In the context of an EU-wide review of export licensing for Russia, the UK Foreign Secretary William Hague announced in March 2014 that the UK Government would be suspending (i) all existing export licences and application processing for export licences for direct exports to Russia for military and dual use items destined for units of the Russian armed forces or other state agencies which could be or are being deployed against Ukraine and (ii) export licences for exports to third countries for incorporation into equipment for export to Russia where there is a clear risk that the end product will be used against Ukraine.
Following this announcement, Russia was added to the list of prohibited destinations for the following Open General Export Licences:
Open General Export Licence (Export for Repair/Replacement under Warranty: Military Goods).
Open General Export Licence (Military Goods: for Demonstration).
The UK Export Control Organisation (the “ECO”) further announced yesterday that Russia has now been added to the list of prohibited destinations for the following additional Open General Licence:
Open General Export Licence (Export After Exhibition or Demonstration: Military Goods).
What this means for you
Companies will no longer be able to use the Open General Export Licences (OGELs) referred to above for exports to Russia, or for end use in Russia. Exporters will rather be required to apply to the ECO for a Standard Individual Export Licence (SIEL). A SIEL allows shipments of specific goods to a specified consignee up to the quantity specified by the licence. Your export will only be authorised if you are granted a SIEL and comply with all of its conditions. Applications for SIELs will be assessed against the terms of the licensing suspension announced above.
Individual export licence applications are circulated to the Foreign and Commonwealth Office and the Ministry of Defence, a process that can take up to 60 days, although the ECO aims to provide a substantive response within 20 working days of receiving the licence application. To avoid any delay, licence applications should be submitted to the ECO as early as possible.
Breach of export controls legislation is a criminal offence. Penalties for non-compliance are monitored by the ECO and offenders can be imprisoned and/or fined. The maximum penalty for the most serious offence of knowingly breaching controls is imprisonment for a term of up to 10 years, unlimited fine, or both. Enforcement of export controls is undertaken by HM Revenue and Customs, who can seize infringing goods. The making of false statements in connection with obtaining an export licence is also a criminal offence.
Companies exporting from the US should also note that the US Government has introduced a number of additional controls on exports to Russia.
Dechert regularly assists companies in ensuring global trade compliance. We have particular experience in engaging with the relevant licensing authorities and supporting clients with export licence applications.