Russian Legislature Makes Way For Counter Sanctions Legislation

In response to the most recent round of U.S. sanctions against Russian entities and individuals, which were arguably the most profound in terms of their impact, the lower house of the Russian Parliament, the Duma, this week initiated deliberations on two laws which, if adopted, would provide additional instruments for the Russian state to apply counter sanctions on western entities/individuals. The first draft law, which was adopted in the second (out of three) readings, establishes a legal framework authorizing the President and the Government of Russia to adopt counter sanctions and various restrictive measures against parties from those nations which imposed sanctions on Russia. The second draft law, adopted in the first reading, seeks to criminalize compliance with western sanctions by Russian individuals. Both draft laws faced strong criticism from the Russian business community and human rights groups. As a result, the Duma was forced to considerably amend the framework law on counter sanctions before adopting it in the second reading, while the bill on criminal liability law was put on hold and will face greater scrutiny from experts and interest groups before it progresses to a second reading.

Both laws could have a significant impact on international business operating in Russia. However, the most recent iteration of the counter sanctions law and the postponement of the criminal liability law provide some basis to believe that a more reasonable and balanced approach to the countermeasures will prevail, taking into account the possible effect these measures would have on both Russian companies and foreign investment in Russia.

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