Polish Parliament is considering a Bill on Restrictive Measures

In early August, the Government submitted a Bill on Restrictive Measures to the Sejm. This marks the culmination of a several-months long process of government consultations, reviews and discussions, with, among others, chambers of commerce and other business organisations. The Bill transposes into Polish law Directive (EU) 2024/1226 of 24 April 2024 on the definition of criminal offences and penalties for the violation of Union restrictive measures and penalties for such breaches (…) which was supposed to be implemented by May 2025, and this justifies the expectation that the Bill will be processed fairly quickly. The Bill has already undergone its two readings at Sejm sittings, and three Sejm committees are currently working on it. Work on the new law in the Sejm has therefore begun and it may enter into force before the end of this year or at the start of next year, as this will take place 30 days after promulgation.

The implementation of the aforementioned directive is not the sole purpose of the new act. It is intended to serve as a ‘sanctions constitution’ facilitating the application by administrative bodies and businesses of sanctions adopted by the EU under the Common Foreign and Security Policy (and thus also any sanctions other than the widely known ones adopted in connection with Russia’s aggression against Ukraine) and complementary national sanctions adopted to protect national security or a fundamental security interest of the state. EU Member States, being bound by EU sanctions legislation, may also adopt national sanctions. The new act will regulate their application, for example by specifying

• against which entities Poland may impose national sanctions,
• what form they are to take,
• how long they may remain in force,
• who can apply for specific individuals to be covered by them
• and which authority will decide on this.

The Bill follows existing practice and stipulates that sanctions may be imposed on natural persons, legal persons and organisational units without legal personality, as well as on states other than EU Member States, EFTA-EEA states and Switzerland. Sanctions against the first group of entities will consist of freezing their funds and economic resources, denying them access to such funds and resources, excluding them from public procurement procedures, and designating natural persons as undesirable in the Republic of Poland. The procedure for imposing sanctions on natural persons, legal persons and organisational entities without legal personality, as set out in the Sanctions Act of 2022, will not undergo any fundamental changes. As before, the sanctions list will be maintained by the Minister responsible for internal affairs, who will decide on the inclusion of entities on the list, as well as on their removal, by way of a decision. In the case of a state subject to sanctions, a ban or restriction on economic cooperation with that state may be imposed for a period of up to 24 months, with the possibility of extension. This may take the form of a ban or restriction on trade in certain goods, their transit through Polish territory, the carrying out of investments, the provision of services, financial settlements and insurance, and the provision of technical assistance. The decision to impose sanctions on a country will be taken by the Council of Ministers.

At the same time, the Act of 13 April 2022 on special measures to counteract support for aggression against Ukraine and to safeguard national security (i.e. the Act passed in connection with Russia’s aggression against Ukraine) will remain in force, and only selected provisions of the new act (namely Article 2 – containing statutory definitions – and provisions from Chapter 3 – concerning the authorities applying restrictive measures, Chapter 4 – concerning cooperation between these authorities, and Chapter 6 – penal provisions) will apply to certain matters regulated therein.

Certain institutions, already familiar from the 2022 Sanctions Act, have also been included in the Bill; they are regulated in a similar manner, and some modifications to the existing provisions appear to address issues identified in the course of their practical application. This applies, for example, to the compulsory administration of a sanctioned entity’s business, established for the purpose of disposal or acquisition of ownership.

The draft contains several new provisions. These include, for example, the requirement to obtain prior consent from the minister responsible for the economy – on pain of nullity – for the disposal of or encumbrance on shares in a company included on the national sanctions list. A significant number of authorities will be competent in matters relating to the application of EU restrictive measures, both in terms of cooperation with other national authorities and authorities of EU Member States, and in terms of the application of derogations provided for under EU law. These include, for example, directors of maritime offices, ministers, the President of UKE, the President of ULC, district administrators, and the Head of KAS. These provisions are to be welcomed, as they should remove any doubts regarding the jurisdiction of the competent authorities in matters concerning the application of derogations provided for, in particular, in newly adopted EU legislation, with which the Polish legislature has not yet kept pace. The heads of customs and tax offices, the General Inspector of Financial Inspection (GIIF), the Polish Financial Supervision Authority (KNF) and the Road Transport Inspection (ITD) will also retain powers to monitor compliance with sanctions, in accordance with the rules set out in separate legislation.  

The draft act contains a very broad list of acts punishable by an administrative fine (29 provisions). It covers acts or omissions constituting a breach of a prohibition or a failure to fulfil an obligation arising from restrictive measures, with individual acts being defined in detail in a manner corresponding to the prohibitions set out in EU sanctioning provisions (e.g. ‘A person or entity which, by breaching a prohibition or failing to fulfil an obligation arising from restrictive measures, fails to apply the contractual re-export ban when selling, supplying, transferring or exporting goods or technology to a third country shall be liable to an administrative fine’). The act also sets out the circumstances to be taken into account when imposing a financial penalty (including, for example, measures taken voluntarily by the party concerned to remedy the effects of the breach of the law). The maximum amount of the administrative fine remains at the same level as in the 2022 Sanctions Act, i.e. 20 million Zlotys. It therefore appears that applying the new act will require one to consider a wide range of circumstances and balance a number of relevant factors.

A substantial section of the draft act consists of criminal provisions. Criminal sanctions take the form of imprisonment, depending on the nature of the offence, for a period ranging from 6 months to 12 years. Directive 2024/1226 will also be transposed into Polish law through an amendment to the Act on the Liability of Collective Entities.

The draft takes a comprehensive approach to the issue of applying restrictive measures as a means for the State to respond to new threats. The entry into force of the new act will require businesses to exercise even greater due diligence when planning and carrying out commercial transactions and engaging in other forms of economic cooperation. The application of the 2022 Sanctions Act will also become more complex.