Vedder Price

U.S. Sanctions Against Donbas

On February 21, President Biden signed his Executive Order on Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine (the “Executive Order”).  Patterned after President Barack Obama’s Executive Order 13685 with respect to Crimea, and relying on the same legal authorities, the Executive Order takes aim at the Covered Regions as follows:

First, the Executive Order imposes sweeping trade and financial sanctions against the Covered Regions, including bans on (a) new investment by U.S. persons, (b) imports into the United States of “goods, services or technology” from the Covered Regions, (c) the export, reexport, sale or supply from the United States or by any U.S. person of “goods, services or technology” to the Covered Regions, and (d) the approval, financing, facilitation or guarantee by any U.S. person of transactions performed by foreign persons that would be prohibited if performed by a U.S. person.  The Executive Order should be read as imposing a broad, Crimea-style trade embargo against Donbas.

Second, the Executive Order blocks all property and interests in property in or coming within the United States, or within the possession or control of U.S. persons, of (a) persons operating in the Covered Regions from the date of the Executive Order, (b) leaders, officials, senior executive officers or members of the board of directors of “any entity operating in the Covered Regions,” (c) persons owned or controlled by, or otherwise acting for, persons whose property is blocked under the Executive Order, and (d) persons providing material assistance or sponsorship or financial, material or technological support for, or goods or services to or in support of, persons whose property is blocked under the Executive Order.  The Executive Order should be read as a classic, broadly worded blocking order.[1] 

Third, the Executive Order broadly prohibits (a) the “making of any contribution or provision of funds, goods, or services by, to, or for the benefit of” persons whose property is blocked, and (b) the “receipt of any contribution or provision of funds, goods, or services” from any such person whose property has been blocked. 

Shortly following the issuance of the Executive Order, OFAC issued a series of general licenses (numbered 17 through 22), which effectively authorize certain transactions and business dealings otherwise prohibited by the Executive Order to the extent that they are “ordinarily incident and necessary to” the wind-down of prohibited transactions or other listed activities, including the export and re-export of agricultural and medical products, the receipt and transmission of telecommunications, the official business of certain listed entities and organizations, including the United Nations (the “UN”) and the exchange of personal communications over the Internet.

[1] OFAC’s 50% rule will apply to all blocked persons designated by OFAC under the Executive Order.


John E. Bradley


Brent Connor


Henrietta Worthington