On May 16, 2017, the Ukrainian President signed Presidential Decree No. 133/2017 which introduces sanctions against 1228 individuals and 468 legal entities.

The Decree has received unprecedented public attention because it establishes restrictive measures (sanctions) against Russian IT companies and their Ukrainian subsidiaries. Such companies/subsidiaries are popular among Ukrainians and provide services such as social networks, a search engine, a navigation service, accounting software, antivirus solutions, and more.

The sanctions are based on Article 4 of the Law of Ukraine “On sanctions” and include measures such as freezing assets; restricting trade operations, foreign transfers of funds, use of telecommunication networks and services, participation in state procurement procedures and transfers and assigning of IP rights; and prohibiting Ukrainian internet service providers (ISPs) from providing access to the websites and online services of the sanctioned parties.

Although the Ukrainian Government has introduced other types of sanctions before, restrictions that prohibit Ukrainian ISPs from providing internet access to certain online services and websites are the first of their kind, and have come as a surprise for Ukrainian ISPs.

The authority responsible for supervising ISPs has already issued an official notice to ISPs explaining that compliance with the Decree is mandatory and ISPs must disable access to the online resources indicated in the Decree. Otherwise, the management of ISPs could be subject to administrative liability.

As of this moment, some of the major ISPs and mobile operators have announced that they will comply with the sanctions and block access to the list of URLs indicated in the Decree.

While this escalation of sanctions against Russian IT companies has caught many by surprise, it was not unpredictable. Previously, on March 15, 2016, the President of Ukraine signed a Presidential Decree which stated as one of its priorities the need to limit the access of Russian-controlled entities to critical Ukrainian cyber security infrastructure.

Furthermore, on January 16, 2017, the President of Ukraine signed another Presidential Decree requesting that the government develop a state system for protecting critical infrastructure and an action plan for its implementation.

On February 13, 2017, the President of Ukraine also signed a Presidential Decree ordering the Cabinet of Ministers of Ukraine and State Security Service of Ukraine to develop legislative proposals to define restrictive measures to be used in relation to critical infrastructure software and telecommunications equipment designed / manufactured by entities of Russia.

The State Security Service of Ukraine has stated that it is currently developing a legislative base that will enable blocking access to even more online resources.

Thus, it is clear that it is not a good time to be present as a Russian IT company in Ukraine and we can expect more sanctions and restrictions for such businesses in the near future. Please contact us if you need any assistance on this complex and developing set of sanctions.

Contributor: Oleksiy Stolyarenko