Russian Parliament Introduces New Legislation in Retaliation for U.S. Sanctions

by Jones Day

Jones Day

In Short

The Situation: The Duma, the Russian parliament's lower chamber, has introduced a Draft Law that, if enacted, imposes criminal liability for compliance with U.S. and other foreign sanctions against Russian parties.

The Result: If implemented in its current form, the Draft Law could have profound negative ramifications for business operations of U.S. and European companies in Russia.

Looking Ahead: If approved after two more "readings," the Draft Law would go for approval to the Federation Council, the upper chamber of the Russian parliament, where it is expected to get a quick approval.

Criminal Liability for Compliance with or Facilitation of Sanctions

On May 14, 2018, the Duma (the lower chamber of the Russian parliament) introduced a draft law, "On Amendments to the Russian Federation Criminal Code" ("Draft Law"), which imposes criminal liability for compliance with U.S. and other foreign sanctions against Russian parties. On May 15, 2018, the Duma approved the Draft Law during the first "reading." If approved during two more "readings," the Draft Law would go for further approval to the Federation Council, the upper chamber of the Russian parliament.

Section 1 of proposed Article 284.2 of the Criminal Code would criminalize any action or inaction aimed at compliance with foreign sanctions resulting in restrictions on, or refusal to engage in, the customary business activities or transactions with Russian nationals, companies, governmental entities, and their controlled affiliates. For the purposes of this provision, customary business activities and transactions include actions aimed at performance of legal or contractual obligations or entering into agreements where a refusal is not customarily expected based on individual characteristic of a counterparty (e.g., opening bank accounts, processing payments, transactions with securities). Violation of this provision could result in criminal liability for individuals of up to four years' imprisonment or fine of up to 600,000 rubles (approximately US$9,700). The application of this provision is not limited to Russian parties and can be construed also to apply to foreign companies and/or individuals.

Section 2 of proposed Article 284.2 criminalizes intentional facilitation by a Russian national of foreign sanctions—for example, by providing recommendations or derogatory information that results or may result in the imposition of sanctions on a Russian party or its controlled affiliates. Violations of this provision may subject a Russian national to up to three years' imprisonment or a fine of up to 500,000 rubles (approximately US$8,000). The likely targets of this provision appear to be Russian political opposition figures who bring to the attention of foreign government officials information that may be used to sanction specific Russian parties. This provision can also be potentially interpreted very broadly to include investigative reports or media coverage of activities or relationships of specific Russian companies and individuals that may be used by foreign governmental entities in imposing sanctions.

If the Draft Law is adopted in its current form, it would effectively subject to criminal liability any officer or employee of a Russian or foreign company that complies with the U.S., EU, or other sanctions and, therefore, may have a major impact on its operations in Russia.

Generally, Russian law does not impose criminal liability on legal entities as opposed to individuals. There have been reports in the Russian media that the Russian Code of Administrative Violations may be amended to introduce penalties on companies for compliance with foreign sanctions.

The Draft Law was sponsored by all major legislative factions, the speaker of the Duma, and the chairwoman of the Federation Council. It received positive reviews from the executive branch and the Russian Supreme Court. While it is possible that the draft law may undergo some changes in the course of parliamentary debates, chances of its adoption within the next months or even weeks are high. Given the unprecedented speed with which the Draft Law was approved by the Duma, it is clearly on a fast track.

Given the breadth of potential application, risk of criminal liability, and significant room for prosecutorial discretion, Western companies operating in Russia should proceed with caution in their dealings with any Russian party subject to existing sanctions or at high risk of future sanctions, particularly in the context of performance or termination of existing commercial agreements.

Retaliatory Sanctions

In our Alert of April 16, 2018, we described the initial draft Federal Law "On Measures to Counter Unfriendly Actions of the United States of America and/or Other Foreign States." Unlike the Draft Law, which criminalizes compliance with sanctions, this law does not amend the existing legislation. Instead, it gives the executive branch broad authority to introduce restrictions on activities of companies and individuals from jurisdictions that have imposed sanctions on Russia, something that the executive branch could do even in the absence of the new legislation.

On May 15, 2018, it was approved by the Duma during the first "reading" but is expected to undergo a number of significant changes prior to the second "reading" aimed at mitigating potential adverse impact of certain provisions on Russian companies and individuals. The second "reading" is scheduled for May 17, 2018. It appears to be on the same approval track as the Draft Law and may very well be on its way for approval by the Federation Council within weeks.

We continue to closely monitor these developments and will provide further updates.

 Three Key Takeaways

  1. Given broad support of the Draft Law in both chambers of the Russian parliament, chances of its adoption in the near future are high.
  2. If adopted, the Draft Law would put at risk of criminal liability officers and employees of U.S. and other foreign companies that comply with U.S., EU, or other sanctions.
  3. If the Draft Law is adopted, Western companies operating in Russia should proceed with caution in their dealings with any party subject to sanctions or at high risk of future sanctions, to ensure that they do not expose themselves to liability in Russia, the United States, the European Union, or other jurisdictions that imposed sanctions on Russian parties.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jones Day | Attorney Advertising

Written by:

Jones Day

Jones Day on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.