Russia, sanctions and professional services
The latest Rahman Ravelli Sanctions Monitor piece sees Angelika Hellweger assess the professional services ban on Russia that has been announced by the UK.
The UK’s latest sanctions imposed on Russia prevent its individuals and organisations buying a range of professional services.
The sanctions were announced following Russia’s plans to annex 90,000 square kilometres of Ukrainian territory in Donetsk, Luhansk, Kherson and Zaporizhzhia, following referendums in those regions orchestrated by Russia and condemned as a “sham” by Western powers.
The aim is to harm Russia’s economy by denying it access to IT consultancy, architectural, engineering, accounting and commercial legal services provided by UK firms. The ban is the latest UK response to Russian activities in Ukraine and follows the UK’s May package of sanctions that banned consultancy firms and PR agencies from working with Russia.
Russia reportedly buys in 67% of the services subject to the latest ban from countries that have sanctioned it because of its invasion of Ukraine. Russia has, until now, relied extensively on the UK to provide auditing and commercial legal services, due largely to London’s role as a major international hub for professional services.
While the May package of sanctions allowed lawyers to continue working with Russia, the latest measures will ban lawyers from providing “transactional legal advisory services” to Russian businesses. They will, however, let law firms provide other limited legal services to the country.
Scope
At this stage, it is not clear precisely which legal services will be prohibited under the new UK sanctions, beyond those covering "certain commercial and transactional services". The relevant legislation has not yet been published and thus the scope of the restrictions cannot be fully determined.
It remains to be seen whether the UK will follow the definition of “legal services’’ contained in the European Union’s (EU’s) eighth sanctions package. The relevant EU legislation prohibits the provision of “legal advice to customers in non-contentious matters, including commercial transactions, involving the application or interpretation of law; participation with or on behalf of clients in commercial transactions, negotiations and other dealings with third parties; and preparation, execution and verification of legal documents”. In short, the EU legislation prohibits the entering into commercial contracts or the acquisition and disposal of assets.
The EU legislation also states that “legal advisory services do not include 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 arbitral or mediation proceedings.”
The right to seek legal advice and access to legal representation is a fundamental right and is particularly important for individuals under criminal investigation. It is explicitly protected under Article 6 of the European Convention on Human Rights. This is likely to be why both the EU and the UK government have limited the ban to commercially-related legal services and transactions.
Conclusion
The scope of the latest UK measures makes it imperative that many businesses - particularly those in auditing, IT and the legal sectors - monitor their client / customer base on an ongoing basis. This needs to be done to ensure that none of the companies or individuals that they do work for are – or may become - sanctioned entities. Sanctions screening and sanctions checks should be undertaken on a regular basis. With this in mind, it is vitally important to ensure that all employees are trained - and that the training is updated - so they are aware of the latest legal situation.
