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EU’s 8th package of restrictive measures: The legal advisory services prohibition

21 Oct 2022
On 6 October 2022, the EU Council adopted the new restrictive measures against Russia covering the provision of legal advisory services to certain Russian persons. The European Commission issued questions and answers on the 8th package which can be accessed here.

The changes, contained in Council Regulation (EU) No. 2022/1904 (Regulation 1904), significantly extend the EU’s cornerstone trade sanctions legislation Regulation 833/2014. As relevant here, it extends the existing prohibition on providing certain professional services to the Government of the Russian Federation or legal persons, entities or bodies established in Russia to additionally cover in Article 5n, paragraph 2 the provision of:

  • architectural and engineering services;
  • IT consultancy services; and
  • legal advisory services.

Legal advisory services is defined in Regulation 1904 as covering the provision of legal advice to customers in non-contentious matters, including:

  • commercial transactions, involving the application or interpretation of law;
  • participation with or on behalf of clients in commercial transactions, negotiations, and other dealings with third parties; and
  • preparation, execution, and verification of legal documents.

Legal advisory services does not include any representation, advice, preparation of documents, or verification of documents in the context of legal representation services, namely in matters or proceedings before administrative agencies, courts or other duly constituted official tribunals, or in arbitral or mediation proceedings.

Unfortunately there is no definition regarding the meaning of “contentious” or “non-contentious” in Regulation 1904, aside from the indicative list outlined above.

The European Commission Q&As issued alongside Regulation 1904 merely repeat the definition of legal advisory services outlined above but does not add any further significant guidance.

To recap, Article 5n(2) restricts the provision of legal advisory services both directly and indirectly to the Government of Russia or legal persons, entities, or bodies established in Russia. The reference to “indirect” service provision may create significant ambiguity in understanding the precise extent of this restriction, especially considering the anti-circumvention measures included elsewhere in Regulation 833/2014.

On the face of it however, and for the time being, it seems that the provision of legal advisory services to Russian individuals (ie not the Government or legal persons, entities or bodies), or non-Russian entities albeit with some Russian nexus, could well be out of scope.

However, much will depend on the facts and it is likely that the European Commission in future Q&As may expect EU operators to take a strict approach on this and err on the side of caution – as we have seen this occur in the context of other trade restrictions introduced during 2022.

Other safe-harbours

Under the express terms of Article 5n(2), the legal services restriction does not apply in respect of the following circumstances:

  • The provision of services that are strictly necessary for the termination by 8 January 2023 of contracts which are not compliant with this Article concluded before 7 October 2022, or of ancillary contracts necessary for the execution of such contracts.
  • The provision of services that are strictly necessary for the exercise of the right of defence in judicial proceedings and the right to an effective legal remedy.
  • The provision of services which are strictly necessary to ensure access to judicial, administrative or arbitral proceedings in a Member State, or for the recognition or enforcement of a judgment or an arbitration award rendered in a Member State, provided that such provision of services is consistent with the objectives of Regulation 833/2014 and of Council Regulation (EU) No 269/2014.
  • The provision of services intended for the exclusive use of legal persons, entities or bodies established in Russia that are owned by, or solely or jointly controlled by, a legal person, entity or body which is incorporated or constituted under the law of a Member State, a country member of the European Economic Area, Switzerland or a partner country as listed in Annex VIII (which interestingly includes the USA and UK).
  • The provision of services necessary for public health emergencies, the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment, or as a response to natural disasters.
  • The provision of services necessary for software updates for non-military use and for a non-military end user, in relation to specific goods listed in in the regulation.

It is understood that no licence or authorisation is required from the competent authorities in the situations outlined above.

In addition, the competent authorities may authorise:

  • The legal advisory services referred to, under such conditions as they deem appropriate, after having determined that this is necessary for:
    • humanitarian purposes such as delivering or facilitating the delivery of assistance, including medical supplies, food, or the transfer of humanitarian workers and related assistance, or for evacuations;
    • civil society activities that directly promote democracy, human rights or the rule of law in Russia; or
    • the functioning of diplomatic and consular representations of the EU and of the Member States or partner countries in Russia, including delegations, embassies and missions, or international organisations in Russia enjoying immunities in accordance with international law.
  • The legal advisory services referred to, under such conditions as they deem appropriate, after having determined that this is necessary for:
    • (ensuring critical energy supply within the EU and the purchase, import, or transport into the EU of titanium, aluminium, copper, nickel, palladium, and iron ore;
    • ensuring the continuous operation of infrastructures, hardware, and software which are critical for human health and safety, or the safety of the environment;
    • the establishment, operation, maintenance, fuel supply and retreatment and safety of civil nuclear capabilities, and the continuation of design, construction and commissioning required for the completion of civil nuclear facilities, the supply of precursor material for the production of medical radioisotopes and similar medical applications, or critical technology for environmental radiation monitoring, as well as for civil nuclear cooperation, in particular in the field of research and development; or
    • the provision of electronic communication services by Union telecommunication operators necessary for the operation, maintenance and security, including cybersecurity, of electronic communication services, in Russia, in Ukraine, in the EU, between Russia and the EU, and between Ukraine and the EU, and for data centre services in the EU.

European Commission’s Q&As can be found here.

European Commission’s press release on the 8th package of sanctions can be found here.

Our updated EU sanctions’ table can be found here and our recent blog post can be found here.