On 24 June 2024, the European Union (EU) implemented its 14th package of sanctions against Russia to combat its continued aggression against Ukraine. A notable addition was made to Article 8a of Council Regulation (EU) No 833/2014, which introduced the requirement that EU operators “undertake their best efforts to ensure that any legal person, entity or body established outside the Union that they own or control does not participate in activities that undermine the restrictive measures provided for in [the] Regulation.” A similar clause has also been included in the Belarus sanctions framework.

On 22 November 2024, the European Commission (the Commission) published FAQs to clarify the “best efforts” obligation (the FAQs). This post provides a brief summary of the Commission’s answers to some of the most frequently asked questions regarding the parameters of “best efforts.”

Summary of FAQs and Answers

1. What does the concept of “best efforts” mean?

• It means “all actions that are suitable and necessary.”
• However, efforts should only be those that are considered “feasible”, depending on the “nature… size and the relevant factual circumstances” of the EU operator, particularly the extent of “effective control over the legal person, entity or body.”

1. What does the concept of “undermining” mean?

• “Undermining” means efforts that result in an outcome that the restrictive measures specifically seek to prevent.

1. How can EU operators show they undertook their “best efforts”?

• This will be decided on a case-by-case basis. It might include operating internal compliance programs, regular sharing of compliance standards and establishing mandatory training and reporting requirements.

1. How is Article 8a to be applied if prevented by the laws of the third country where the owned or controlled entity is incorporated?

• An EU operator will not be expected to exercise control when such power to do so is impossible.
• However, this will not apply if the loss of control was caused by the EU operator itself, such as inadequate risk assessments or unnecessary risk-prone decisions.

1. Will EU operators be liable if they are aware of, and accept, that any non-EU entities that they own or control are undermining EU sanctions?

• Yes—the operator will not be considered as having performed all necessary, suitable and feasible actions to prevent such undermining.

Concluding Remarks

The FAQs reaffirm the EU’s determination to broaden and strengthen the application of sanctions to hinder Russia’s military action in Ukraine. Whilst the FAQs do not represent binding obligations, they are reflective of the Commission’s intentions and could be relied upon by EU enforcement agencies. Operators are, therefore, encouraged to take a proactive approach to ensure adherence to compliance measures.

For further information on the FAQs, please see our alert.