanded Ban on management of, and transactions with, State owned entities
As from 24 February 2023, any person resident or working from Switzerland will be prohibited from holding any post in the governing bodies of Russian entities (as well as certain of their subsidiaries) that are publicly owned or controlled by Russia, and in which Russia, the Russian Government or the Russian Central Bank has (i) the right to participate in profits, or (ii) other 'substantial economic relationship'. Several derogations (subject to prior authorisation) apply, including in respect of certain Swiss or EU-related joint ventures or subsidiaries established before 25 January 2023 or if deemed necessary for ensuring critical energy supply.
Switzerland also added the Russian Regional Development Bank to Annex 15, making it subject to the transaction ban with State owned entities.13 An exemption (not requiring an authorisation) allows the execution of contracts concluded with the Russian Regional Development Bank before 25 January 2022 until 26 April 2023.14
New derogation from Swiss export and import bans to support divestments or wind-down of business activities in Russia
To enable Swiss operators to divest from the Russian market or the wind-down of business activities in Russia, Switzerland has introduced specific and time-limited derogations (requiring a prior authorisation) from the existing export and import bans.15
More specifically, SECO16 can authorise the sale, supply and transfer until 30 September 2023 of items that are the subject of an export ban,17 where such sale, supply, transit or transport is strictly necessary for the divestment from Russia or the wind-down of business activities in Russia, and provided that the three following cumulative conditions are met:
- The items must be owned or controlled by Swiss nationals, nationals of a member state of the EEA, a legal person, entity or body established or incorporated under Swiss law or the law of an EEA member state, or a legal person, entity or body established in Russia and owned or controlled exclusively or jointly by a legal person, entity or body organised or incorporated under the laws of Switzerland or a Member State of the EEA;
- The competent authority has no reason to believe that the item might be for military end-user or have a military end-use in Russia; and
- The items were physically located in Russia before the relevant export restrictions entered into force.
In respect of the state-owned enterprises ("SOEs") that are the subject of a transaction ban, Switzerland has also introduced a derogation (requiring a prior authorisation) for transactions that are strictly necessary for divestment and withdrawals by 30 June 2023 of such SOEs or their subsidiaries from an EU entity.18
New derogation for military demining equipment
There is now a new derogation (subject to prior authorisation) for demining equipment and equipment to be used in demining operations that is intended exclusively for humanitarian purposes.19
Expansion of the export ban on aviation-related goods and goods that contribute to the enhancement of Russian industrial capacity
The list of aviation-related goods now also covers inter alia: (i) spark-ignition reciprocating or rotary internal combustion piston engines for aircraft; and (ii) parts suitable for use solely or principally with internal combustion piston engine for aircraft.20
Annex 23, which lists all the goods considered as goods that contribute to the enhancement of Russian industrial capacity includes as of 25 January 2023, goods such as various data-processing machines (e.g. laptops), as well as related input or output units (e.g. keyboards), storage units (e.g. hard drives), related parts, etc.18,21
New reporting obligations and exemptions from Swiss Import bans
Switzerland introduced a new reporting obligation of all purchases (where Switzerland is the destination), import or transport into Switzerland of natural gas condensate originating in or coming from Russia.22
Switzerland also introduced a new wind-down exemption from the existing Swiss import ban on goods that generate significant revenues for Russia in respect of goods falling under tariff position 2905 11 (i.e. Methanol (methyl alcohol)). The wind-down exemption allows the execution of contracts concluded before 24 November 2022 until 18 June 2023.23
Switzerland further extended asset freeze restrictions to around 200 individuals and entities.
Switzerland also introduced various new derogations from the asset freeze in relation to the designated Russian state-owned banks and in respect of activities relating to agricultural and food products, as follows:
- Specific derogation (subject to prior authorisation) from the asset freeze on Sberbank in respect of funds or economic resources that are necessary for the completion, by 26 July 2023, of an ongoing sale and transfer of proprietary rights directly or indirectly owned by Sberbank in a Swiss or EU entity24;
- Specific derogation (subject to prior authorisation) from the asset freeze on Credit Bank of Moscow and Dalnevostochny Bank in respect of funds or economic resources that are necessary for the termination by 26 July 2023, of operations, contracts or other agreements, including correspondent banking relations, concluded with those entities before 24 January 202325;
- Specific derogation (subject to prior authorisation) from the asset freeze on the designated Russian banks (i.e. Bank Rossiya, Promsvyazbank, VEB, Otkritie FC Bank, Novikombank, Sovcombank, VTB Bank, Sberbank, Credit Bank of Moscow and Dalnevostochny Bank) in relation to funds or economic resources that are necessary for the purchase, import or transport of agricultural and food products, including wheat and fertilisers26; and
- Specific derogation (subject to prior authorisation) from the asset freeze on any designated person who held a significant role in international trade in agricultural and food products, including wheat and fertilisers, prior to their listing in relation to funds or economic resources that are necessary for the sale, supply, transfer or export of agricultural and food products, including wheat and fertilisers, to third countries in order to address food security.27
1 Available by clicking on this link.
2 See here for previous White & Case client alerts relating to sanctions.
3 See here for Federal Council's press release of 25 January 2023 on the ninth package of sanctions.
4 Article 28b (1) of the Ordinance.
5 European Economic Area.
6 Article 1(n) of the Ordinance.
7 Article 28b (3) of the Ordinance.
8 Annex 30 of the Ordinance.
9 Article 28e (1ter) of the Ordinance.
10 Art. 35(28) of the Ordinance.
11 Article 28e (2) of the Ordinance.
12 Article 28e (3) of the Ordinance.
13 Article 24a(1)(a) of the Ordinance.
14 Article 35(26(d) of the Ordinance.
15 Article 14e of the Ordinance.
16 The Secretariat for Economic Affairs, link to website here.
17 The new derogation covers all existing Swiss export bans imposed on: (i) dual-use goods and technology (Article 4), (ii) goods that might contribute to Russia's military and technological enhancement (Article 5), (iii) goods and technology for use in the aviation and space industry (Article 9), (iv) maritime navigation goods and technology (Article 9a), (v) jet fuels and fuel additives (Article 9b), (vi) goods for the use in oil refining and liquefaction of natural gas (Article 10), (vii) goods for the energy sector (Article 11), (viii) goods for the reinforcement of the industry (Article 11a), and (ix) luxury goods (Article 14b).
18 Article 24a (3) (b) of the Ordinance.
19 Article 2a of the Ordinance.
20 Article 5 of the Ordinance and Annex 1, X.A.VII.03 ff.
21 Annex 23, Part 2.
22 Article 12a (4) of the Ordinance.
23 Article 35(23) (b) of the Ordinance.
24 Article 15(8) (b) of the Ordinance.
25 Article 15(8bis) of the Ordinance.
26 Article 15(8bis) of the Ordinance.
27 Article 15(9quater) of the Ordinance.
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