Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2023

Lord Purvis of Tweed Excerpts

Wednesday 19th July 2023 Grand Committee

[The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)]

My Lords, these regulations amend the Russia (Sanctions) (EU Exit) Regulations 2019. This instrument was laid on 29 June 2023, under powers in the Sanctions and Anti-Money Laundering Act 2018. The measures in this instrument entered into force on 30 June 2023.

If I may digress from my script, once again we are debating Russia and its actions. As I came into the Room, I was catching up on some of the news on the Black Sea grain initiative. Yet again, we have seen tragedy; to say it is shocking is perhaps an understatement. According to media reports, Russia has not only scuppered the Black Sea grain initiative but attacked some of the grain ports, destroying much of the grain held in those warehouses. Again, it shows the tragic nature of this illegal war and the importance of our sanctions. I say at the outset that I appreciate the work of both Front Benches opposite and the co-ordination and unity that we have displayed in moving through sanctions at such a pace.

I turn to the SI in front of us. These measures have been co-ordinated with our international partners, while refining the approach to accommodate the particular circumstances of the UK legal sector. By restricting access to additional services from the United Kingdom, they will contribute to increasing pressure on Mr Putin for waging this illegal and brutal war against Ukraine. I know that noble Lords have been focused on this issue in previous debates too. These measures place further constraints on the Russian economy, and therefore Mr Putin’s war machine. They add force to the largest, most substantial package of economic sanctions that Russia has ever faced.

The instrument delivers on the commitment made by the UK Government to ban legal advisory services on specified commercial activities. This will further hamper the ability of Russian businesses to operate internationally. This legislation will make it illegal for any person working in the UK, as well as British nationals working abroad, to advise on or facilitate certain commercial activities that would be sanctioned by the United Kingdom Government if they involved a British national or entity or were taking place in the UK. In practice, this will make it harder for Russia to benefit from the United Kingdom’s world-class legal expertise. This goes beyond prohibitions already in place that cover a range of professional services, including accountancy, architecture and management consultancy. This latest measure demonstrates our continued determination to ratchet up the pressure on Mr Putin for continuing his illegal war.

Although this legislation will close down opportunities for Mr Putin’s associates and supporters to benefit commercially from the UK’s legal expertise, it is important that we ensure that legal services can continue to be provided where they contribute to upholding the rule of law and compliance with our sanctions framework. By protecting the fundamental right to legal representation, we, frankly and directly, distinguish ourselves from Mr Putin’s oppressive regime. By ensuring that legal advice can continue to be provided for the purposes of compliance with our sanctions framework, we enhance the effectiveness of our regulations and intensify the pressure on Mr Putin.

Legal professionals are under a strict obligation to ensure that their services support their clients to be sanctions-compliant and do not stray into enabling them to circumvent restrictions. However, it has become apparent that this legislation can be interpreted as having the unintended consequence of prohibiting persons in the UK and British nationals abroad from providing legal advice to clients seeking to comply with the sanctions regimes of our international partners. Let me assure noble Lords that it is not the intent of these regulations to prohibit this type of legal service. UK lawyers should be able to support their clients to be sanctions-compliant beyond UK law as we work closely with our allies to tighten the net on Russia’s economy.

We have looked at this issue thoroughly. As an immediate response, we are working, first, across government and, importantly, across the legal profession. We have met representatives of the legal sector. My colleagues, the Lord Chancellor and the Justice Secretary, have met members directly; indeed, the Lord Chancellor met the president of the Law Society this morning. I know that this is a concern that anyone would have but I assure noble Lords that we are working closely with the legal sector in this respect to ensure that we implement a general licence that will make it clear that this type of activity can continue. We aim to have this in place in the coming days. I put on record our thanks to the legal sector for its constructive engagement on this important issue.

We have sought here to provide a direct remedy to that possible unintended consequence; the valuable support and input that we have had from the professional legal sector is very much appreciated. Once we have issued the licence, we will consider whether further amendments to the SI to address the issue are appropriate and necessary. Of course, I will update noble Lords, particularly those representing the Front Benches, on this. We will do this in conjunction with the legal sector and, if amendments are deemed necessary, we will bring them forward at the earliest opportunity.

As with our sanctions, this latest package has been developed in co-ordination with our international partners, as I said. In doing this, we will continue to work with the legal community to monitor the effects of this legislation and ensure that it achieves the desired objectives. We will also continue to co-ordinate with our international allies to identify and address any gaps or loopholes that emerge in our respective sanctions regimes.

This latest measure demonstrates our determination to target those who participate in or facilitate Mr Putin’s illegal war of choice. Through our sanctions regime, and those of our allies, Russia is being increasingly isolated, cut off from western markets, services and supply chains. Key sectors of the Russian economy have taken a significant hit and its economic outlook is bleak. The UK Government will use sanctions to intensify the military and economic pressure on Russia until Mr Putin does the right thing and ends his brutal invasion of Ukraine. We welcome the clear and continued cross-party support for this course of action. I beg to move.

[Lord Purvis of Tweed (LD)]

My Lords, I am grateful to the Minister for introducing these regulations in such a clear and comprehensive way. I will refer briefly to the concerns about unintended consequences in a moment but I will start by strongly agreeing with the Minister about what are likely to be the consequences of the decision on grain in the Black Sea.

Putin will again threaten the expansion to new victims of his aggression to Ukraine across those who are least able to feed and fend for themselves, especially as malnutrition and hunger ravage the Horn of Africa. Those countries that are dependent on the grain will be looking at this with doom. In a way, it is a horrific response to the leaders of countries, when they consider that they can effectively maintain the status quo ante relations with the Putin regime, to know how little he holds in his standing their people, who need this food.