The recently issued decision of the Ukrainian Supreme Court addresses the enforcement of Ukrainian sanctions in relation to foreign corporate structures and ownership chains involving a sanctioned person.
The Ukrainian law, “On Sanctions,” is silent on the principle of territoriality, opening different potential interpretations, including those suggesting that Ukrainian sanctions should apply to transactions with a Ukrainian nexus—such as those involving Ukrainian assets or entities.
However, the Supreme Court has now explicitly confirmed the extraterritorial application of Ukrainian sanctions. In particular, it ruled that sanctions—specifically those involving the blocking of assets—are not limited to property located in Ukraine but extend to any assets of the sanctioned person, regardless of jurisdiction.
Below you can find a summary of this court’s decision dated 14 May 2025, Case No.: 320/14459/24 Administrative Cassation Court (Supreme Court of Ukraine).
The case concerns a corporate restructuring outside Ukraine involving a sanctioned individual. A private notary registered changes to the ultimate beneficial ownership of a Ukrainian legal entity, based on a foreign transaction. The Ministry of Justice subsequently found these actions to be in violation of Ukrainian sanctions law and the principles of extraterritorial application.
Key conclusions of the Supreme Court:
- Sanctions under the Law of Ukraine No. 1644-VII “On Sanctions” apply extraterritorially, including to assets located abroad, transactions executed outside Ukraine under foreign law.
- A sanctioned individual cannot legally transfer shares or change the UBO of a legal entity, directly or indirectly. Any such transfer may be deemed a circumvention of sanctions and null and void as a matter of Ukrainian public order.
- Foreign transactions do not override Ukrainian sanctions. The fact that the control change occurred under foreign law and was reflected in foreign corporate records does not bind Ukrainian authorities.
- Ukrainian registrars are obligated to refuse registration of UBO changes where the previous UBO is a sanctioned person.
- The Court emphasized that, until changes are recorded in the Ukrainian Unified State Register, they have no legal effect in Ukraine—regardless of foreign documentation.
It is important to highlight that the extraterritorial effect of Ukrainian sanctions would imply the need for compliance with Ukrainian sanctions in any transactions involving a sanctioned person, even if executed entirely outside Ukraine. Such transactions may potentially be deemed null and void under Ukrainian law.
By Natalia Selyakova, Partner, Dentons Ukraine
