I have attended two meetings over the last few weeks, bringing together lawyers who are working with clients in the framework of the new sanctions packages introduced after the Russian invasion of Ukraine.
The last such meeting was a training session a few days ago for European lawyers on the EU’s sanctions packages, organised by the European Lawyers Foundation and the Council of Bars and Law Societies of Europe. Over 600 lawyers from around the EU attended, and over 60 questions were put during the two-hour session, showing the need for detailed guidance on how the sanctions packages work.
Solicitors are clearly able to continue working for sanctioned clients if they have a licence from the Office of Financial Sanctions Implementation (OSFI). The SRA has issued guidance, but it is of the ‘do-not-break-the-law’ variety.
That does not help with the practical traps which lie in the path of a solicitor who clearly does not want to break the law. There are reports that solicitors’ professional indemnity insurance companies and law firms’ banks add further barriers and prohibitions for such work, even when done under licence.
Due diligence can be more than usually complicated, given that those under sanctions may hide their assets in third countries, through byzantine layers of shell companies or other ownership mechanisms to defeat discovery. What software will help a solicitor to navigate this maze?
One lawyer at the EU training complained that even the European Commission’s page on frequently asked questions (FAQs) can be misleading, because behaviour explicitly mentioned previously as admissible by the FAQs was prohibited in a later version of the same page.
When someone not surprisingly asked at the seminar the obvious and ultimate question - ‘What can a lawyer do and not do for a client who has been sanctioned?’ - the official answer was that there was no clear answer.
A lawyer from the Netherlands reported that the Dutch competent authorities take the view that legal services to a sanctioned (legal) person may constitute a prohibited form of making "economic resources" available. To know whether the specific legal services are considered prohibited, the lawyer has to explain to the competent authorities what work will be done. The same needs to be explained if funds have to be unfrozen to pay a lawyer’s fees – the competent authorities need to receive a budget and explanation for the legal costs. (The SRA’s guidance similarly says that OFSI will judge whether legal fees are reasonable.)
The answer from those responsible for the detail of the EU sanctions package was that this was a correct interpretation of the law, and matters have to be decided on a case-by-case basis. However, this solution raises issues of lawyer-client confidentiality. In addition, there is a chilling effect on lawyers, since they may obviously become reluctant to be involved in work of such risk and difficulty. This affects the client’s right of access to a lawyer.
The saving grace lies in the fundamental principles underpinning the rule of law. The Gazette reported last month that legal services are still not per se within the banned activities under the various sanctions packages. There have been continuing rumours from all the major sanctions-issuing players that legal services are under consideration.
The official response within the European Commission is that the Charter of Fundamental Rights of the EU will provide protections for lawyers and their clients.
For the UK – and this may be provocative to some, given the events of the last few days over the Rwandan flight – the European Convention on Human Rights, and in particular Article 6 on the right to a fair trial, should govern the basics of what lawyers can do. There is extensive case-law, with authoritative guides issued by the European Court of Human Rights on both the civil and criminal limbs of Article 6.
The European Commission has a sanctions map of which it is proud. There you can look up people – say Roman Abramovich (all possible spellings are given) – and see exactly what sanctions have been imposed, in full detail. But there are other searchable categories, too – for instance, all the competent authorities in EU Member States. On another page, there are also the FAQs previously mentioned.
The SRA guidance has links to the OFSI’s and the Financial Conduct Authority’s guidance.
All sides agree that those under sanctions are entitled to legal services for some work, for instance relating to criminal charges and delisting. After that, matters become very unclear, putting lawyers at risk. The burden on the profession is already very heavy, unfairly so when the risks are so high, and it cannot be right that the answer to a simple question like what a lawyer can and cannot do cannot in fact be answered. The competent authorities should do more to provide guidance, and perhaps offer training to lawyers.
