Ukraine: The National Security and Defense Council of Ukraine Applies Sectoral Sanctions to Russian Federation and the Republic of Belarus

On 22 November 2023, Resolution of the Verkhovna Rada of Ukraine No. 3489-IX approved the Decision of the National Security and Defence Council of Ukraine (the “NSDC”) dated 20 November 2023 “On the application of sectoral special economic and other restrictive measures (sanctions) to the russian federation and the republic of belarus in the defence-industrial sphere” (the “NSDC Decision”).

The NSDC decision provides for introducing sectoral special economic and restrictive measures to the russian federation and the republic of belarus (“sectoral sanctions”) for 50 years. Sectoral sanctions relate to the defence-industrial sphere and primarily cover transactions with military and dual-use goods.

According to the Law of Ukraine “On State Control of International Transfers of Military and Dual-Use Goods”, military goods include military products, military services, military technologies, technical data, technical assistance, and basic technologies.

Dual-use goods are certain types of products, equipment, materials, software and technologies not specifically intended for military use, as well as related to them services (technical assistance), which, in addition to civilian purposes, can be used for military or terrorist purposes or the development, production, use of military goods, weapons of mass destruction, means of delivery of said weapons or nuclear explosive devices.

The introduced sectoral sanctions include:

• prohibition of transactions with military and dual-use goods with residents of the russian federation and the republic of belarus, including transactions involving residents of other states;
• suspension of the performance of economic and financial obligations in favour of residents of the russian federation and the republic of belarus under the above transactions;
• prohibition of transferring technologies and rights to intellectual property rights objects to residents of the russian federation and the republic of belarus;
• prohibition of actions by residents of the russian federation and the republic of belarus to obtain security documents and other actions related to the protection of rights to intellectual property objects, except for actions related to the extension of the validity period of intellectual property rights and the extension of the validity period of security documents;
• prohibition of registration and accreditation of collective management organisations founded by residents of the russian federation and the republic of belarus;
• termination of joint projects and industrial programmes in the sphere of security and defence, the participants of which are residents of the russian federation and/or the republic of belarus, regarding military and dual-use goods;
• prohibition of investments involving residents of the russian federation and the republic of belarus in legal entities engaged in production, international transfers of goods, and provision of military and dual-use services, including those conducted with the involvement of residents of other states.

Since Ukrainian legislation lacks a definition of the “defence-industrial sphere”, state authorities can widely apply the introduced restrictions on intellectual property rights and technologies. Accordingly, Ukrainian citizens and companies should be especially cautious while conducting activities in this area.

Although the NSDC Decision, of course, primarily concerns Ukraine, the Ministry of Foreign Affairs was instructed to inform the competent authorities of the European Union, the United States of America, and other states about the application of the above sectoral sanctions.