Issue price – Newspaper Kommersant No. 55 (7500) dated 03/31/2023

Issues of enforcement of Russian court decisions against foreign companies revealed one aspect of the sanctions that had not been noticed before. It turned out that domestic organizations may have problems attracting lawyers to help with the recognition of Russian decisions in EU courts.

The fact is that European sanctions (the eighth package) have introduced restrictions on the provision of legal services to any Russian persons, even those not under sanctions. An exception is made for legal representation, but there is a subtle caveat: European lawyers can represent the interests of Russian persons “only for the purpose of securing access to judicial, administrative or arbitration proceedings in an EU Member State” or in cases “for the recognition or enforcement of a judicial ( arbitral award rendered in a Member State”.

Accordingly, the exception allows representing the interests of Russian persons in disputes in European courts and recognizing in them court decisions (arbitral awards) issued in the EU countries. That is, when a court is initiated in an EU country, the assistance of European lawyers is not prohibited. But, apparently, lawyers from the EU cannot help Russian organizations in cases of recognition or enforcement of a judicial (arbitral) decision made in Russia or any other country that is not a member of the Union.

As a result, it is now practically impossible to execute a judgment received outside the jurisdiction of the Union in the EU. First, there are hardly any European lawyers who are ready to directly violate the sanctions that prohibit helping with the execution of decisions of Russian and other non-European courts.

Secondly, in the EU there is a lawyers’ monopoly on the provision of legal services in the courts. That is, only lawyers licensed under the law of the EU country where the court is located can represent the interests of applicants in court. These may also be citizens of non-EU countries who have a license for judicial representation in the EU. Accordingly, they are bound by a license and are required to comply with sanctions restrictions.

Theoretically, according to the general regulations, it is possible to obtain a special permit for the provision of services subject to sanctions restrictions. But in relation to the ban on legal services, the right to receive it is not expressly recorded. Therefore, this possibility remains at the discretion of the European lawyers themselves – whether they decide to apply for permission. And then everything will depend on the discretion of the EU regulators – whether they decide to give it at all.

So far, only Switzerland, apart from the EU, has introduced the same sanctions on legal services and judicial representation, but it has a more extended list of countries whose court decisions can be enforced. It includes (besides Switzerland itself) the EU, Liechtenstein, Norway, Iceland and the UK.

What options are left for organizations that have won a case against a European counterparty in a Russian court? You can apply to the courts of non-European countries, in whose territory the debtor’s assets are located, for the execution of a Russian court decision. However, it should be borne in mind that national legislation may contain restrictions that prevent this. For example, a court in the UAE recently recognized that for the enforcement of a foreign court decision, it is not enough just to have the debtor’s assets in the Emirates, but it is also necessary that the debtor himself be registered in the UAE.

Denis Primakov, Head of Sanctions Law and Compliance Practice, KIAP Law Office