EU Adopts 18th Sanctions Package Against Russia: Focus on Services, Circumvention Controls, and Investor Protection

On 18 July 2025, the European Union adopted its 18th sanctions package targeting the Russian economy. Unlike previous measures, this package places particular emphasis on closing circumvention routes and introduces significant restrictions not only on goods but also on a wide range of services, including technical, legal, financial, insurance, and logistical support.

Services Restrictions: Key Considerations for EU-Based Operators

The EU continues to expand restrictions beyond trade in goods, directly targeting the service sector. Prohibited services now include, in particular:

• support services for vessels transporting Russian oil, including bunkering, crew changes, insurance, agency, and other maritime services, both within EU ports and beyond EU territorial waters;
• legal, accounting, auditing, consultancy, financial and insurance services provided by EU firms to Russian companies or public authorities;
• provision of banking software to Russian entities;
• services — whether direct or via third-country intermediaries — that facilitate the circumvention of EU sanctions.

Ban on Transactions with 22 Additional Russian Banks and RDIF

As of 8 August 2025, all transactions with 22 additional Russian banks are prohibited, including the provision of specialized financial messaging services (e.g. those linked to SPFS, Russia’s alternative to SWIFT). The ban also covers banks operating in the occupied territories of Ukraine and applies to the Russian Direct Investment Fund (RDIF) and its affiliates.

Circumvention Measures: “Catch-All” Mechanism and Expanded Export Controls

The package introduces a “catch-all” clause, empowering EU customs and export control authorities to:

• examine exports to third countries more closely;
• halt and investigate shipments suspected of diversion to Russia;
• restrict the export of technology and equipment that may benefit Russia’s military-industrial base.

This measure significantly enhances EU authorities’ ability to respond to re-export strategies and complex intermediary chains, particularly in Asia, the Middle East, and the Caucasus.

Trade Restrictions: Technologies, Metals, and Equipment

The 18th package substantially broadens the scope of export restrictions, including:

• chemicals and solid fuel components used in missile production;
• CNC machines used in the manufacture of drones, missiles, tanks, and helicopter parts;
• industrial equipment for the energy sector (e.g. gas turbines), raw chemicals, refined copper, aluminum, steel products, and plastics;
• additional restrictions on 26 entities linked to Russia’s defense sector or involved in sanction circumvention schemes.

Investor-State Arbitration: Protection Measures for EU Member States

The 18th sanctions package introduces robust safeguards to protect EU Member States from abusive arbitration claims brought by Russian or Russia-linked investors under bilateral investment treaties (BITs), particularly in connection with measures adopted under Regulation (EU) No 833/2014 and Regulation (EU) No 269/2014.

Key provisions include:

• Member States must not recognize or enforce any injunctions, orders, reliefs, or judgments — whether issued by courts, tribunals, or arbitral bodies outside the EU — that are connected to investor-State dispute settlement proceedings based on EU sanctions measures;
• Any such recognition or enforcement is to be considered contrary to the public policy of both the Union and its Member States;
• This prohibition applies even in the case of out-of-court settlements involving sanctioned claims;
• Member States retain the obligation to participate in proceedings initiated against them, and they may seek to recover damages and legal costs incurred due to such disputes — including from Russian persons, entities, or their affiliates who initiated them;
• Where possible, Member States are encouraged to invoke all available legal objections in both domestic and foreign jurisdictions to oppose the recognition or enforcement of such arbitral awards.

These provisions aim to prevent the circumvention of the EU sanctions regime through international arbitration and affirm the primacy of EU sanctions law over BIT-based claims.

Key Takeaways

1. Businesses operating in or with the EU must recognize that services, not just goods, may now fall under sanctions if they support prohibited or sanction-evasive activities.
2. Deal structuring — especially in third countries — requires enhanced sanctions due diligence and counterparty risk assessments.
3. The updated list of restricted financial institutions and entities imposes heightened compliance obligations, particularly regarding transaction screening, funding channels, and ownership verification.

Note: Israel Has Not Imposed Sanctions Against Russia

As of the date of publication, Israel has not adopted sanctions against Russia in alignment with the EU, US, or UK. Therefore, Israeli companies may continue providing legal, technical, or other professional services to Russian clients, provided such activities do not violate EU, UK, or US sanctions when carried out directly or through intermediary jurisdictions.