EU Law and Practice Contributed by: Edward Borovikov, Laurens Engelen, Aurore Ancion and Semen Medvedkov, Dentons
exclusively hinge on the principle of strict liability. This complexity arises from the diverse legal frameworks of the member states, which remain competent for the enforcement of sanctions. In certain instances, particularly concerning proce - dural and administrative mandates, the EU’s sanc - tions regime may reflect a strict liability approach. This means that individuals or entities could face penalties for non-compliance with specific obligations, such as reporting requirements, without the need for authori - ties to demonstrate intent or knowledge of wrongdo - ing. It is possible to obtain licences or derogations (exemp - tions) from sanctions regulations in certain circum - stances. These licences allow entities or individuals to engage in activities that would otherwise be pro - hibited under the sanctions regime. It is important to note that obtaining a derogation typically involves a formal application process and approval by the member state competent authorities or regulatory bodies responsible for enforcing sanc - tions. Entities seeking derogations must provide suf - ficient justification and demonstrate that the proposed activities do not undermine the objectives of the sanc - tions regime. 2.3 Licensing 2.3.1 Derogation The grounds on which derogations may be granted can vary depending on the specific sanctions regime and the jurisdiction, but common grounds include: • provision of humanitarian aid, medical supplies or other essential goods and services; • public interest, such as ensuring the safety of citizens, protecting national security or promoting peace and stability in a region; • compliance with international obligations, including treaties or agreements between states or interna - tional organisations, as well as exceptional circum - stances such as emergencies, natural disasters or unforeseen events that necessitate urgent action; • transitional arrangements when sanctions regimes are adjusted or phased out, allowing entities time to adapt to new regulations; and
• legal obligations – eg, if a party is under a legal obligation that conflicts with the sanctions, such as a pre-existing contract, they may apply for a licence to fulfil that obligation without breaching the sanctions. The application process for a licensing derogation typically involves submitting a request to the relevant competent authority or regulatory body. This request must usually include: • detailed information about the proposed activity or transaction; • details of the parties involved; • the reasons why the activity should be considered for an exemption; and • supporting documentation that justifies the need for a derogation. 2.3.2 Provision of Legal Services There is no general licence for the provision of legal services to designated persons in the EU. A licence from member state authorities is required in order to receive payment, and such licensing ground is includ - ed in the various EU asset freeze sanctions regimes. 2.4 Reporting In the EU, the framework for reporting obligations con - cerning sanctions is designed to ensure adherence to, and effective oversight of, restrictions imposed on certain individuals, entities or countries. These obliga - tions are set out in different sanctions frameworks and vary across different sanctions. The obligations are primarily directed at financial institutions, credit institutions, national central banks, insurance and reinsurance undertakings, central secu - rity depositories and other entities or individuals that might come into contact with sanctioned parties. Who Must Report Financial institutions such as banks, insurance/rein - surance companies and other providers of financial services are required to report specific dealings that may involve sanctioned parties, or are subject to peri - odic reporting requirements. Additionally, any com - pany or individual that may possess assets or engage
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