Polish Sanctions Act
05/05/22
The Act on Special Measures to Counteract the Support of Aggression Against Ukraine and to Protect National Security came into force on 16 April 2022; the Act has been frequently called the “Polish Sanctions Act” (hereinafter: the “Act”).
The main premise of the Act is to supplement the existing EU sanctions imposed on the Russian Federation and Belarus. The sanctions under Regulations Nos. 269/2014, 833/2014 and 765/2006 have been considerably extended since the Russian aggression against Ukraine; however, they lacked the key element which is penalties for breaching the bans. The Polish legislator has extended the catalogue of restrictive measures and implemented severe consequences for breaching the sanctions.
List of persons and entities subject to sanctions
The creation of an additional list of persons and entities subject to repressive measures, which is kept by the Minister of the Interior and Administration, is one of the most important provisions of the Act. The catalogue is supposed to be supplemental to the EU sanction lists.
The criteria for the inclusion on the list are defined broadly, as the list can cover any person and entity that supports directly or indirectly:
the Russian Federation’s aggression against Ukraine; serious breach of human rights and repressions against civil society and democratic opposition, or persons or entities whose activities pose any other serious threat to the democracy or the rule of law in the Russian Federation or in Belarus.
Furthermore, the list may cover entities that are directly tied to the above mentioned persons and entities, particularly in view of:
personal-, organisational-, economic- or financial ties, or if they have been found likely to use their means, funds or resources for that purpose.
The decision of the Minister of the Interior and Administration to add a person/entity to the list may not be appealed by way of a regular administrative procedure. The decision is executed immediately. Only an appeal to the Provincial Administrative Court or the motion for removal from the list may challenge the entry; however, it does not stop the enforceability of the decision.
The first list was published on 26 April 2022. The list is available at: https://www.gov.pl/web/mswia/lista-osob-i-podmiotow-objetych-sankcjami.
New statutory prohibitions and exclusions
The extensive list of EU prohibition measures including but not exclusive to:
- the sale, supply, transfer or export of civilian and military dual-use goods and technology,
and
- the freeze of all financial means and economic assets belonging to, owned, held or controlled by persons and entities subject to sanctions,
was supplemented by the Polish legislator in the Act which also includes:
the exclusion from the public procurement procedures or competitions conducted pursuant to the Public Procurement Law of entities on the EU lists and on the lists maintained by the Ministry of the Interior and Administration, and of entities in which a person on such list is the parent company or beneficial owner;
the ban on the imports of coal from Russia or Belarus and transport of coal through the territory of Poland, and – by extension – the duty to hold documents proving the country of origin of the coal and other information related to the region where the resources where extracted and the date of their acquisition;
the ban on the application, use or propagation of symbols or names supporting the Russian aggression against Ukraine.
Sanctions for the breach of sanctions
The Act also provides for severe penalties for the breach of the prohibition measures. It is worth noting that there are now criminal sanctions under domestic law for the breach of multiple rules arising from EU regulations.
Fines up to PLN 20 million may be imposed in the following cases (among others):
- failure to fulfil the duty to freeze the financial means, funds, economic assets of entities on the list, or taking actions to evade that duty,
breaching the ban on the imports and transport of coal from Russia or Belarus to Poland,
- by the Head of the National Revenue Administration (KAS);
applying for a public contract or admission to participate in a competition or taking part in the public procurement procedure or a competition,
- by the President of the Public Procurement Office.
Furthermore, a penalty of deprivation of freedom for a period not shorter than three years may be imposed on natural persons for:
breaching the trade embargo on coal from Russia and Belarus;
breaching the EU sanctions concerning the export of dual-use goods and technology, among other things;
taking part in actions with the purpose or effect of evading the above ban.
It is worth pointing out at this point that, where the offence of breaching or evading sanctions was committed as part of the business activity of an entrepreneur (e.g. a company), it is required under the Act to assume that the prohibited act was committed by the person responsible for the transaction conclusion.
Furthermore, where the said offences are committed, the court may order forfeiture of goods which are the object of the crime.
Given the amount and severity of penalties for the breach of sanctions imposed on the Russian Federation and Belarus, it is imperative that you take all due diligence measures before establishing a business relationship with a business partner. Polish businesses are recommended to conduct a thorough check of the chains of delivery and potential counterparties, and to implement risk mitigants, such as additional provisions addressing the sanctions or receiving the relevant statements from the counterparties.
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Counsel, Compliance Practice Team Leader, Advocate, PwC Poland
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