EU bans lawyers from advising Russian firms on sanctions

European lawyers can advise foreign subsidiaries of Russian companies, but not in the interests of the parent company, the European Commission explained.An exception is made for judicial representation

Russian companies cannot obtain legal advice on sanctions from European experts, unless it involves going to court. This follows from the updated clarifications of the European Commission on the provision of services under sanctions, which RBC studied.

The European Commission answered the question whether it is forbidden to provide advice on compliance with sanctions to Russian organizations and the government. In her response, it is indicated that the responsibility for complying with EU sanctions is directly assigned to European companies, and not to Russian companies. Accordingly, according to the logic of the European Commission, Russian organizations should not turn to European lawyers for advice on compliance with sanctions restrictions at all. For permissions to conduct transactions or transactions, European companies, and not their Russian counterparties, apply to the national competent authorities.

Also, European specialists can advise foreign subsidiaries of Russian companies, provided that these services are not in the interests of the parent company in Russia.

In general, consulting services in the field of sanctions compliance are a special case of legal services, the provision of which to the Russian authorities or organizations (any, including those not included in the sanctions lists) was banned by the EU under the eighth sanctions package. There are no specific exemptions for the provision of sanctions compliance services other than general exemptions. The ban does not apply to services necessary for exercising the right to legal protection, as well as for preparing documents for litigation or arbitration proceedings in the EU countries to which the Russian organization is a party.

In any case, the European Commission emphasizes, lawyers should pay special attention to ensuring that their services to Russian organizations cannot be used to circumvent sanctions.

Rights of individuals

As in the case of American sanctions, the main thing here is the localization of the company, says Denis Primakov, head of the practice of sanctions law and compliance at the KIAP law firm. Europeans can advise foreign companies, even if they are subsidiaries of firms established in Russia, but cannot provide services to companies located in Russia and incorporated under Russian law.

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This recommendation of the European Commission refers only to Russian legal entities. As for individuals, we can proceed from the exception that consultation can be provided for going to court, judicial appeal, this is guaranteed by Art. 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, Primakov notes.

Thus, a number of large Russian businessmen use the services of European lawyers and apply to the courts. For example, Roman Abramovich challenged the sanctions imposed against him in the European Court in Luxembourg this spring . It is also known about lawsuits against the Council of the EU from the shareholders of Alfa-Bank Petr Aven and Mikhail Fridman, the owner of Severstal Alexei Mordashov and dozens of other entrepreneurs who fell under the sanctions.

In mid-December, the German newspaper Bild wrote that a total of 61 individuals and one company from Russia and Belarus filed lawsuits with the European Court of Justice to challenge the EU sanctions.

Issues of sanctions in relation to the court or transactions

Dmitry Stakheev, senior lawyer at Kucher, Kuleshov, Maksimenko & Partners, explained to RBC that any issues related to sanctions regulation very rarely arise “by themselves”. As a rule, they are divided into two groups:

issues related to the sanctions regime in relation to a specific person (the possibility and procedure for challenging inclusion in the sanctions list, judicial challenging of illegal actions of state bodies, prosecution in connection with the illegal default of obligations by the counterparty with reference to sanctions, etc.); issues related to assessing the risks of performing certain actions (transactions, payments, other interactions) in terms of the current sanctions restrictions.

“Thus, it is clear that almost any request for advice on sanctions will be rooted either in a potential administrative or judicial proceeding, or in transactional activity, from which it can be preliminary concluded whether it is possible to provide advice in a particular case,” notes Stakheev. In his opinion, the regulator is most likely hinting at the same, pointing out that, in general, the need for Russian companies to receive advice on the application of sanctions is doubtful.

The only criterion that can be said with certainty is that it is prohibited in any form to advise on the circumvention of sanctions by Russian companies or their European counterparties, the lawyer emphasizes. There is also a clear ban on Russian companies receiving advice from European lawyers through their EU-based subsidiaries, which some Russian clients with an international presence could probably count on, Stakheev said.

He also draws attention to the fact that, regardless of the recommendations of the European Commission, the European consultants themselves may take an even more conservative position and refuse to advise Russian persons even on resolved issues.