UK Russian sanctions legal advice restrictions to be eased with new licence

UK Russian sanctions regulations that took effect late last month prohibited UK persons and overseas persons when in the UK– including those working in-house at organisations – from providing legal advisory services to non-UK persons in relation to, or in connection with, any activity that is prohibited under the UK’s financial and trade sanctions on Russia if the activity in question was done by a UK person or taking place in the UK.  The ban is applicable to lawyers and other persons who provide legal advice, for example, to export control and compliance professionals.

An exception to the prohibition enables legal advice by UK lawyers to non-UK individuals and businesses to continue on whether an act, or proposed act, complies with the UK Russian regulations. However, the exception did not extend to advice to non-UK persons as to whether acts or proposed acts comply with other sanctions regimes that may be relevant, for example the EU or US Russian sanctions in place.

The regulations spurred concern from within the legal industry. Sanctions expert Stacy Keen of Pinsent Masons said at the time the new regulations were introduced that they could prevent UK lawyers from providing a holistic view on sanctions risk. She said many in-house legal teams in the UK, and external lawyers, are regularly asked to advise non-UK parts of businesses / non-UK entities on whether proposed activities comply with sanctions regimes beyond the UK or on the exposure to risk under those regimes.

In response to the concerns raised, the government confirmed at a webinar it hosted on Tuesday that  a general licence is being prepared and will be issued in the coming weeks to allow legal advice  to be given in relation to any sanctions concerning Russia imposed by any jurisdiction, as well as Russian countermeasures.

Rachel Trease of Pinsent Masons said: “The government has recognised that the current exception, which applied only to UK sanctions, is too narrow. This meant that UK lawyers could not provide holistic sanctions advice to clients covering EU, US or other sanctions regimes.”  

“The proposed general licence is very welcomed. The effect of the legal advisory services prohibition is clear – to ensure that UK lawyers are not facilitating Russian trade and revenue generation in relation to commercial activity that the UK has chosen to sanction – but the restriction as it stands is very wide and much wider than equivalent restrictions in the EU. The general licence will allow UK lawyers and other professionals to continue to provide clients with holistic sanctions advice covering sanctions in different jurisdictions, which is fundamental for organisations navigating across a range of jurisdictions. However, it is very important to note the general licence is unlikely to apply retrospectively and there is a need to ensure that the current extensive prohibition is complied with,” she said.