Ireland: US Sanctions On Russia: Potential Impact On Irish Companies

Last Updated: 22 June 2018
Article by Greg Glynn, Ryan Ferry and Sinead Crowley

Irish companies may see a knock-on effect from the new range of sanctions announced by the US government against Russia.

The US government introduced sanctions against Russia as a response to what it describes as 'malign activity' by Russia in Syria, eastern Ukraine, and the West. These sanctions are aimed at having a punitive effect on targeted entities and limiting Russia's economic growth.

On 6 April 2018, the US Department of the Treasury's Office of Foreign Assets Control (OFAC) added a number of high-profile Russian businessmen and the companies they own or control to the Specially Designated Nationals and Blocked Persons List (the SDN List).

Under these sanctions, US persons are generally prohibited from dealing with an SDN, or an entity controlled by an SDN (i.e. an entity in which 50% or more of its shares are owned by an SDN).

Persons or entities engaged in dealings with certain specified SDNs (GAZ Group, United Company RUSAL PLC, EN+ Group PLC and JSC EuroSibEnergo) can avail of a general licence giving them an extended period of time, currently up to 23 October 2018, to wind down their dealings with the SDN that were in effect prior to 6 April. This licence does not authorise the provision of new services or exports. (This deadline has been extended on a number of occasions – see OFAC's website for updates).


Non-US persons and entities may be subject to secondary sanctions and penalties if they knowingly engage in significant transactions with an SDN, including potentially being added to the SDN List. The potential consequences of these sanctions may be far-reaching.


A difficult choice for companies? Take for example an Irish company doing business with an SDN, or with a subsidiary controlled by an SDN. The Irish company has a choice: terminate its contract with the SDN or potentially face secondary sanctions.

If the Irish company opts to terminate the contract, this may lead to claims for breach of contract and could have significant effects on the Irish company's business, for example in cases where the SDN is a key supplier to the Irish company and there are no alternative suppliers available.

If the Irish company continues to trade

with the SDN, it risks being subject to secondary sanctions, including having its assets in the US frozen. US persons and entities will also be prohibited from transacting with the Irish company, potentially eliminating significant revenue streams.

US banks will not be able to process transactions involving the Irish company.

Non-US banks may also be reluctant to transact with the Irish company.

Over the past ten years, US government agencies have imposed multi-billion dollar penalties on non-US banks (including Commerzbank, BNP Paribas and HSBC) for "causing" US banks to violate sanctions by clearing SDN- related transactions through the US financial system. Non-US banks may also be subject to secondary sanctions for facilitating transactions involving entities subject to sanctions.

What about the group?

A parent company, subsidiary, or company within the same group that continues to transact with an SDN may also be subject to secondary sanctions.

Even if the related company is not itself subject to secondary sanctions, heightened due diligence requirements mean that a US entity might refuse to transact with it, despite being legally permitted to do so.

Other companies within the group may also suffer reputational damage by being associated with a sanctioned entity.


It is important to carefully manage the approach to a counterparty that has been designated an SDN in order to navigate contractual risks.

  • » Ascertain whether there is a legitimate "way out" of contractual terms, for example under the terms of a force majeure clause or a sanctions clause. When entering into new contracts, companies should ensure that the contractual terms deal with the risk of sanctions, a risk which is not necessarily as remote as it might first seem.
  • » Liaise with other companies that find themselves in the same situation and avail of the assistance of trade associations and industry representative bodies. OFAC is more likely to engage in discussions with representative groups from a particular industry than individual companies.
  • » Apply to OFAC for a specific licence to engage in a transaction that would otherwise be prohibited.
  • OFAC is unlikely to grant a specific licence to continue transacting with the sanctioned entity in perpetuity. However, it may be willing to grant a specific licence to extend the time period within which the Irish company must wind down transacting with the sanctioned entity so that alternative arrangements can be made.
  • » If a company has availed of the general licence, to continue to trade with certain specified SDNs for the limited time period, the company must take action to start to wind down its business with the SDN and avoid any actions that might be seen as an attempt to bypass the sanctions e.g. increasing supply between now and the wind down date, as this might be seen as an attempt to side- step the sanctions by stockpiling supplies in advance.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions