The EU's phased prohibition on Russian LNG imports – introduced through the 20th and 21st sanctions packages – creates immediate and binding legal obligations for European companies holding supply, offtake and trading contracts tied to Russian liquefied natural gas. For most new and short-term arrangements, the ban took effect on 25 April 2026; for long-term contracts concluded before 17 June 2025, the operative date is 1 January 2027. Understanding how this timeline interacts with force majeure clauses, best-efforts obligations and governing-law provisions is now a critical priority for any counterparty operating within EU jurisdiction.
Regulatory Background: The 20th and 21st Sanctions Packages
The EU's Russian LNG import ban did not emerge in isolation. It forms part of a broader legislative trajectory that accelerated sharply in 2026. The 20th sanctions package was adopted on 23 April 2026, introducing, among other measures, the ban on transactions involving the digital rouble and the RUBx settlement mechanism, which became operative on 24 May 2026. The Russian LNG import prohibition for most contracts was embedded within this package, with its primary effective date of 25 April 2026.
The 21st sanctions package – formally Council Regulation (EU) 2026/1848 – was adopted on 23 July 2026 and extended restrictions across the energy, financial services and crypto-asset sectors. It also confirmed the extended divestment derogation for entities exiting Russian-linked positions, with that window running until 31 December 2026. Practitioners should read the two instruments together; the 21st package's provisions on financial services and export controls directly affect how LNG transactions can be wound down and whether existing payment arrangements remain permissible during the run-off period.
For up-to-date consolidated texts and recitals, EUR-Lex remains the authoritative source. The European Commission has issued guidance notes clarifying the interaction between the energy ban and pre-existing financial exposures, though certain implementation details at the national level remain subject to each member state's competent authority.
If your organisation holds contracts that may be affected by these measures, the Ferraz & Whitmore sanctions and trade team can assist with a rapid legal exposure assessment. Write to us at info@ferrazwhitmore.com or visit our contacts page.
Scope of the Import Ban: What Is Prohibited and for Whom
The prohibition is directed at the import, purchase and transfer of Russian LNG into EU territory. This covers physical delivery, title transfers and related financial transactions where the underlying commodity is Russian-origin liquefied natural gas. The personal scope is broad: EU operators, including trading companies, utilities, regasification terminal operators and financial intermediaries, are all within the prohibition's reach.
The critical temporal distinction is as follows:
- Contracts concluded on or after 17 June 2025: the prohibition applies from 25 April 2026, meaning performance of any delivery after that date is already impermissible regardless of contractual terms.
- Long-term contracts concluded before 17 June 2025: a transitional window applies, with the ban operative from 1 January 2027. This gives counterparties approximately eight additional months to restructure, renegotiate or terminate.
The distinction between "long-term" and other contracts is not exhaustively defined in the publicly available regulatory text at the time of writing; national competent authorities are expected to provide further guidance. Companies should not assume that duration alone determines classification – the nature of the commitment and pricing structure may also be relevant factors under applicable guidance.
EU sanctions screening obligations also apply throughout any wind-down process. Counterparties must verify that no designated persons or entities are involved in residual transactions, and must document their compliance posture in line with EBA and ESMA expectations where financial instruments are involved.
Force Majeure: Does the Regulatory Ban Qualify?
The most commercially sensitive question for many clients is whether the import ban constitutes a force majeure event under their LNG contracts. The answer depends on three overlapping legal frameworks: the governing law of the contract, the drafting of the force majeure clause itself, and the applicable mandatory rules of the EU legal order.
Under English law (still common in commodity contracts despite Brexit), a regulatory prohibition can in principle satisfy the threshold for force majeure, but only if the event was unforeseeable at the time of contracting and has rendered performance impossible rather than merely more expensive. Courts applying English law have consistently refused to extend force majeure to situations of commercial inconvenience, and the CJEU's jurisprudence on EU sanctions as supervening events is of limited direct authority in English proceedings.
Under the laws of EU member states, the position is more nuanced. Civil law systems generally recognise force majeure (or the analogous concepts of hardship, imprévision or Wegfall der Geschäftsgrundlage) where a subsequent mandatory rule of public law makes performance definitively impossible. The EU sanctions framework, as directly applicable EU law under Article 288 TFEU, may qualify as such a rule. However, the scope and procedural requirements vary by jurisdiction.
Several structural factors complicate the analysis:
- Foreseeability: contracts concluded after June 2025 carry heightened foreseeability risk, given the public legislative trajectory at that date. Force majeure arguments will be harder to sustain for later agreements.
- Partial impossibility: the transitional window for pre-2025 contracts does not make delivery impossible immediately; it creates a defined deadline. Some courts may characterise this as foreseeability of future impossibility rather than present force majeure.
- Best-efforts obligation: many LNG contracts include a best-efforts or reasonable-endeavours obligation to overcome obstacles. Where an EU-law derogation or licence mechanism is available, failure to apply for it may negate the force majeure defence.
- Circumvention risk: any arrangement designed to route Russian LNG through a third-country intermediary to avoid the ban will expose the parties to circumvention liability under EU sanctions – a risk flagged consistently in European Commission enforcement guidance.
Contract Termination: Grounds, Notice and Consequences
Even where force majeure is not available or is contested, companies may have grounds for termination under other contract law doctrines: frustration (common law), impossibility, or the right to terminate for regulatory illegality. The practical steps matter as much as the legal theory.
Key procedural considerations include:
- Notice requirements: most commodity contracts specify tight notice windows for force majeure or termination events. Missing these windows – even by a short period – can result in a waiver of the right to invoke the clause or create liability for ongoing deliveries.
- Mitigation obligations: the non-performing party is typically required to demonstrate that it took reasonable steps to mitigate losses. In the context of an EU-wide prohibition, this will include documenting compliance with sanctions screening, any licence applications and alternative sourcing efforts.
- Return of prepayments and deposits: where buyers have paid in advance, the legal basis for recovering those sums on termination is distinct from the termination right itself; unjust enrichment claims and contractual restitution provisions need to be analysed separately.
- Asset freeze implications: if the seller or any payment intermediary is a designated person or entity, the asset freeze provisions of EU sanctions may prevent the transfer of funds back to the buyer, creating a separate legal impasse that requires a specific licence from the relevant competent authority.
Where disputes are governed by arbitration clauses (LCIA, ICC, SCC and similar), parties should note that several arbitral institutions have issued guidance on the procedural implications of EU sanctions for tribunal composition and payment of fees. This is a live procedural risk in Russian-counterparty cases.
Cross-Border Implications: Third-Country Operators and Transit Routes
The import ban's extraterritorial reach is a point of ongoing legal debate. EU sanctions directly bind EU persons and entities established in the EU, as well as conduct that takes place in whole or in part within EU territory. However, non-EU subsidiaries of EU parent companies and EU-bank-financed transactions routed through third countries also fall within scope in many configurations.
Operators in jurisdictions that have been used as transit or re-export points for Russian energy commodities – including certain South Caucasus and Central Asian routes – face heightened scrutiny. The 21st package's export controls provisions are directly relevant here: the list of items subject to controls has been expanded, and EU authorities have signalled increased focus on the role of intermediary jurisdictions.
For companies with Georgia-related trade routes, the evolving sanctions posture warrants careful attention; Ferraz & Whitmore's analysis of the operational implications is available at our Georgia sanctions and trade practice page. Similarly, the Italian market – which has historically had significant LNG exposure – presents specific regulatory considerations addressed in our Italy sanctions and trade practice.
The divestment derogation extended to 31 December 2026 offers a limited but important window for EU operators with Russian-linked energy assets to exit positions without triggering additional breach of sanctions liability. Companies considering using this derogation should move promptly: the process of obtaining the necessary authorisation, completing transaction documentation and ensuring that exit payments do not themselves constitute prohibited transactions under the asset freeze regime is operationally complex.
Strategic Recommendations for Affected Operators
Given the regulatory timeline and the legal complexity outlined above, the following steps are relevant for companies currently holding or unwinding Russian LNG exposure:
- Audit existing contracts immediately. Identify whether agreements fall within the pre-17 June 2025 category, what the contractual force majeure and termination provisions say, and what governing law applies. This audit should be completed well before the 1 January 2027 operative date for long-term contracts.
- Document the regulatory chain. In any future dispute, demonstrating that performance became impermissible by operation of directly applicable EU law – rather than by commercial choice – is critical. Preserve all regulatory correspondence, legal opinions and compliance records.
- Engage counterparties proactively. Where the other party is a non-EU entity not subject to EU sanctions, a negotiated exit may be both faster and less contentious than a unilateral termination. Consider whether the 31 December 2026 divestment derogation can be used to structure an orderly wind-down.
- Apply for derogations or licences where available. The sanctions regime contains derogation mechanisms for specific categories of transaction. Failure to explore these routes may weaken a subsequent force majeure or impossibility argument.
- Monitor the 21st package guidance. Council Regulation (EU) 2026/1848 is relatively recent; European Commission FAQs and national competent authority guidance are still emerging. Our analysis of the 21st package is maintained on an ongoing basis and is accessible via our EU 21st Sanctions Package alert page.
- Review financial exposure. Where LNG contracts are linked to derivative instruments, letters of credit or bank guarantees, the interaction between the import ban and financial sanctions – including EBA guidance on due diligence and ESMA's positions on sanction-related market disruption – needs to be assessed separately.
Open Questions and Litigation Risks
Several significant legal questions remain unresolved as of the date of this analysis. First, the precise scope of the "long-term contract" carve-out has not been authoritatively defined by the European Commission or the CJEU, creating uncertainty for borderline cases. Second, the interaction between the LNG import ban and member states' pre-existing energy security obligations under the Gas Security of Supply Regulation is contested: some operators have argued that national derogations may be available where supply disruption would threaten critical infrastructure, but no member state has publicly invoked such a derogation in this context to date.
Third, the question of whether a seller's inability to deliver due to Russian export restrictions – as opposed to the EU's import prohibition – constitutes a distinct force majeure event in the seller's favour remains live in several pending commercial disputes. The asymmetry of the legal positions taken by buyers and sellers in these proceedings will likely be resolved only through arbitral awards or court decisions over the coming years.
Finally, circumvention enforcement is an area of escalating risk. EU sanctions authorities have increased coordination with ESMA and EBA to identify structured transactions designed to bring Russian LNG into EU territory through non-EU intermediaries. Penalties for breach of sanctions – including criminal liability in certain member states – can be severe, and the enforcement posture has visibly hardened in 2026.
For a confidential discussion of your specific contractual exposure under the Russian LNG import ban, please contact the Ferraz & Whitmore sanctions and trade team at info@ferrazwhitmore.com or through our contacts page. We advise on EU sanctions compliance, contract termination strategy and cross-border divestment across multiple jurisdictions.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.