Weekly analytics for 7 — 13 December

The Criminal Code of Ukraine should provide for responsibility for the failure to comply with sanctions and subsequently be adapted to the future EU legislation, which is currently being updated

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Event

On November 28, the Council of the European Union unanimously decided to expand the list of crimes contained in the Treaty on the Functioning of the EU with the violations of restrictive measures. The proposal in this regard was provided by the European Commission on May 25.

Thus, the first step towards the criminalization of such an act as a violation of EU restrictive measures has been implemented. The preparation of the draft EU directive by the European Commission, which will contain minimum rules for defining the relevant crime and punishing should be the next step in this regard. Finally, this draft directive must be discussed and adopted by the Council and the European Parliament.

The decision of the Council of the EU mentioned that according to the national legislation of most of the EU member states, the violation of restrictive measures or the EU sanctions (and in some states – the UN and EU sanctions) is already qualified as a crime. At the same time, some states provided for a broad interpretation of the composition of crime – as “violation of rules”, while others defined it more specifically and provided a list of prohibited actions; some states connected criminal punishment with the gravity of the offence (“serious character”), others – with a quantitative parameter (“damage amount”), others – with intent or gross negligence.

However, the fact that member states providing different definitions and different punishments regarding the same crime does not contribute to the EU’s unified approach on protecting international peace and security.

Therefore, there is a need for joint action at the EU level. At the same time, it is necessary to ensure the principles of legality and proportionality of crimes and punishments enshrined in Art. 49 of the Charter of Fundamental Rights of the European Union, as well as requirements of accuracy, clarity, and understandability of the criminal law.

It is known that beyond the borders of the thousand-kilometer frontline in Ukraine, an unprecedented scale of economic conflict is raging, when Western countries, through a new arsenal of sanctions, are trying to hurt russian economy, which worth $1.8 trillion. The effectiveness of this embargo is of key importance for the end of the war in Ukraine. At the same time, as it turns out, the sanctions weapon has its flaws. The biggest drawback is that not everyone observes a full or partial embargo.

Therefore, decision of the Council of the EU emphasized that the violation of EU restrictive measures is a particularly serious crime, as it increases the threat to international peace and security, undermines support for democracy, the rule of law and humanitarian law, and can cause significant economic, social, environmental and other damage. Due to such violations, individuals and legal entities whose assets are frozen or whose activities are restricted may be able to support regimes that are subject to restrictive measures. Similarly, the money involved may allow regimes targeted by sanctions to spend on the weapons with which they commit crimes.

CPLR’s assessment

Article 83 of the Treaty on the Functioning of the European Community (as amended by the Treaty of Lisbon in 2007) provides that the European Parliament and the Council may, by means of directives, establish minimum rules concerning  the definition of criminal offenses and sanctions in the areas of particularly serious crimes of a cross-border dimension resulting from the nature or impact of such offences or of a special need to combat them on a common basis.

Currently, these areas of crime are the following: terrorism, trafficking in human beings and sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organized crime.

However, this same article allows the Council, depending on the basis of development in crime, to adopt a decision identifying other areas of crime that meet the criteria specified in Art. 83. These criteria include, as mentioned by the European Commission, the bypass of the EU sanctions.

Article 215 of the Treaty on the Functioning of the European Community should also be mentioned. According to it, the Council may adopt restrictive measures against natural or legal persons and groups or non-State entities in terms of interruption or reduction, in part or completely, of economic and financial relations with one or more third countries. Such measures are applied on a geographical or thematic indicators based on the Council’s decision on restrictive measures, which is adopted in accordance with Art. 29 of the Agreement. It is envisaged that member states should have effective, appropriate and dissuasive sanctions for violations of the Council’s rules on restrictive measures.

Thus, in the medium term, the Council and the European Parliament will adopt the relevant directive.

According to Ukraine-EU Association Agreement, the European Atomic Energy Community and their member states provide for cooperation between Ukraine and the EU in the area of criminal law regarding fight against crime (Article 22). As a candidate for EU membership, Ukraine must bring its national legislation in compliance with the EU legislation, including to implement the mentioned directive into its national legislation – after its future adoption.

However, this does not prevent the development and adoption of amendments to the Criminal Code of Ukraine (CC of Ukraine), which would provide for responsibility for bypassing sanctions imposed in accordance with the legislation of Ukraine.

The Law of Ukraine “On Sanctions” of August 14, 2014, №1644-VII mentions many types of special economic and other restrictive measures. However, there is both temptation and an opportunity to bypass most of them. In particular, regarding:

– blocking of assets or their collection into state income;

– restriction of trade operations;

– restriction or termination of transit of resources, flights and transportation through Ukraine’s territory;

– prevention of withdrawal of capital outside Ukraine;

– suspension of economic and financial obligations;

– cancellation or suspension of licenses and other permits;

– prohibition of participation in privatization, lease of state property;

– ban on using the radio frequency resource of Ukraine;

– restriction or termination of the provision of electronic communication services and the use of electronic communication networks;

– prohibition on public and defense procurement;

– prohibition on securities transactions;

– suspension of issuance of permits, licenses for import into Ukraine from a foreign state or export of currency values from Ukraine and restriction of cash issuance;

– ban on increasing the authorized capital amount,

– termination of trade agreements, joint projects and industrial programs;

– prohibition of transfer of technologies or rights to intellectual property;

– ban on acquiring ownership of land plots.

At the same time, the court decides only regarding collection of assets into the state income – therefore, intentional failure to comply with such a decision is criminal liable under Art. 382 of the CC of Ukraine “Failure to comply with court decision”. Decisions regarding other restrictive measures are adopted by the National Security and Defense Council of Ukraine, which effecting by the President’s decree and approved by a resolution of the Parliament of Ukraine – and the CC of Ukraine does not provide for responsibility for the failure to comply with such decision.

According to the Law of Ukraine “On the basic principles of forced seizure of property of russian federation and its residents in Ukraine”, the decision on the forced seizure of such a property (also a kind of sanction) adopted by the National Security Council and defense of Ukraine, effecting by the decree of the President of Ukraine. However, the CC of Ukraine does not provide for responsibility for the failure to comply with such a decision either.

Thus, the Chapter XV of the CC of Ukraine “Criminal offenses against the authority of states bodies, local self-government bodies, citizens’ associations and criminal offenses against journalists” must be complied with an article that will provide for responsibility for intentional violations of special economic or other restrictive measure, envisaged by the law or other restrictive measure or measure in the form of forced seizure of property of Russian Federation and its residents in Ukraine, committed by an official or person, providing public services.

Committing this crime by an official holding a responsible or particularly responsible position should be defined as an aggravating circumstance (paragraphs 2 and 3 of the note to Article 368 of the CC of Ukraine).