Worldwide: Russian Coal Embargo In Poalnd And European Union

1. COAL EMBARGO REGULATION IN POLAND AND EU

1.1 What is the legal basis Russian and Belarussian coal import and distribution embargo in Poland?

As a part of Polish set of legislation regarding sanctions on Russia - there are two legal acts that are introducing restriction on coal trading within Poland (and the European Union). These are:

• Council Regulation (EU) No 833/2014 of 31 July 2014, concerning restrictive measures in connection with Russia's actions destabilizing the situation in Ukraine (hereinafter "Regulation 833/2014")
• Act on Special Solutions to Counteract Supporting Aggression against Ukraine and Serving the Protection of National Security of 13 April 2022 (Journal of Laws 2022, item 835, hereinafter referred to as the "Sanctions Act").

1.2 What kind of coal import restrictions are currently binding in Poland?

1.3 What are the duties for coal importers on Sanctions Act?

• importers of coal should have at their disposal documents confirming the country of origin of the coal, the date of its introduction or transfer to the territory of Poland and, in the case of coal originating in Ukraine, the region in which it was extracted. The documents should be kept for a period of 5 years from the date of coal's introduction into the territory of Poland and made available to the appropriate control authorities upon request;
• entrepreneurs trading in coal on the territory of Poland should provide the buyer with a declaration each time covering the country of origin of the coal (including the region of Ukraine, if applicable) and the date of its introduction into the territory of Poland or the date of purchase from a Polish mine. The declaration is made under pain of criminal liability for false declarations, and the entrepreneur should keep copies of the declarations issued and received for 5 years from the date of their issue or receipt.

1.4 What are the administrative consequences of violating the coal embargo under the Sanctions Act?

1.5 What is the criminal liability for violating the coal embargo under the Sanctions Act?

The act also introduces criminal liability in Poland of individuals with penalty up to 3 years of imprisonment for:

• violating sanctions adopted by the European Union against Russia and Belarus regarding, inter alia, the prohibition of the supply or acquisition of products and technologies specified therein;
• engaging in activities which have the purpose or effect of violating EU sanctions as above;
• violation of the coal embargo under the Sanctions Act.

2. DETENTION COAL TESTING AND CUSTOMS PROCEDURE.

2.1 On what basis can coal be detained at the border?

Control of compliance with the coal embargo is carried out by the relevant Polish tax and customs authorities. This is a customs and fiscal control. During the control, coal may be verified for its origin (Article 10 of the Sanctions Act). This decision is not subject to appeal and can be taken by the customs authorities without justification.

2.2 Who can be subject to control?

Entities obliged to comply with the provisions of the Sanctions Act are mainly coal importers and entities participating in coal trade transactions. Those entities are subject to customs and fiscal control. This, in the context of the Sanctions Act, means that a "controlled person" is "an entrepreneur who has introduced or transported coal into the territory of the Republic of Poland". The scope of the control gives the control authorities practically unlimited possibilities to designate subjects for control, as all taxpayers, payers and collectors as well as legal successors and customs debtors will, in principle, be subject to this procedure.

Also, counterparties of the controlled person involved in the supply of the same good or service, being both suppliers and purchasers involved directly or indirectly in the supply of the good or service, may be required by the customs authority to provide documents and fulfil obligations.

2.3 What if the results of checks on the origin of the coal indicate that it was transported in violation of the embargo?

Under the Sanctions Act, if a breach of the coal embargo is discovered, the Head of the Customs and Taxation will seize the goods and apply to the court for their forfeiture to the State Treasury. Dispute resolution / litigation procedure in Poland – is explained below.

2.4 Is the seizure of goods (coal) in order to request their forfeiture legally challengeable?

As a general rule, any seizure is made by administrative decision, which is subject to appeal.

The Sanctions Act states that, in the event of a violation of an embargo, the Head of the Customs and Taxation shall seize the goods and apply for an order of forfeiture to the State Treasury. This decision is subject to appeal to a higher authority and, if the complaint is not successful, to the administrative court within 30 days of receipt of the final decision.

2.5 What is the general custom procedure? Can we challenge the results of the inspection?

• Customs and fiscal control shall be initiated ex automatically, on the basis of a customs and fiscal control authorization given to the inspector.
• The date of initiation of customs and fiscal control shall be the date of delivery of the authorization to carry out customs and fiscal control. The mere presentation of an official identity card may be sufficient in certain cases.
• A customs and tax inspection ends with the drawing up of an inspection protocol.
• A party to a customs proceeding is entitled to file 'objections' and 'explanations' to the findings made in the official protocol (appeal) as well as to offer evidence.
• There is a doubt who may be considered as party to this procedure, customs authorities understand an owner of the coal as an exclusive party; leading law firms and lawyers suggest that status shall be interpreted wider.
• Appeal must be filed within 14 days from the date of delivery of the protocol. The appeal must be considered by the authority within 14 days, and the consideration of the appeal is final.
• If no irregularities are found, a protocol need not be drawn up and the retained goods are released.
• If irregularities are found, then the authority may implement a forfeiture procedure.

3. COAL FORFEITURE UNDER EMBARGO LAWS IN POLAND

Once the customs inspection is completed and it is established that there has been a violation of the coal embargo, launch of forfeiture case before the Courts of Poland by customs authorities is mandatory.

3.1 Who can be a party to the court proceedings?

Anyone whose rights are affected by the outcome of the proceedings can take part in any state of the case until the conclusion of the second instance proceedings. Contrary to customs proceedings, the catalog of persons who can participate in court proceedings is much broader and includes not only the owner of the thing, but also parties interested in securing their contractual obligations. A party wishing to join the proceedings shall file an application. If admission is denied, the court issues an order, which may be appealed.

3.2 What is the scope of the Court's judicial review?

The Court examines the correctness of the conduct of the customs investigation, in particular, whether the evidence collected justifies the application of the Sanctions Act and the forfeiture of coal to the State Treasury.

3.3. Can the Court rule differently from the customs authority?

Yes - if the Court itself establishes the defectiveness of the findings of the customs authority or that procedural mistakes had been made. However, this is a largely formalized procedure and the results of the inspection are difficult to challenge.

3.4 Can the Court's decision be a subject to appeal?

Decisions of the Court of first instance ruling on the merits may be appealed. Other decisions of the Court of first instance, in cases indicated by law, may be appealed too. Once an appeal is filed, the case is heard by a higher court. The decision of the higher court is final (there shall be no right of action for cassation before the Supreme Court).

4. OTHER RISKS.

1. Failure to follow proper procedures resulting in a breach of an embargo may give rise to liability on the part of the supplier even if the recipient is the only party to the proceedings.
2. Even in the case of non-participation in customs proceedings as a party, it may be beneficial to provide the recipient of the cargo and the customs authorities with all documents and other means of certifying the cargo's place of origin. Failure to cooperate could result in a breach of due diligence in business relations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.