Sanctions 2025

UKRAINE Law and Practice Contributed by: Denys Bugay, Volodymyr Vashchenko and Denys Shkarovsky, VB Partners

7. Designation, Compliance and Circumvention 7.1 Executive Body The procedure for imposing sanctions involves several stages and various state authorities. Imposition of “Typical” Sanctions (Those of the National Security and Defense Council) • The first stage is the initiation of sanction impo - sition. Five bodies are empowered to propose sanctions: the Verkhovna Rada of Ukraine, the Cabinet of Ministers of Ukraine, the National Bank of Ukraine, the Security Service of Ukraine and the President of Ukraine. Proposals are submitted to the Council of National Security and Defense of Ukraine, the co-ordinating body on national secu - rity and defence at Ukraine’s Presidency. • The second stage is the adoption of a decision on sanction imposition. At its meeting, the National Security and Defense Council of Ukraine considers proposals for sanction imposition, examines the evidence and makes an appropriate decision. • The third stage is implementation of the decision, taken by the National Security and Defense Coun - cil of Ukraine. • The decision is then implemented by the President of Ukraine, if applicable, by issuing a Decree. • In the case of sectoral sanctions, the fourth stage is approval of the Decree of the President of Ukraine by a Resolution of the Verkhovna Rada of Ukraine within 48 hours of its adoption. The decision on imposing sanctions should contain the terms of their application, except for in cases where sanctions are imposed leading to rights termi - nation, and other sanctions that cannot be imposed temporarily from a content perspective. In general, the procedure for imposing sanctions in Ukraine is not transparent. A person learns that a restriction has been applied to them from inside sources or post factum, when the decisions of the National Security and Defense Council of Ukraine and the Decree of the President of Ukraine have been adopted.

ing the impossibility of fulfilling contractual obligations with respect to imposition of sanctions on a certain person is reflected in the cases relating to claims filed by sanctioned persons against banks, where the latter refused to carry out transactions, and stopped pro - viding banking services, based on the agreement on banking services with the clients in question, on whom sanctions were later imposed. The courts of Ukraine have concluded that the obliga - tion to comply with the requirements of the legislation and apply sanction restrictions prevails over the obli - gation to comply with contractual obligations. 6.2 Enforcement The position of the Ukrainian courts regarding the possibility of enforcing decisions in favour of persons subject to sanctions was formed based on the results of consideration of the applications for permission to recognise and enforce decisions of international arbi - tration made in favour of sanctioned persons. In particular, the question was repeatedly raised as to possible implementation of the decision taken by the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation in favour of the persons on whom sanc - tions were imposed in Ukraine. The Courts of Ukraine, including the Supreme Court, take the position that granting permission to enforce decisions in favour of the persons on whom sanctions have been imposed would be contrary to the public order of Ukraine. This is explained by the fact that the grounds for imposing sanctions based on the Law of Ukraine “On Sanctions” are, first of all, the protection of national interests, national security, Ukraine’s sov - ereignty and territorial integrity. The fact of imposing a sanction on a person on the basis of the Law of Ukraine “On Sanctions” indicates that the person has created a threat to these values. Therefore, granting permission to implement the decision of the interna - tional arbitration in favour of such a sanctioned person roughly violates the fundamental political interests of the state in ensuring national security, including the security of people living on the territory of Ukraine.

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