The Licence was issued under the Russia Sanctions Regulations and Belarus Sanctions RegulationsRegulation 64 of the Russia (Sanctions) (EU Exit) Regulations 2019 (“Russia Sanctions Regulations”) and Regulation 32 of the Republic of Belarus (Sanctions) (EU Exit) Regulations 2019 (“Belarus Sanctions Regulations”) and replaced General Licence INT/2022/2252300 (“Previous Licence,” together “Licences”), which was in force until 28 April 2023.
Subject matter of the Licence
The Licence allows, subject to conditions (including the limits for fees, hourly rates and reporting), payments to solicitors and barristers in the UK for legal servicesHowever, the Licence does not cover cases involving the protection of honour and dignity, business reputation and defamation. provided to legal entities and individuals designated under UK sanctions (“DPs”).The UK sanctions did not generally prevent UK lawyers from providing services to DPs, but individual licences were required to be obtained in order to receive fees. In this connection, OFSI earlier issued the Previous Licence and has published the new Licence.
Aggregation of the fee limits under the Licence
The pre-sanction (Part A of the Licence) and post-sanction (Part B of the Licence) fee limits are, as before, GBP500,000 (including VAT).The limit for expenses is also 5% of the amount of fees, but no more than GBP25,000.
However, the limits (before and after the designation) may now be combined, ie the fees for the services rendered before the DP was designated (GBP500,000) and services rendered after the designation (GBP500,000) may be up to GBP1 million (including VAT) in total. The Previous Licence did not provide for such possibility.
The same rule applies to expenses (ie GBP25,000 before the designation and GBP25,000 after the designation).
Reporting obligations
UK lawyers or DPs must report to OFSI within seven days of:- the legal services being completed; or
- the Licence coming to an end (whichever is earlier).
UK lawyers and DPs are also required to keep documents and information regarding the use of the Licence for a minimum of six years.
Duration of the Licence
The Licence is valid from 29 April 2023 to 28 October 2023.Limitations on the use of the Licence
In our view, the Licence is unlikely to eliminate the cautious approach of a number of UK lawyers to using the Licences and providing legal services.In particular, the Licence does not cover fees for services if they:
- involve actions that are otherwise prohibited by the Russia Sanctions Regulations or Belarus Sanctions Regulations (or other UK sanctions legislation); or
- are likely to result in an economic benefit to the DPs.
The Licence also preserves the requirement to pay for services to accounts with UK banks. Such requirement may not always be feasible in practice, for example when services are provided by solicitors or barristers practising in other jurisdictions (eg Hong Kong and the UAE).
Furthermore, the Licence should be assessed in light of the internal policies of foreign law firms, some of which have refused to provide services to DPs (even despite the existence of the Licence) or to clients from Russia generally. That said, in our experience, UK barristers have taken a more flexible approach to providing services to Russia-linked clients, including DPs.
