Legal analysis warns of extraterritorial reach of Ukrainian sanctions following court ruling
A legal analysis by global law firm Dentons warns that Ukrainian sanctions may apply extraterritorially to any transactions involving sanctioned persons, even those executed entirely outside Ukraine, following a recent Supreme Court decision that confirmed the broad reach of Ukrainian sanctions law.
Wednesday’s analysis by Kyiv-based Dentons Partner Natalia Selyakova notes that the 14 May Ukrainian Supreme Court ruling ‘explicitly confirmed the extraterritorial application of Ukrainian sanctions’. The court ruled that sanctions ‘are not limited to property located in Ukraine but extend to any assets of the sanctioned person, regardless of jurisdiction’.
With this ruling, the Supreme Court has now explicitly confirmed the extraterritorial application of Ukrainian sanctions, the analysis notes.
The court case arose from a corporate restructuring outside Ukraine involving a sanctioned individual, where a private notary registered changes to the ultimate beneficial ownership of a Ukrainian legal entity, based on a foreign transaction. The Ministry of Justice found these actions violated Ukrainian sanctions law and the principles of extraterritorial application.
The analysis highlights key implications: A sanctioned individual cannot legally transfer shares or change the ultimate beneficial owner of a legal entity, directly or indirectly. Any such transfer may be deemed a circumvention of sanctions and null and void as a matter of Ukrainian public order.
The ruling establishes that ‘foreign transactions do not override Ukrainian sanctions. The fact that the control change occurred under foreign law and was reflected in foreign corporate records does not bind Ukrainian authorities,’ the analysis states.
