EU Russian Coal Sanctions - 'U Turn' on transport to non-EU countries.

On 19th September 2022, the EU published new FAQs which reverse the (controversial) expansion of restrictions imposed on 10th August 2022 on certain coal and other Russian-origin goods. These FAQs clarify that EU restrictions on certain coal products (among others) do not include a ban on their transfer to third countries.

The background to this ‘EU U-Turn’ is as follows:

  • As is well known amongst commodity traders, on 8th April 2022, the EU prohibited the “purchase, import, or transfer, directly or indirectly, [of] coal and other solid fossil fuels, as listed in Annex XXII into the Union if they originate in Russia or are exported from Russia.”  The reference to “into the Union”, was interpreted as meaning that these restrictions only prohibited the purchase, import or transfer of Annex XXII coal products where they were destined for an EU Member State. 

  • However, on 4th June 2022, the EU published another FAQ which stated that EU persons were restricted from transporting restricted Russian-origin coal regardless of its end destination.  

  • On 10th August the EU further announced that “The prohibition on transfer applies irrespective of the final destination of the goods, whereas the prohibition on the import applies by nature to goods moving ‘into the Union’”.  This had the effect of restricting the transfer of certain products (including coal) to third countries.

  • Then on 29th August the EU confirmed that:

“a) The transfer of targeted goods (including coal) to third countries was prohibited; and

b) The provision of financial assistance, including brokering and insurance related to the transfer of such goods, was prohibited.”

That was the state of EU law until yesterday.  Since 19th September the above 29th August FAQs have now been amended and this has reversed the position in relation to certain restricted goods.  The EU has clarified that coal and related products are now permitted to be transferred (including transported) to non-EU countries (to mitigate food and energy insecurity).  The EU has also clarified that relevant services (such as financial assistance including brokering or insurance) tied to such transfers under Articles 3i and 3j to third countries via EU operators or the EU territory are now permitted.

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