U.S. Foreign Policy Sanctions: Russia

On December 6, 2012, Congress enacted the Sergei Magnitsky Rule of Law Accountability Act as Title IV of the Russia and Moldova Jackson-Vanik Repeal Act, which allows the President to grant permanent normal trade relations (PNTR) to Russia and Moldova by proclamation. On December 14, the President signed the bill, suspending application to Russia of the 1974 Jackson-Vanik amendment. PNTR enables U.S. companies to access the benefits of Russia's accession to the World Trade Organization (WTO), importantly including its dispute resolution mechanisms.

The Magnitsky bill was included in the PNTR legislation as a human rights replacement for the Jackson-Vanik amendment that denied the Soviet Union most-favored-nation status because of restrictions on emigration. The new law authorizes sanctions on those Russians who were complicit in the death of Russian attorney Sergei Magnitsky and those who have otherwise violated human rights in Russia. It mandates the creation of a list of persons whose U.S. assets are to be frozen and who are to be denied entry visas into the United States.

In the summer of 2012, the House Foreign Affairs Committee reported sanctions legislation that, unlike its Senate counterpart which applied the sanctions globally, was confined to Russian persons and had a ten-year sunset provision. The House version of the Magnitsky sanctions was added to the PNTR legislation, but, importantly, without its sunset provision providing criteria for termination of the sanctions. The law's potentially expansive language extends sanctions to persons who "acted as an agent of or on behalf of a person in a matter relating to an activity…" that violated internationally recognized human rights. This could be interpreted to include corporations. The law application is extraterritorial, defining those who can be sanctioned as "any entity organized under the laws of the U.S., including a foreign branch of such an entity," thereby extending its application to foreign subsidiaries of U.S. companies.

The law provides that the President "shall consider information provided" by members of Congress, as well as by foreign governments and NGO's in compiling the list of sanctioned persons. The law gives the President this responsibility and provides a national security interest waiver for those in the classified annex. However, the law gives the Secretary of the Treasury national security waiver authority for others named who are not in the classified annex.

Russian President Putin called the law a "purely political unfriendly act" and the Duma approved a draft law imposing parallel sanctions on certain U.S. citizens.