In Ukraine, the sanctions sector has been rapidly developing since 2014 because of Russia’s annexation of Crimea and armed conflict in the East.

In 2024, sanctions were imposed on more than one thousand legal entities and individuals. Although the number of sanctions imposed in 2024 has decreased compared to 2023 (when more than 7,000 individuals and legal entities were designated), sanctions remain a tool used against the aggressor state and those who support the Russian Federation.

The number of lawsuits to impose a sanction introduced in 2022 – confiscation of the assets of the Russian Federation’s accomplices into the state income filed by the Ministry of Justice of Ukraine – remains almost at the same level.

In 2023, the Ministry of Justice of Ukraine filed 31 lawsuits. In 2024, the number of lawsuits was 28.

In Ukraine, the COVID-19 pandemic has not affected the sanctions sector at all. The imposition of sanctions is caused by the full-scale invasion of the Russian Federation in Ukraine.

Within the last 12 months in the sanctions sector, the authors have observed:

• active steps to finally criminalise sanctions violation and/or circumvention; and
• actions aimed at preventing co-operation with those who in any way contribute to the war against Ukraine.

In June 2024, the Main Intelligence Directorate of the Ministry of Defense of Ukraine launched the “Main Portal on Sponsors and Accomplices of Aggression”.

Since that time, the portal has been significantly developed.

In Ukraine, the institution of sanctions was introduced in August 2014 in response to Russia’s annexation of Crimea and armed conflict in the East.

The purpose of sanctions imposition in Ukraine is to protect the national interests, national security, sovereignty and territorial integrity of Ukraine; countering terrorist activity; prevention of violations, restoration of violated rights, freedoms and legitimate interests of Ukrainian citizens, society and the state.

Taking the above into account, sanctions were mainly imposed on Russian individuals and legal entities or those affiliated with them.

At the same time, sanctions were imposed on several Ukrainian individuals and legal entities (not related to the Russian Federation), who may pose a threat to the national security, sovereignty and territorial integrity of Ukraine.

From the analysis of the entities on which sanctions have been imposed, it follows that the industries, logistics, communications, energy, science and education, as well as the field of public and military groups and government structures were most affected.

In 2025, sanctions started to be used to prosecute direct political opponents.

For example, in February 2025, the President of Ukraine, Volodymyr Zelenskyy,imposed sanctions on a direct political opponent, the fifth President of Ukraine, Petro Poroshenko.

The procedure for imposing sanctions in Ukraine involves the joint work of the bodies of various branches of government, and key bodies vary depending on the type of sanctions.

For typical sanctions – sanctions of the National Security and Defense Council of Ukraine (eg, blocking assets, banning entry into the territory of Ukraine, etc) – the key bodies are as follows.

• The Cabinet of Ministers of Ukraine, National Bank of Ukraine, Security Service of Ukraine, President of Ukraine and Verkhovna Rada of Ukraine, which are all entitled to make proposals for imposing sanctions.
• The National Security and Defense Council of Ukraine, which directly decides on imposing sanctions.
• The President of Ukraine, who, by decree, brings into effect decisions taken by the National Security and Defense Council of Ukraine.

For special sanction – confiscation of assets into state income – the main bodies are as follows.

• The Ministry of Justice of Ukraine, which can initiate the imposition of the above sanction.
• The High Anti-Corruption Court, which decision on whether this sanction can be imposed.

The Law of Ukraine “On Sanctions” does not establish an obligation for the entities implementing sanctions to report on their activities in the area of sanctions. However, such obligations are established at the sub-legal level, and they regulate the sanctions policy in specific fields.

For example, banks and non-banking institutions are required to provide the National Bank of Ukraine with monthly statistical reports on:

• sanctioned persons (clients of the bank/other participants in financial transactions, and/or other sanctioned persons, whose/of which funds are recorded on bank accounts, and/or sanctioned persons, whose/of which controlled persons are bank clients), on whom/on which at least one of the following personal sanctions, such as blocking of assets, suspension of financial transactions (operations), etc, is imposed;
• bank accounts where the funds of sanctioned persons are recorded;
• financial operations of sanctioned persons, on behalf of/for the benefit of such sanctioned persons, which were refused or stopped due to imposing personal sanctions;
• controlled persons and financial transactions (operations) of controlled persons/on behalf of controlled persons, which were refused or stopped due to imposing personal sanctions on sanctioned persons; and
• financial transactions that contribute or may contribute to the violation/avoidance of restrictions established by personal sanctions (including the cases involving third parties), which have been stopped or refused.

Non-banking institutions are also required to submit monthly statistical reports to the National Bank of Ukraine on applying, lifting and amending personal sanctions against the non-banking institution, ultimate beneficial owners/owners of significant share (participatory interest), managers and clients of the non-banking institution.

Notaries are obliged to notify the territorial administration of the Ministry of Justice of Ukraine of any individual and legal entity on whom/which sanctions have been imposed and for whom/which notarial acts have been refused, giving information on the notarial act, type of sanction and, in the case of imposing a sanction in the form of asset blocking, the asset in respect of which the person made an application.

Ukrainian sanctions are a fairly new field, launched in 2014 as a response to Russian hybrid aggression. Accordingly, this new sanctions regime has not been significantly changed.

In respect of legal developments, it is worth noting the following.

• In January 2025, the President of Ukraine registered in the Parliament a draft law on the Criminalisation of Violations and/or Intentional Circumvention of Sanctions.
1. Despite the fact that the institution of sanctions has existed since 2014, there is no criminal liability for their violation and/or circumvention.
2. The draft law proposes amendments to: (i) The Law of Ukraine “On Sanctions”, (ii) The Criminal Code of Ukraine and (iii) The Criminal Procedure Code of Ukraine.
3. The key amendments are:
1. introduction of a prohibition on violation/circumvention of sanctions;
2. definition of the notion of “sanctions circumvention”; and
3. introduction of a new crime: violation of sanctions and/or intentional circumvention of sanctions.
4. This is not the first attempt to criminalise sanctions violation and/or circumvention in Ukraine, but previous attempts have not been successful. Taking into account that the new draft law was registered by the President of Ukraine, there is a high chance that sanctions violation and/or circumvention will be criminalised soon.
• In May 2022, of a new type of sanction, “confiscation of assets into state income”, came into effect. This sanction is special both in the terms and grounds of its imposition, and in the imposition procedure. It is imposed by the High Anti-Corruption Court, following the suit of the Ministry of Justice of Ukraine. The assets of the persons who have created a threat to the national security of Ukraine or contributed to its creation through their actions, are subject to confiscation into state income.

The Law of Ukraine “On Sanctions” provides a fairly broad, but not exhaustive, list of grounds for imposing the above sanction.

These grounds can be divided into several groups.

• Political – decision-making or lobbying regarding armed aggression against Ukraine, creation of illegal authorities of the Russian Federation, holding elections and/or referendums on the temporarily occupied territory of Ukraine, planning, leadership, co-ordination and personal participation in the aggression of the Russian Federation. It can conditionally be politicians, government officials, collaborators and military personnel.
• Economic – (i) financing the Russian Federation’s activities by paying taxes, providing charitable assistance, investing in military bonds; and (b) military support in the form of supply of weapons, transfer of property.
1. At the same time, the Law establishes the minimum indicators under which the provision of economic resources to the Russian Federation will be the basis for imposing this sanction.
2. Payment of taxes, fees to the Russian Federation’s state income – the total amount of such payments (except customs payments) for the last four consecutive tax (reporting) quarters should exceed an equivalent of UAH40 million for a legal entity and UAH3 million for an individual, determined at the weighted average official exchange rate of the National Bank of Ukraine for the same period.
3. Donations, charitable assistance, free transfer of property – the total amount of such funds or the value of property during the year should be at least UAH750,000 at the official exchange rate of the National Bank of Ukraine.
4. Investing in government bonds of the Russian Federation – the total amount of investment during the year should be at least UAH3 million at the official rate of the National Bank of Ukraine.
• Ideological – public support, approval of armed aggression against Ukraine and the genocide of the Ukrainian people. This is the mass media sector, bloggers and everyone else who is engaged in propaganda of Russian directives.

Currently, the High Anti-Corruption Court has considered 70 suits.

Sanctions in respect of confiscation of assets have been imposed on public and political figures of the Russian Federation, business representatives of the Russian Federation, collaborators, university rectors of the aggressor state, Russian state companies, a blogger-propagandist, and the Ministry of Defense of the Republic of Belarus.

These sanctions are a fairly effective mechanism and may be quickly and easily applied. However, there is a risk that the speed and ease of the procedure, dictated by political expediency, may be adversely evaluated when challenging such decisions in international institutions.

The most significant court decision was adopted in February 2025, when the Supreme Court adopted a decision to lift sanctions imposed on a French citizen and former top manager of one of the world’s largest financial groups.

In February 2023, the President of Ukraine imposed sanctions on an individual for holding a management position in a Russian bank at the time the sanctions were applied. Sanctions were mistakenly imposed. As of the date of sanctions imposition, the individual did not hold any positions in a Russian bank – they had resigned in 2020.

This became the first decision on lifting sanctions imposed by the current President of Ukraine – Volodymyr Zelenskyy – and will be reviewed by the Grand Chamber of the Supreme Court.

The most awaited upcoming development is criminalisation of sanctions violation and circumvention.

As discussed in 2.2.2 Breaching Sanctions and 3.1 Significant Court Decisions or Legal Developments, in January 2025, the President of Ukraine registered in the Parliament a draft law on the Criminalisation of Violations or Intentional Circumvention of Sanctions.

The draft law was prepared on the basis of Directive (EU) 2024/1226 of the European Parliament and of the Council of 24 April 2024 on the definition of criminal offences and penalties for the violation of Union restrictive measures and amending Directive (EU) 2018/1673.

The draft law proposes amendments to: (i) The Law of Ukraine “On Sanctions”, (ii) The Criminal Code of Ukraine and (iii) The Criminal Procedure Code of Ukraine.

The key amendments are:

• introduction of a prohibition on violation/circumvention of sanctions;
• definition of the notion of “sanctions circumvention”; and
• introduction of a new crime: violation of sanctions and/or intentional circumvention of sanctions.

On 3 June 2025 the draft law passed its first reading. Taking into account that the draft law was registered by the President of Ukraine, there is a high chance that sanctions violation and/or circumvention will be criminalised soon.

The procedures for both imposing and lifting sanctions are not sufficiently transparent. There are two mechanisms for lifting sanctions imposed by the National Security and Defense Council of Ukraine: (i) in court proceedings and (ii) administratively.

Judicial Procedure for Lifting Sanctions

Administrative cases regarding the appeal of the Decrees of the President of Ukraine on imposing sanctions are considered by the Supreme Court as part of the panel of the Administrative Cassation Court, consisting of at least five judges (court of first instance). Appellate review is carried out by the Grand Chamber of the Supreme Court.

Consideration and resolution of cases in administrative courts are carried out on the basis of competition between the parties and their free provision to the court of evidence and in proving their persuasiveness before the court. A number of problems with respect to competitiveness in sanctions disputes can be identified, as follows.

• Before the start of legal proceedings, the person who has suffered restrictions generally lacks information about the initiator and the reasons for imposing sanctions. This is a clear violation of the principle of transparency.
• As a result of the principle of official investigation of the circumstances existing only in administrative proceedings, the court not only takes the measures required by law to clarify all the circumstances in the case but should also offer to submit evidence or require, on its own initiative, any evidence that is lacking. This results in state participants not facing the adverse consequences related to the non-performance of procedural obligations with respect to submission of documents and information, or mandatory participation in court sessions.
• Clarification of primary information about the reasons for sanctions only at the stage of judicial review leads to the unjustified involvement as third parties of the initiators of sanctions impositions (Cabinet of Ministers of Ukraine, Security Service of Ukraine, etc) and subordinate ministries, agencies and departments.
• Involved state bodies actively provide the documents, which were not examined and taken into account by the National Security and Defense Council of Ukraine when making decisions on imposing sanctions, and are improper and inadmissible evidence. In particular, by providing the materials of unfinished criminal proceedings, pre-trial investigation bodies try to put pressure on the internal conviction of judges, and in fact to entrust the Supreme Court with the tasks of criminal justice and criminal process.
• It is also common to provide documents marked “For official use”, or “Confidential”, which leads to the limitation of the rights of other participants in the process to get acquainted with the documentation, as well as to the term of case consideration being prolonged.

Quite often, documents marked “For official use” do not actually contain any “special” information. They might contain extracts from the registers of foreign jurisdictions, or general certificates. However, familiarisation with the above documents is carried out in a special manner: representatives cannot copy these documents, only read them and note down certain information. It is clear that it takes time to become familiar with the documents.

In order to gain access to documents marked “Confidential”, access to state secrets is required. This involves passing a special check by the Security Service of Ukraine, and this process alone takes between six and nine months.

In addition, the examination of the documents marked “For official use” and “Confidential” is carried out in specially equipped courtrooms, which also leads to the consideration periods being prolonged, in view of the significant number of sanction cases.

As a result of consideration of administrative case, the Supreme Court may declare the Decree of the President of Ukraine illegal and invalid, or dismiss the claim.

Administrative Procedure for Lifting Sanctions

First of all, it should be noted that the procedure for lifting sanctions in an administrative manner is not regulated in detail by law.

The decision to lift sanctions is made by the National Security and Defense Council of Ukraine, and is put into effect by the Decree of the President of Ukraine. The proposal to lift sanctions can be made by the same entities that initiated their imposition (Verkhovna Rada of Ukraine, President of Ukraine, Cabinet of Ministers of Ukraine, National Bank of Ukraine, Security Service of Ukraine).

In light of the lack of legislative regulation of the mechanism for lifting sanctions in the event of their erroneous imposition, the administrative procedure is also lengthy.

The result of the procedures for lifting sanctions (judicial or administrative procedures) is the exclusion of a person from the sanctions list.

This can be the basis for compensation for damages. However, this is a separate legal process, during which the plaintiff has the burden of proving the existence of a direct causal link between the damages suffered and the sanctions imposed. There are no such precedents in Ukraine as yet.

Cancellation (Lifting) of Sanctions in Court

Cases on lifting sanctions are subject to consideration in the order of simplified proceedings. The legislation sets the time limit for case consideration, which is 60 days from the day of opening proceedings in the case.

However, in practice, the legal process for challenging sanctions lasts an average of two to three years. At the same time, cases of decision-making on merits (lifting or refusal to lift sanctions) are rare. In most cases, legal proceedings last even longer than the validity period of the sanctions themselves.

Cancellation (Lifting) of Sanctions in an Administrative Procedure

The deadline for lifting sanctions in this manner is not regulated by legislation. The procedure itself is not public. Accordingly, it is impossible to monitor the terms of consideration of lifting cases in an administrative procedure. It follows from practice that, in general, the administrative procedure lasts at least a year.

As part of the sanctions mechanism, bans on trade transactions with certain countries are introduced through imposing sectoral sanctions. It is worth noting that, unlike personal sanctions, the imposition of sectoral sanctions is not widespread. Since sanctions mechanisms have been in existence (ie, from 2014), the National Security and Defense Council has made only five decisions on imposing sectoral sanctions. Bans on export-import transactions apply to Iran, the Russian Federation, Belarus and Nicaragua.

For example, in May 2023, the NSDC (National Security and Defense Council) adopted a decision on the prohibition of trade transactions with Iran regarding the services related to the supply, sale, transfer, production or use of goods, the international transfers of which are regulated by the Law of Ukraine “On State Control over International Transfers of Military and Dual-Use Goods”.

Ukraine implements a complex policy concerning trade restrictions. Most of them apply to the Russian Federation as well as to the countries that support the aggressor state.

In 2015, Ukraine terminated the Free Trade Agreement between Ukraine and the Russian Federation.

On 30 December 2015, the Cabinet of Ministers of Ukraine prohibited the import of certain goods produced in the Russian Federation. Each year, the duration of the resolution is extended. On 9 April 2022, the same cabinet prohibited the import of goods from the Russian Federation.

Moreover, in relation to trade restrictions, the following decisions are worth noting. 

• The NSDC’s decision dated February 2021, prohibiting the export-import transactions from the Republic of Nicaragua for the following groups of goods for a period of five years: (i) edible fruits and nuts; citrus or melon peels, (ii) coffee, tea, mate or Paraguayan tea, spices and (iii) tobacco and manufactured tobacco substitutes.
• The NSDC’s decision dated May 2023, prohibiting for 50 years trade transactions with the Islamic Republic of Iran with goods, the international transfers of which are regulated by the Law of Ukraine “On State Control Over International Transfers of Military and Dual-Use Goods”.
• The NSDC’s decision dated November 2023, prohibiting trade transactions with the Russian Federation and Belarus in the defence-industrial sphere for a period of 50 years, in respect of goods, the international transfers of which are regulated by the Law of Ukraine “On State Control over International Transfers of Military and Dual-Use Goods”.

Ukraine sanctions legislation imposes the obligation to comply with sanctions imposed on any person. There are no exceptions to this (such as obtaining a special permit, licence, etc). The position of the courts regarding the impossibility of fulfilling contractual obligations with respect to imposition of sanctions on a certain person is reflected in the cases relating to claims filed by sanctioned persons against banks, where the latter refused to carry out transactions, and stopped providing banking services, based on the agreement on banking services with the clients in question, on whom sanctions were later imposed.

The courts of Ukraine have concluded that the obligation to comply with the requirements of the legislation and apply sanction restrictions prevails over the obligation to comply with contractual obligations.

The position of the Ukrainian courts regarding the possibility of enforcing decisions in favour of persons subject to sanctions was formed based on the results of consideration of the applications for permission to recognise and enforce decisions of international arbitration made in favour of sanctioned persons.

In particular, the question was repeatedly raised as to possible implementation of the decision taken by the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation in favour of the persons on whom sanctions were imposed in Ukraine.

The Courts of Ukraine, including the Supreme Court, take the position that granting permission to enforce decisions in favour of the persons on whom sanctions have been imposed would be contrary to the public order of Ukraine. This is explained by the fact that the grounds for imposing sanctions based on the Law of Ukraine “On Sanctions” are, first of all, the protection of national interests, national security, Ukraine’s sovereignty and territorial integrity. The fact of imposing a sanction on a person on the basis of the Law of Ukraine “On Sanctions” indicates that the person has created a threat to these values. Therefore, granting permission to implement the decision of the international arbitration in favour of such a sanctioned person roughly violates the fundamental political interests of the state in ensuring national security, including the security of people living on the territory of Ukraine.

The procedure for imposing sanctions involves several stages and various state authorities.

Imposition of “Typical” Sanctions (Those of the National Security and Defense Council)

• The first stage is the initiation of sanction imposition. Five bodies are empowered to propose sanctions: the Verkhovna Rada of Ukraine, the Cabinet of Ministers of Ukraine, the National Bank of Ukraine, the Security Service of Ukraine and the President of Ukraine. Proposals are submitted to the Council of National Security and Defense of Ukraine, the co-ordinating body on national security and defence at Ukraine’s Presidency. 
• The second stage is the adoption of a decision on sanction imposition. At its meeting, the National Security and Defense Council of Ukraine considers proposals for sanction imposition, examines the evidence and makes an appropriate decision.
• The third stage is implementation of the decision, taken by the National Security and Defense Council of Ukraine.
• The decision is then implemented by the President of Ukraine, if applicable, by issuing a Decree.
• In the case of sectoral sanctions, the fourth stage is approval of the Decree of the President of Ukraine by a Resolution of the Verkhovna Rada of Ukraine within 48 hours of its adoption.

The decision on imposing sanctions should contain the terms of their application, except for in cases where sanctions are imposed leading to rights termination, and other sanctions that cannot be imposed temporarily from a content perspective.

In general, the procedure for imposing sanctions in Ukraine is not transparent. A person learns that a restriction has been applied to them from inside sources or post factum, when the decisions of the National Security and Defense Council of Ukraine and the Decree of the President of Ukraine have been adopted.

It is not possible, in fact, to prove the groundlessness of rights restrictions before a final decision is made. Quite often there are the cases of automatic sanctions imposition with no detailed verification of the existence of any grounds, based on unverified information on the activities of individuals found in the media.

Imposition of “Special” Sanctions – “Confiscation of Assets to State Income”

The first stage involves the Ministry of Justice of Ukraine preparing and submitting a claim to the High Anti-Corruption Court for confiscation of assets and their transfer into state income. This claim must be filed during the period of martial law. This sanction can be imposed only on the individuals and legal entities:

• who/which created via their actions a significant threat to the national security, sovereignty or territorial integrity of Ukraine (including through armed aggression or terrorist activity);
• who/which significantly facilitated (including through financing) the commission of such actions by other persons; or       
• on whom/which the National Security and Defense Council of Ukraine imposed the asset-blocking sanction after 24 February 2022. 

Two groups of assets are subject to confiscation into state income: (i) assets belonging to a sanctioned person and (ii) assets, with respect to which a sanctioned person can perform the actions identical content-wise to the exercise of the right of disposition.

The second stage involves the High Anti-Corruption Court considering the claim for imposition of a sanction. The case is subject to consideration by a panel of three judges in the order of administrative proceedings within 30 days of the date of filing the claim. The persons whose assets are subject to confiscation and transfer into state income must be summoned to the court. However, their non-appearance does not prevent the case from being considered. The court makes a decision in favour of the party with the most convincing evidence.

The grounds for imposing sanctions by the National Security and Defense Council of Ukraine are as follows:

• actions of a foreign state, a foreign individual or legal entity, other entities (subjects) that create real and/or potential threats to national interests, national security, sovereignty and territorial integrity of Ukraine, promote terrorist activities and/or violate the rights and freedoms of a person and citizen, the interests of society and the state, lead to the occupation of territory, expropriation or limitation of property rights, causing property losses, creating obstacles to sustainable economic development, full exercise of rights and freedoms by citizens of Ukraine;
• resolutions of the General Assembly and the Security Council of the United Nations;
• decisions and regulations of the Council of the European Union; and
• violations of the Universal Declaration of Human Rights, the Charter of the United Nations.

The grounds for imposing the special sanction of confiscation of assets with their transfer to state income are:

• committing actions by a person creating a significant threat to the national security, sovereignty or territorial integrity of Ukraine (including via armed aggression or terrorist activity); or
• facilitating to a large extent the commission of such actions.

Such a basis for imposing a sanction as the fact that a person is being “owned or controlled” by a directly designated person is not directly provided for by the law.

At the same time, sanction imposition on a beneficiary, first of all, may result in imposing the sanction on all the companies under their control.

Moreover, sanction imposition on a beneficiary may lead to the impossibility of the company’s functioning, through the revocation of licences, or impossibility of participating in the privatisation of state and communal property.

In addition, the entities controlled by sanctioned persons may be deprived of the opportunity to receive banking services (banks may refuse to conduct banking operations (transactions) or even block accounts on the basis of internal acts and compliance policies), and registration services (make changes to information in the Register of Legal Entities).