The UK established sanctions against Russia soon after the invasion took place in February 2022 (as a number of Western allies also did, and continue to do). A number of these existing sanctions have particularly targeted wealthy Russians with significant political influence (‘oligarchs’) who live in the UK, and particularly in London (as has been a trend for some time – it is believed that the Russian state holds over £25 billion in assets in the UK which the government are now targeting). One notable headline example within a sports law context was Chelsea FC’s owner Roman Abramovich being forced to sell the club last year.
In the latest turn of events, the UK government is suggesting that, by law, seized Russian assets will now be used to fund the reconstruction of Ukraine. It is believed that this process will continue until Moscow agree to pay compensation for damages caused (itself not a certainty to actually happen, by any means). This comes as part of a wider current topic of discussion around looking to Ukraine’s future after the war – The Economist (regularly reading this is an excellent way to build commercial awareness knowledge) recently ran a large piece titled ‘Building Ukraine 2.0’ on the importance of financing the reconstruction of the country. For another example, see the Council of Europe summit last week, where leaders discussed similar topics. In the UK, the law is clearly being used as a tool via which this monetary process can emerge.
A number of other pieces of legislation arrive at the same time. Certain individuals linked to Russia now need to more clearly declare all their assets based in the UK, for example.
Further details can be found within the bill itself (as introduced to Parliament) – titled ‘Seizure of Russian State Assets and Support for Ukraine’. It has been sponsored by Sir Chris Bryant of the Labour party (who have been particularly vocal in their support for this action), and is currently going through its second reading in the House of Commons.
So far, most Russian assets have been effectively ‘frozen’ rather than ‘seized’, but this new piece of legislation suggests that the UK is willing to take things a step further. While obviously supporting an admirable cause, this does raise some issues – issues which have meant that many other Ukrainian-sympathetic nations have not yet taken the same steps.
Most notably, the principle laid down by the UK here would open up suggestions that Western assets being held elsewhere could also now be seized. In other words, this move sets a precedent. However, it could also be seen to encourage other Western countries to now step forward and do the same, which would have a major impact on the reduction of the Russian war effort (and act as a major boost for the Ukrainian front).
Another point worth remembering is that freezing assets (and even more so seizing them, as this new legislation implies) is a complex matter legally speaking, since wealthy individuals often have skilled advisors hiding their assets in numerous places (for example, holding them within multiple companies or multiple investment vessels which are difficult to trace back to one questionable individual). Situated within an already-complex legislative landscape, it becomes clear that enforcing these laws effectively is an extremely difficult process.
Law never exists in a vacuum. Any study of the history of law and its ties to philosophical ideas establishes this fact. Instead, the goalposts of morality which it establishes are always influenced by external factors – namely, the political landscape. For this reason, aspiring lawyers applying for training contracts, vacation schemes, pupillage, etc, are always tested on their commercial awareness (specifically how politics is currently affecting business too) in interviews. A typical commercial awareness interview question might ask an applicant to describe a recent news story and its effect on the legal industry (or law more widely). The war in Ukraine is undoubtedly one of the most important topics for students to understand (and demonstrate) right now, and a key point of discussions in boardrooms around the UK (and indeed the world).
For lawyers already practicing, the ongoing crisis is having a major impact on their day-to-day work. On a business level, a huge swathe of law firms pulled out of Russia following the invasion, and law firms now need to be particularly careful in who they work with in regard to the public image of their business. On a legislative level, the UK has introduced a number of laws as a response to the war, including a number of sanctions against Russian individuals and businesses which will impact deals involving Russian parties in various ways.
In particular practice areas such as Public Law and International Arbitration, the war in Ukraine is having an obviously pronounced effect (since those areas are often quite political in nature). However, the ongoing situation has also impacted areas more traditionally financial, such as M&A (mergers and acquisitions) or trade, since the flow of money in and out of both Ukraine and Russia is the most significant contributor to victories and losses – wars require heavy financing, which lawyers are always a major part of.
The war in Ukraine is having a huge impact on the political landscape of Europe (and indeed the world), which is certainly now being reflected in tightened sanctions and wider legislation being introduced in the UK. While lawmakers are setting out to use the law as a political (or even humanitarian) vehicle, lawyers themselves are coming to terms with the complex consequences that this has in their day-to-day work. They are certainly aware of the need to keep on top of this rapidly developing situation, and the crucial role they have to play in supporting Ukraine/condemning Russia’s ongoing aggression.
By Declan Peters
Loading More Content