Sanctions legislation for entrepreneurs is the body of EU, UN, and national rules that restrict or prohibit trade with specific countries, parties, or goods. At Musch Legal, we have seen an explosion of sanctions inquiries since 2022, particularly regarding Russia and dual-use products. Sanction violations are punishable under the Economic Offences Act with heavy fines and imprisonment. Anyone who does not yet have a sanctions program runs an unacceptable risk.
What is the legal problem? (Which sanctions affect Dutch exporters?)
Sanctions change rapidly and apply with immediate effect. Compliance is mandatory under severe penalties. Sanctions target countries (Russia, Iran, North Korea), sectors (energy, defense, dual-use), parties (sanctioned persons and entities), and goods. At the same time, sanctions disrupt commercial obligations. Non-compliance leads to criminal prosecution, freezing of funds, and exclusion from payment systems.
What does the law say? (Which regulations do you need to know?)
EU sanctions apply directly in all Member States via regulations. Since February 2022, the EU has applied an extensive package under Regulation (EU) 833/2014 (Russia) and Regulation 269/2014 (freezing of funds). The Sanctions Act 1977 provides for Dutch implementation; violation is punishable under the Economic Offences Act. Regulation (EU) 2021/821 governs export control of dual-use goods. OFAC sanctions via US Treasury with extraterritorial effect, including secondary sanctions.
Regime
Scope
Enforcement
EU sanctions (833/2014)
All EU Member States
Per Member State — NL via Sanctions Act
UN sanctions
Worldwide via UN Members
Via EU + national implementation
US OFAC
US + secondary effects
OFAC + DOJ prosecution
UK sanctions
UK + extraterritorial
OFSI
Dual-use 2021/821
EU exports
Per Member State authorization
Regime
Scope
Enforcement
EU sanctions (833/2014)
All EU Member States
Per Member State — NL via Sanctions Act
UN sanctions
Worldwide via UN Members
Via EU + national implementation
US OFAC
US + secondary effects
OFAC + DOJ prosecution
UK sanctions
UK + extraterritorial
OFSI
Dual-use 2021/821
EU exports
Per Member State licensing
What risks do companies face? (What penalties threaten?)
Criminal prosecution and heavy fines under the Sanctions Act 1977 and the Economic Offences Act (Article 6 of the Economic Offences Act). Exclusion from international payment systems (SWIFT). Freezing of funds under Regulation 269/2014. Loss of insurance coverage. Banks refuse payments. Reputational damage undermines customer relationships and financing. Personal liability for directors in the event of inadequate supervision.
Practical example from our practice (How did Musch Legal avoid a Russian sanctions claim?)
Musch Legal represented a Dutch supplier with a multi-year contract with a Russian client that did not include a sanctions clause. Following new sanctions, delivery was prohibited under Regulation 833/2014. The client demanded performance or damages of 1.8 million euros. We successfully defended the case based on Section 6:75 of the Dutch Civil Code (force majeure due to statutory impossibility). Upon renegotiation, we incorporated a specific sanctions clause: suspension, termination without damages, retention of advances, plus automated sanctions screening.
What can you do? (Which sanctions program do you build?)
Implement automated sanctions screening (Refinitiv, Worldcheck, Dow Jones). Train purchasing and sales on sanction recognition. Incorporate sanction clauses into all international contracts. For dual-use goods under Regulation 2021/821: apply for a license in a timely manner via the Central Office for Import and Export (CDIU). Screen UBOs, directors, and end users. Document everything for proof of compliance. Engage Musch Legal for a sanctions audit.
Sanction clauses in international agreements