The European Union can Lawfully Prohibit the Provision of Certain Legal Services to Russian Entities

1. French and Belgian Bar associations as well as some lawyers contend that the restrictive measures adopted by the European Union against Russia are invalid insofar as they prohibit providing certain legal advisory services to Russian legal entities. They asked the General Court of the European Union (‘the GC’) to annul that prohibition. They argued that the prohibition infringed the right to effective judicial protection enshrined in Article 47 of the EU Charter of fundamental rights (‘the Charter’), the right to respect for communications between lawyers and their clients enshrined in Article 7 of the Charter, as well as other rules and principles of EU law. The GC found, in three judgments delivered on the same day, that there is no right to legal advice unconnected to judicial proceedings, and the sanctions only prohibit that kind of legal advice (the reasoning dismissing the other grounds for annulment are discussed below). The prohibition is therefore valid.

The cases decided a novel question of law. The three judgments under analysis add to the growing case law on the sanctions adopted by the EU against Russia since 2022, which contain many unprecedented restrictions. It is already possible to identify a trend, to which these three judgments contribute: by and large, the GC is confirming the (broad) powers of the Council in the imposition of restrictive measures of novel nature, scope and depth, such as the prohibition to provide some legal services. The Court had in fact confirmed the validity of the prohibition to broadcast Russian propaganda (in case T-152/22, RT France v Council).

There are also significant real-world implications. The prohibition at issue is very broad indeed, and it is clearly against the (financial) interests of many lawyers in the EU. The Court found, arguing on the basis of precedent, that the negative effect on the interests of the applicant did not, in and of itself, affect the legal validity of the sanctions.

Paragraph 2 of this contribution provides the legal context. These are not joined cases and each set of applicants challenged the same prohibition on various grounds, but it is still appropriate to consider them together as they all confirm the validity of the same provision, with largely identical reasoning, adopted by the GC in the same formation (Grand Chamber) and were assigned to the same Rapporteur. Paragraph 3 o recalls the reasoning of the GC in the three decisions. Paragraph 4 provides some reflections. Here, given the scope of this Section – the judicial dimension of the Charter – the focus will be exclusively on Articles 7 and 47 Charter. The reasoning of the GC is ultimately convincing because it is grounded on a tight, literal, formalistic analysis of EU secondary law, read in the light of the hierarchically superior Charter, and of the case law of the Court of Justice of the EU.

2. The prohibition that was contested in the three cases is contained in Article 5n(2) of Regulation No 833/2014. It was adopted in October 2022, in the context of the continued war between Russia and Ukraine. It is part of the most comprehensive and harshest sanctions ever adopted by the EU (for a general policy overview of the sanctions see K. Meissner, C. Graziani, 2023). It is phrased as follows: «It shall be prohibited to provide, directly or indirectly, architectural and engineering services, legal advisory services and IT consultancy services to: (a) the Government of Russia; or (b) legal persons, entities or bodies established in Russia». The Regulation contains several exceptions as well, most notably that the prohibition «shall not apply to 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» (Article 5n(5)). Other exceptions pertain to services strictly necessary to ensure access to judicial, administrative or arbitral proceedings in a Member State; or for public health emergencies or in response to natural disasters; etc. (paragraphs 4 to 9 of Article 5n). The Regulation also provides for the opportunity to apply for derogations: competent authorities in Member States can authorise the provision of the services «under such conditions as they deem appropriate, after having determined that this is necessary for» a list of purposes specified in the Regulation, including humanitarian purposes and the functioning of diplomatic representations (Article 5n(10), or the need to ensure critical energy supply and infrastructure (5n(11)), and divestment (Article 5n(2a)).

In Case T-797/22, Belgian Bar associations and lawyers, supported by the German Federal Bar and the Geneva Bar, challenged the provision on the grounds that it infringed Articles 7, 47, and 52(1) of the Charter, as well as the independence of lawyers as an aspect of the value of the rule of law protected by Article 2 TEU, and the general principle of legal certainty. In Case T-798/22 the Paris bar and a lawyer of that Bar, supported by the Geneva Bar, requested the annulment of the measure alleging a violation by the Council of its duty to state reason, and a violation of Articles 7, 47, and 52(1) of the Charter. In both those cases the Council was supported by Estonia, the European Commission, and the High Representative. In Case T-828/22 another French lawyers’ association put forward as grounds for annulment a violation of the duty to state reasons, of the right of lawyers to provide legal advice, of Article 47 Charter and Article 6(1) European Convention for the protection of Human Rights (ECHR), and a violation of Article 52(1) Charter. In this case the Council was supported by Estonia and the European Commission.

3. In all the three cases, the Court found it unnecessary to rule on the admissibility of the actions, even though the Council submitted that they were inadmissible insofar as the derogations (Art. 5n(10)) were concerned. The question was raised by the Council in so far as the challenge to the derogations was concerned (Article 5n(10) and Article 12b(2a) of Regulation No 833/2014). For reasons of procedural economy, the Court focused only on the merits instead. The GC is in fact allowed to sidestep questions of admissibility when the merits are unfounded, by virtue the precedent established in C-23/00 P Boehringer, on which the GC relied (para. 23 of Case T-797/22 and of Case T-798/22; para. 19 of Case T-828/22).

The applicants in Case T-797/22 argued that Articles 7 and 47 Charter «form the basis of a fundamental right of access to a lawyer, including in situations unconnected with any judicial proceedings» (para. 37). A literal reading of the heading and of the third paragraph of Article 47 Charter led the Court to the conclusion that «a person must only be recognised as having the possibility of being advised, defended and represented, provided for in the second paragraph of that article, where there is a link with judicial proceedings» (para. 42 Case T-797/22 and 53 Case 798/22). Article 7 Charter protects the privacy of lawyers communication, irrespective of judicial proceedings, and the ECHR and ECJ case law confirms as much (paras 44-47 Case T-797/22). But Article 7 and 47 have different scope and do not form, neither separately nor together, the basis of a right to access to a lawyer outside of judicial proceedings. Legal advice connected to judicial proceedings is explicitly authorised by the contested measure (it is an exception to the prohibition, Article 5(n)(5) and (6)). In particular, «legal advisory services relating to a pre-litigation procedure – that is to say, an administrative procedure – or to the initial stage of judicial proceedings which is a necessary step for the parties under the applicable national law, fall outside the scope of the prohibition at issue» (para. 61 Case T-797/22).

The applicants also argued that the requirement to apply for prior authorisation was an unlawful interference with the right to professional secrecy of lawyers (guaranteed by Article 7 Charter). That right, the ECJ held in C‑694/20 Orde van Vlaamse Balies covers circumstances where there is «a reporting obligation, requiring a lawyer to disclose to a third-party intermediary which was not the lawyer’s client, the lawyer’s identity, his or her assessment in relation to the reporting obligation at issue and the mere fact that he or she had been consulted» (para. 73 of Case T-797/22). As it did for Article 47 Charter, the Court explained why the prohibition and its exceptions and derogations fall outside the scope of Article 7 Charter. The derogations in the measures at issue in fact «grant the competent authorities discretion as to the manner in which an application for exemption must be set out, lodged and processed» (para. 77 of Case T-797/22 and 85 of Case 798/22). Conceivably, the Russian entity – and not the lawyer – may apply for such a derogation; if the lawyer applies, the measures at issue do not compel the revelation of information that is covered by the professional secrecy guaranteed by Article 7 of the Charter (paras 77 and 78 of Case T-797/22). This depends on how the national authorities set up such derogation system, which does not, by itself, breach Article 7 Charter. In any event, the Court went on, even assuming that the exemption provisions do give rise to interference with the professional secrecy of lawyers, these are provided by law, respect the essence of the right and meet objectives of general interest (paras 85-106 of Case T-797/22).

The prohibition does not affect the independence of lawyers or access to justice either, because those are recognised only in relation to judicial proceedings, and, even if the profession was affected, it can be subject to limits, and the limits here are justified and proportionate (paras 132-135 of Case T-797/22 and paras 119-125 of Case T-798/22).

The principle of legal certainty is not breached, because the rules are sufficiently clear and precise (paras 180-211 of Case T-797/22).

In cases T-798/22 and T-828/22, the applicants also alleged a breach of the institutional duty to state reasons for the adoption of the measure (Article 296 TFEU). The sanctions indicate both the context in which they are adopted and the objectives they pursue. They are therefore sufficiently motivated (paras 30-41 of Case T-798/22 and 30-36 of Case T-828/22). In case T-828/22, the Court dismissed the argument that the prohibition would be contrary to other rules of EU law because either they were not material, or they were not identified with sufficient precision by the applicants (paras 52-78 of Case 828/22).

4. The reasoning is formalistic but not unduly so. The interpretation of the scope of the right to effective judicial protection given by the Court is indeed restrictive, but this is settled case law. In addition, the interpretation of the exception in the sanctions is expansive. Under Article 47 Charter, the Court found, legal advice is a right only «if there is a link to judicial proceedings, whether such proceedings have already been commenced or can be pre-empted or anticipated, on the basis of tangible elements, at the stage at which the lawyer assesses his or her client’s legal situation» (para. 51 of T-797/22). The heading of the Article 47 does refer to effective remedy and a fair trial, which implies a connection to proceedings. But the reference, in the third paragraph of that Article, to the fact that legal aid is to be provided in the context of proceedings is less convincing as an argument, even though the GC relies on it. Further, the second paragraph, second sentence of Article 47 Charter («Everyone shall have the possibility of being advised, defended and represented») is silent on the connection to judicial proceedings and a literal interpretation may suggest that no such link is necessary. The drafting of the judgement is, however, very precise. Secondary legislation must be interpreted, as far as possible, in such a way as not to affect its validity and in conformity with primary law as a whole and, in particular, with the provisions of the Charter (see para. 58 of T-797/22). The Court therefore interprets «the prohibition at issue [as not applying] to the legal advisory services provided as soon as the lawyer is called upon for assistance in defending a client or in representing a client before the courts, or for advice as to the manner of instituting or avoiding judicial proceedings». So, a preliminary assessment, «with the sole aim of determining whether proceedings, including judicial proceedings, should be ruled out on the basis of that person’s situation or whether, on the contrary, proceedings are probable or even inevitable» is not prohibited (para. 56 of T-797/22). This does not entail that the mere potential of a connection to judicial proceeding makes the provision of legal advice fall under the exception of Article 5n(5) and (6). Legal advice on commercial and financial transaction, that may or may not result in litigation at some point, is instead prohibited. But legal advice that is related to judicial, administrative, or arbitral proceedings is not prohibited (see also Preamble 19 of Regulation 2022/1904, para. 54 of Case T-797/22 and para. 58 of Case T-798/22). In sum, the GC found that the prohibition (by virtue of its exception) operates outside the scope of Article 47 Charter, and that the prohibition is therefore valid. The Court could have reached the same conclusion on the validity of the sanctions by saying, for example, that there is a breach of Article 47 Charter, but that the breach is justified in light of the exceptional context. Some may find the Court’s reasoning formalistic (see also the final paragraph of this section), but in my view it is convincing. This finding complements the interpretation of Article 5(n)2 of the Regulation given by the Court in Case C-109/23 Jemerak, where it held that «legal advisory services» does not cover ‘the authentication, by a German notary, of a contract for the sale of immovable property situated in Germany which is owned by a legal person established in Russia’ (para. 56).

The Court also found, essentially, that the prohibition (by virtue of its derogations) operates outside the scope of Article 7 Charter. But it then also went on to explain why, even admitting that the prohibition at issue interferes with Article 7, the interference fulfils the conditions of Article 52(1) Charter. Here, the context – including the economic reality that the sanctions negatively affect lawyers in the EU – became relevant in the judgment. Given the importance of the objectives pursued by the sanctions, these may have negative consequences on parties, such as lawyers, who are in no way responsible for the situation which led to their adoption (para. 93 of T-797/22). The Court thus acknowledged such negative consequences, but restated, as it had done in earlier cases (T‑735/14 and T‑799/14 Gazprom), that this does not affect the validity of the sanctions. In my view, this is a correct application of the case law of the Court (para. 22 of Case C-84/95 Bosphorus: «Any measure imposing sanctions has, by definition, consequences which affect the right to property and the freedom to pursue a trade or business, thereby causing harm to persons who are in no way responsible for the situation which led to the adoption of the sanctions»). The rule expressed by the case law also has merit. The policy choice of sanctioning a country may (and usually does) come at a cost for the EU and for its citizens, but this is for the Council to assess. Once the Council’s choice is made, the review of the Court will be extremely deferential, in practice.

An interesting comparison can be drawn with the reasoning in the decision in RT France. While that judgment referred to the exceptional context of a war in the EU’s neighbourhood as a determinant factor to establish the proportionality of the prohibition to broadcast certain content, this does not feature as prominently in the cases under analysis. It shall be recalled that, instead of a reference to the «context» as such, there is a reference to the «importance of the objectives» pursued by the sanctions (and to the judgment in RT France) to justify the proportionality of the interference with Article 7 Charter. To be sure, the international context (the war in Ukraine) is the same for the adoption of both measures (the censorship and the prohibition to provide some legal advisory services). Only, this time the analysis is focused more on an interpretation of EU law to delimit its scope of application, rather than on the context justifying its proportionality: the reasoning is perhaps more doctrinal here. This is merely a difference in judicial style. The reasoning is careful in both judgements, and I find them equally persuasive.