The Russia (Sanctions) (EU Exit) (Amendment) (No 3) Regulations 2023, in force from last week, may block legal professionals from advising international companies on lending decisions to Russian companies. According to the Ministry of Justice and the Foreign Office, Russia is highly dependent on Western countries for legal expertise, with the UK previously exporting £56m in legal services to Russian businesses every year.
Julie Norris, partner at Kingsley Napley, said: ‘The risk of non-compliance is career ending in no uncertain terms.
‘Lawyers are seen as enablers of sanctions evasion. Lawyers should be in no doubt that the regulations need to be taken very seriously and while there has been little enforcement action seen to date, this is likely to change now the regime is implemented, allowing the focus to shift to enforcement.’
Norris said prohibited activities include the granting of a loan and trust services, and noted that the ban related to advice and not to legal representation in court or arbitral proceedings. She said advice ‘includes interpretation of law, the preparation of legal documents and advising in relation to a commercial transaction, negotiation or any other dealing with a third party.
‘There are a limited number of exceptions, for example where the service is provided in relation to the discharge of or compliance with UK statutory or regulatory obligations and further where an obligation arises under a contract concluded before 30 June 2023.’
A defence is also available, where the lawyer can show they did not know and had no reasonable cause to suspect the activity was prohibited.
Lord Chancellor Alex Chalk said: ‘The UK legal system underpins many international contracts and businesses, and we will no longer allow Russia to benefit from our knowledge and expertise.’
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