Guidance

No-Russia clause guidance

Published 7 January 2025

The UK government is issuing this guidance for those involved in export and making available of Common High Priority Items and any other items critical to Russian weapons systems and its military development. It aims to support businesses in tailoring due diligence within exporter contracts and support those wishing to insert a “no re-export to Russia” clause.

Contractual clauses prohibiting buyers/importers from re-export, or export from a third country, of items subject to Russia sanctions could help protect you as a seller. While the UK government does not require it, including such clauses or other statements in your export documents could  reduce the risk that your customer involves you in what may be deemed a breach of sanctions.

1. Context 

The Russia sanctions regulations impose financial, trade, aircraft, shipping and immigration sanctions. The purpose of these sanctions is to encourage Russia to cease actions which destabilise Ukraine, or undermine or threaten the territorial integrity, sovereignty or independence of Ukraine.

Trade sanctions seek to deny Russia access to the goods, technologies, services, and revenue necessary to pursue its illegal war.

Direct trade between the UK and Russia has fallen heavily since sanctions were introduced. However, Russia has been seeking to procure goods and services via indirect routes and complex supply chains. This heightens the risk of circumvention of trade sanctions, and diversion of goods to Russia.

Reducing Russia’s capacity to prolong the war in Ukraine remains in the interests of the security and economic prosperity of all UK businesses and persons. It is the responsibility of businesses to adopt appropriate measures to mitigate the risk of unwittingly facilitating Russia’s access to sanctioned goods and technologies.

Prohibitions in the UK’s Russia sanctions regime also typically prohibit export ‘for use in’ Russia. Even if the immediate destination of the relevant goods is not Russia, the prohibition may still apply. UK businesses must not intentionally circumvent our sanctions and should ensure they are satisfied as to the end destination of products. In this context, due diligence on counterparties and internal compliance processes in relation to sanctions is essential.

2. No re-export to Russia clause 

To help to mitigate the risk of sanctioned items ending up in Russia, some exporters already insert, in their contracts, a clause restricting the buyer/importer from re-exporting the items to Russia. While not  required under the Russia sanctions regulations, this may represent a component of due diligence best practice. Faced with the prospect of breaching a contract, negotiation and inclusion of a “no re-export to Russia” clause may act as an additional deterrent to non-UK persons seeking to redirect goods, sanctioned by the UK, to Russia. Where contracting parties are non-UK persons conducting business from jurisdictions that continue to trade goods with Russia, or where goods are relevant to Russian military operations, use of such clauses should be considered.

Inclusion of a “no re-export to Russia” clause can be a useful tool to counter the risk of circumvention and diversion. Whether included in the contract or not however, businesses should continue to have in place strong due diligence frameworks to ensure sanctions compliance. Guidance has been produced on how to ensure due diligence and identify key risk indicators.

The European Union have put in place a requirement for EU operators to insert a “no re-export to Russia” clause into certain export contracts. See information regarding Article 12g of Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilizing the situation in Ukraine.

The United States Bureau of Industry and Security have issued guidance for exporters regarding language they can include in their sales contracts or other export documents.   

3. Template text 

The exact wording of a “no re-export to Russia” clause is at the discretion of the relevant business to ensure it fits best for them and their contract.

It is advised to seek independent legal advice when drafting, negotiating and including a “no re-export to Russia” clause into any existing or new contacts.

While it does not preclude the use of other drafting of such a clause, the template below could be considered good practice for exporters of items relevant to the Russian military complex:

(1) The [Importer/Buyer] shall not sell, export or re-export, directly or indirectly, to the Russian Federation or for use in the Russian Federation any goods supplied under or in connection with this Agreement that fall under the scope of The Russia (Sanctions) (EU Exit) Regulations 2019 (“Sanctioned Goods”).

(2) The [Importer/Buyer] shall undertake its best efforts to ensure that the purpose of clause (1) is not frustrated by any third parties further down the commercial chain, including by possible resellers.

(3) The [Importer/Buyer] shall set up and maintain an adequate monitoring mechanism to detect conduct by any third parties further down the commercial chain, including by possible resellers, that would frustrate the purpose of clause (1).

(4) Any breach of clauses (1), (2) or (3) shall constitute a material breach of this Agreement, and the [Exporter/Seller] shall be entitled to seek appropriate remedies, including, but not limited to termination of this Agreement.

(5) The [Importer/Buyer] shall immediately inform the [Exporter/Seller] about any problems in applying clauses (1), (2) or (3), including any relevant activities by third parties that could frustrate the purpose of clause (1). The [Importer/Buyer] shall make available to the [Exporter/Seller] information concerning compliance with the obligations under clause (1), (2) and (3) within two weeks of the simple request of such information.

(6) Where the Exporter/Seller has reason to believe that any Sanctioned Goods have been sold, exported or re-exported directly into the Russian Federation the Exporter/Seller shall be at liberty to notify the [relevant UK Authorities] irrespective of any confidentiality agreement between the parties.

4. Ensuring due diligence 

Strong due diligence on counterparties and internal governance in relation to sanctions is essential. Even on established counterparties, due diligence will need to be repeated at intervals to ensure that the risk has not changed; for example, change of directors, change of products traded, amongst others.

Russia continues to seek to procure restricted goods via other routes. As such, there are risks around displacement of trade and diversion of goods to Russia.

For example, a buyer in a third country may intentionally purchase a sanctioned good with a view to selling it on to Russia (effectively acting as an intermediary) or may have disguised or opaque ties to a person connected with Russia (effectively acting as a cover or front company).

In this way, entities enabling Russian circumvention often employ complex and irregular corporate structures to hide their intentions and their ultimate beneficial owners. This can include the use of shell companies, or frequent changes in, or multiple levels of, ownership and management.

Exporters are advised only to conclude deals where they are confident that a process of cross-checking these risks provide reassurance that compliance thresholds are met. This includes any other indicators that factor into in-house due diligence processes. 

5. Further information 

Any non-compliance with UK sanctions is a serious offence and punishable through large financial penalties or criminal prosecution.

HMRC and the Office of Trade Sanctions Implementation (OTSI) within the Department for Business and Trade work together to enforce breaches of trade sanctions.

HMRC is responsible for enforcing trade sanctions on goods crossing the UK border in line with its role as the UK’s customs body. As part of its customs role, HMRC is also responsible for measures relating to strategic exports - such as military and dual-use goods – and the provision or procurement of services that are ancillary to the import or export of goods.

OTSI is responsible for:

• sanctioned services that are not ancillary to the movement of goods
• the movement of sanctioned goods, technology and ancillary services outside the UK, where a UK person is involved

If you have any indication that your products have been supplied or diverted to Russia, from the UK, please contact HMRC. If you discover you have imported or exported goods or transferred controlled technology without an appropriate export licence in place, it is very important to consider reporting the irregularity to HMRC (sometimes known as ‘voluntary disclosure’) as soon as possible.  Details for making a disclosure can be found on the Export controls: military goods, software and technology page.

If you suspect that you, or someone else, has breached trade sanctions within OTSI’s remit, you should report it to OTSI as soon as possible using the online service: Report a suspected breach of trade sanctions. Guidance on OTSI’s enforcement approach can also be found on its website. For all other enquiries, you can use the OTSI contact form.

If you would like to discuss any wider concerns you may have regarding sanctions evasion and circumvention, please contact the Department for Business and Trade’s export sanctions policy team.

6. Contact 

Trade Sanctions
Department for Business and Trade 
Old Admiralty Building 
Admiralty Place 
London 
SW1A 2DY 

Email: tradesanctions@businessandtrade.gov.uk