On October 2, 2024, the General Court of the European Union (Grand Chamber) delivered a significant ruling in Case T-797/22. The claim was filed by the Ordre néerlandais des avocats du barreau de Bruxelles (Belgium) and other applicants, supported by the Bundesrechtsanwaltskammer (Germany) and Ordre des avocats de Genève (Switzerland). The applicants challenged the legal basis and application of art. 5n of regulation (EU) no. 833/2014 which prohibits the provision of legal advisory services to Russian legal entities. The Council of the European Union acted as the respondent, supported by the Republic of Estonia, the European Commission, and the High Representative of the Union for Foreign Affairs and Security Policy.

Court’s Decision in Summary

The Court rejected the challenge brought by the applicants and upheld the legality of the sanctions measures that impose restrictions on certain legal services. Specifically, it ruled that the restrictions on non-contentious legal advisory services—such as business transactions and contract negotiations—are lawful under EU law and proportional to the objective of countering Russia’s destabilizing actions in Ukraine.

Background and Pleadings

The litigation arose in response to the European Union’s sanctions against Russia, particularly following the latter’s illegal annexation of Crimea in 2014 and its continued aggression in Ukraine. As part of this sanctions regime, the EU issued Regulation (EU) No. 833/2014, which, in various amendments, imposed broad restrictions on economic dealings with Russian entities. Notably, Regulation (EU) 2022/1904, 2022/2474, and 2023/427 extended these restrictions to cover legal advisory services to Russian state entities or businesses.
The claimants—Belgian bar associations and individual lawyers—argued that the restrictions disproportionately infringed upon the fundamental rights of lawyers and their clients, particularly the right to legal advice under Articles 7 and 47 of the Charter of Fundamental Rights of the European Union. They contended that the scope of the legal services ban was overly broad, encompassing activities crucial to the functioning of justice and impeding the professional independence of lawyers. Moreover, they highlighted potential violations of the principle of legal certainty, arguing that the regulations failed to provide sufficient clarity on which services were prohibited.
The Council of the European Union, supported by Estonia, the Commission, and the High Representative, defended the measures, arguing that they were necessary and proportionate to achieve the EU’s foreign policy objectives. They stressed that the legal services restrictions targeted only non-contentious services and excluded essential services related to defense rights, legal proceedings, and access to justice.

Key Legal Issues

The central legal issues addressed by the Court included:

  1. Proportionality: Whether the EU’s ban on providing legal advisory services to Russian entities struck a fair balance between achieving the EU’s foreign policy goals and protecting the fundamental rights of lawyers and their clients.
  2. Legal Certainty: Whether the regulations provided sufficient clarity regarding which legal services were prohibited and which were allowed

Court’s Reasoning

  1. The Court addressed the proportionality argument by holding that the restrictions were justified due to the exceptional circumstances of Russia’s actions in Ukraine. It found that the ban on non-contentious legal services, such as participation in commercial transactions, was a targeted measure aimed at isolating the Russian economy and leadership without affecting essential legal functions. The Court noted that the regulations provided adequate exemptions for critical legal services related to defense rights and access to justice, ensuring that these fundamental rights were preserved.
  2. On the issue of legal certainty, the Court ruled that the regulations were sufficiently clear. The decision emphasized that the delineation between contentious and non-contentious services was reasonable and that legal professionals could determine the applicability of the restrictions by referring to the specific exemptions for litigation and dispute resolution services.

Strictly necessary” and “consistent with the objectives of this Regulation and Regulation (EU) No 269/2014”

There are two limitations to the exceptions granted in art. 5n para 6. The first one is that the legal services are “strictly necessary” and the second one that they shall be “consistent with the objectives”. Both wordings are highly unclear. Is it necessary to seek legal assistance in a matter that the client could deal with himself, that is, if no representation by lawyers is obligatory? And when is a representation “consistent with the objectives”? To the first point the Court gave the following guidance: The wording “strictly necessary to ensure access to judicial, administrative or arbitral proceedings in a Member State” in art. 5n para 6 “is intended solely to prevent abuse of the exceptions provided for in those paragraphs and cannot be used to argue that the prohibition infringes the right of access to a lawyer for the purposes of legal proceedings.” (para 60).

For the second element “consistent” the clarifications are a bit less clear, in paras 195 to 198 the Court argued that: “The requirement of consistency with the objectives pursued by Regulation No 833/2014 and Regulation No 269/2014, as laid down in Article 5n(6) of Regulation No 833/2014, is thus intended to ensure that the exception provided for by that provision does not undermine the objective of exerting pressure on the Russian Federation to put an end to its war of aggression against Ukraine, in compliance with the principles guaranteed by the Charter. As the Council emphasises, this requirement is intended to prevent any abuse of the exception set out in paragraph 6 above and is thus sufficiently explicit.”

No explanation is provided, however, when an application to a court or administrative body would be considered abusive.

Summary of Prohibited and Allowed Legal Services

Prohibited Legal Advisory Services

The Court, interpreting Article 5n (2) of Regulation 833/2014, confirmed that the following activities are prohibited when provided to Russian entities or the Russian government:

1. Non-contentious legal advice: Providing legal advice in business transactions, including the interpretation or application of laws in commercial matters (Paragraph 52).

2. Participation in negotiations: Legal professionals are forbidden from participating in business negotiations on behalf of Russian clients or acting in commercial operations (Paragraph 53).

3. Preparation and verification of legal documents: Drafting, executing, or verifying legal documents in non-litigious matters is prohibited (Paragraph 53).

4. Investment advisory services: Offering legal advice related to investments in Russia, including guidance on purchasing or transferring shares in Russian companies (Paragraph 206).

Allowed Legal Advisory Services

However, the regulation allows certain legal services under Article 5n (5)-(6), as long as they are „strictly necessary“ for specific purposes and the Court gave helpful guidance with respect to the “strictly necessary” nature of legal services:

1. Legal representation in judicial, arbitratal and administrative proceedings: Services directly related to a client’s representation in court, arbitral proceedings or administrative proceedings, including advice on potential or ongoing litigation, remain permitted (Paragraphs 54, 55).

2. Pre-trial advice: The court also gave some helpful guidance in respect of pre-trial consultation and evaluation of the chances of a legal dispute. It held:

“Paragraph 5, of Regulation No 833/2014 makes it possible to consider that legal advice services relating to a pre-litigation procedure, namely an administrative procedure, or to the initial stage of a judicial procedure through which the parties would necessarily have to pass under the applicable national law escape the contested prohibition. (para 61)”

and

“Similarly, the wording of Article 5n(6) of Regulation No 833/2014 does not preclude the conduct of a preliminary legal assessment concluding whether or not it is necessary to initiate judicial, administrative or arbitral proceedings, as well as the provision of advisory services making it possible to avoid such proceedings, in particular by means of an out-of-court settlement. The Council rightly points out that this interpretation is logically consistent with the judgment of 26 June 2007, Ordre des barreaux francophones et germanophone and Others (C-305/05, EU:C:2007:383).” (para 62)

3. Advisory services related to defense rights: Lawyers can provide services essential to defending the rights of individuals or entities in legal disputes, including advice at the pre-trial stage (Paragraph 55).

Conclusion

This ruling underscores the EU’s firm stance on enforcing sanctions related to Russia’s destabilizing activities in Ukraine, including the restriction of legal services. The Court balanced the need for effective sanctions with the protection of fundamental rights, confirming that legal services directly linked to access to justice and defense in legal proceedings remain protected.

To reach this effect, the Court interpreted the – confusing – wording “strictly necessary” in the widest possible way, so that it should rather be read as “not completely unnecessary”, which is at least very helpful guidance for the legal practice. The explanation regarding the requirement that the provision of legal services should be “consistent with the objectives” of the sanctions regulations is however less helpful. It basically says that the exception must not be abused – however, how and when an application to court or an administrative body could be “abusive” is not explained.

See below the original judgement: