On October 6, 2022, the European Union approved the eighth package of tough sanctions against russia in response to the illegal annexation of Ukrainian territories, the announcement of “partial mobilization” and constant nuclear threats. The updated sanctions were enshrined by adopting Regulations and Council Decisions amending previously adopted Regulations and Council Decisions (Regulation (EU) 2022/263 of 23. 02.2022, Regulation (EU) No 833/2014 of 31.07.2014, Regulation (EU) No 269/2014 of 17.03.2014, Decision 2014/145/CFSP of 17.03.2014, Decision (CFSP) 2022/266 of 23.02.2022, Decision 2014/512/CFSP of 31.07.2014).
The list of new sanctions includes a ban on providing legal advisory services to the government of russia or legal persons, entities, or bodies established in russia.
In particular, according to Council Regulation (EU) No 2022/1904 of 6 October 2022 (hereinafter – the Regulation), the term “legal advice” covers the following services:
- the provision of legal advice to customers in non-contentious matters, including commercial transactions, involving the application or interpretation of the law;
- participation with clients or on behalf of clients in commercial transactions, negotiations, and other dealings with third parties;
- preparation, execution, and verification of legal documents.
It is also noted that these prohibitions do not apply to any representation, advice, preparation of documents, or verification of documents in the context of legal representation services namely in matters or proceedings before administrative agencies, courts, or other duly constituted official tribunals, or in arbitration or mediation proceedings.
Among the amendments to the Council Regulation (EU) No 833/2014 of 31 July 2014 introduced by the Regulation, the following exceptions to the ban on the provision of legal advisory services are set out:
1) the prohibition does not apply to the provision of services that are strictly necessary for the termination by January 8, 2023, of contracts not compliant with the requirements of the Regulation and were concluded before October 7, 2022, or ancillary contracts necessary for the execution of such contracts;
2) the prohibition does not apply to the provision of services that are strictly necessary for the exercise of the right of defense in judicial proceedings and the right to an effective legal remedy;
3) the prohibition does not apply to the provision of services intended for the exclusive use of services by legal persons or bodies established in russia that are owned by, or solely or joint controlled by, a legal person, entity, or body which is incorporated or constituted under the law of a Member State, a country member state of the European Economic Area, Switzerland or a partner country.
4) the prohibition does not apply to the provision of services necessary for public health emergencies, the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment, or as a response to a natural disaster.
A few days before the introduction of the ban on legal advisory services by the Council, the same sanctions were introduced by the UK. The UK Government portal states that russian business is heavily dependent on Western countries for the import of legal services, and 85% of all legal services are imported from the G7 countries.
It is expected that the effective implementation of the ban on the provision of legal services to the government of russia and law firms based or operating in russia will significantly affect their ability to carry out international activities.
We remind you that in Ukraine, the ban on the provision of legal services to the russian federation, its citizens, and companies is regulated by the Resolution of the Cabinet of Ministers of Ukraine No. 187 “On ensuring the protection of national interests in future claims of the State of Ukraine in connection with the military aggression of the russian federation” dated 03.03.2022.
Ukrainian and European legal businesses cannot stay away from the front of the fight against the aggressor country. Before starting to work with new clients, law firms must conduct thorough due diligence on future clients and carefully assess all risks in advance. This is the key to success for the development of legal business in modern realities, especially during martial law in Ukraine.