Legal advice rights written into UK Russian sanctions law

The update of the exceptions to the ban on legal advisory services under the UK Russian sanctions regime took effect on Friday 6 September.

Last year, the previous UK government legislated to introduce a ban relating to the provision of legal advisory services to non-UK persons in the context of activity prohibited under the UK’s financial and trade sanctions.

While an exception to the prohibition was provided for compliance advice on whether an act complied with the UK Russian sanctions regime, it did not extend to advice given to non-UK persons as to whether acts or proposed acts comply with other sanctions regimes that may be relevant, such as the EU or US Russian sanctions in place. To address the problem, the UK government issued a general licence, which provided an ability to provide such advice in relation to any sanctions concerning Russia imposed in any jurisdiction, as well as Russian countermeasures.

Stacy Keen of Pinsent Masons said “It is common for multiple sanctions regimes to apply to a transaction or proposed dealing linked to Russia, including the counter measures imposed by Russia in response to those sanctions. The original drafting of the UK Russian legal advisory restriction created a challenge within the legal industry that the regulations could prevent UK lawyers – including those within in-house legal teams – from providing a holistic view on sanctions risk and compliance.  Use of the general licence provided a solution to that challenge, but only if its conditions – for example, on registration and record keeping – were met.”

Fiona Cameron of Pinsent Masons said: “The change aims to clarify that the provision of legal advice in relation to compliance with global sanctions and criminal legislation is permitted. The issue was that the prohibition in the regulations as drafted originally could prevent the legitimate provision of legal advisory services on non-UK sanctions compliance under certain circumstances. Whilst a general licence was issued to address this, that general licence is now replaced and the matter hopefully put beyond doubt.”

Rachel Trease of Pinsent Masons said: “The scope of the restriction has also narrowed. Previously, it was prohibited to provide legal advice ‘in relation to or in connection with’ activity prohibited by the sanctions. The restriction now applies only to providing legal advice that ‘enables or facilitates’ underlying prohibited activity. It is now the case that a breach will only occur where the person giving the legal advice has actual knowledge that the object or effect of the legal advice provided is to enable to facilitate prohibited underlying activity, whereas previously the test was knowledge or reasonable cause to suspect.”

“Other clarifications made in the new regulations include to the definition of legal advisory services, which make it clear that the term does not include representation or advice in any proceedings before administrative agencies, courts or other duly constituted official tribunals in any jurisdiction. The addition of ‘in any jurisdiction’ clarifies that this applies to non-UK courts or agencies and is activity that falls outside the scope of the ban,” she said.