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Retaliatory sanctions imposed by the Russian Federation

08/08/2014

On August 6, 2014 the President of the Russian Federation Vladimir Putin signed Decree No. 560 “On applying special economic measures to ensure security of the Russian Federation”. The decree prohibits the importing of agricultural products, raw materials and foodstuffs to the Russian Federation from the USA, EU countries, Canada, Australia and Norway, following the economic sanctions imposed on Russian legal and natural persons by those countries.

Any deliveries of beef, pork, poultry, sausages, seafood, dairy products (including milk, cheese and curds) as well as fruit and vegetables to the territory of the Russian Federation are now prohibited. Therefore, the restrictions will affect not only the import of agricultural production, but also the processing of foodstuffs such as sausages, jams, juice and carbonated beverage, muesli and potato chips.

A number of departments and agencies have been given the task of controlling the current market situation, as well as avoiding undue inflation with regard to the cost of agricultural production, raw materials and food.

The prohibition on the relevant imports shall be effective as of August 7, 2014 for an initial period of one year. However, if there are any changes in the political or economic situation, the Government of the Russian Federation is prepared to revise the duration and other measures set out in the decree.

Such restrictions may seriously affect the retail trade, particularly importers of agricultural products. In light of these measures, it would be wise to analyse existing contracts involving counterparties from the USA, EU countries, Canada, Australia and Norway in order to assess whether the contract is enforceable, as well as to minimise possible losses.

Source
CMS Client Alert | August 2014
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Authors

Portrait of Sergey Yuryev
Sergey Yuryev
Partner
Moscow