1. The UK has introduced the largest and most severe package of economic sanctions that Russia has ever faced. This sanctions package has been implemented in Jersey and the Island remains in support of the UK Government's aim to reduce Putin's ability to wage war.
2. As part of this package, over 1,200 new designations have been introduced under the Russia sanctions regime since 22 February 2022. Putting this into context, at the time of the UK Office of Financial Sanctions Implementation's ("OFSI") last annual review, there were a total of 2,213 individuals and entities designated across all sanctions regimes. Moreover, the new designations were imposed on a major G20 economy with significant economic ties to the UK and other global economies. Previous sanctions regimes of broadly comparable scope, for example those relating to the Democratic People's Republic of Korea ("North Korea") and the Islamic Republic of Iran ("Iran"), targeted smaller, less globally integrated economies.
3. There has therefore been a substantial increase in those who are subject to UK and Jersey asset-freezes and who would now require a licence from the Minister for External Relations (the "Minister") to use or benefit from any of the funds or economic resources they own or control. This includes funds needed to meet the basic needs of any of these individuals or entities, and the payment of fees and expenses for any legal representation they might seek.
4. Acknowledging the importance of a person's ability to receive legal advice and representation, in most circumstances the provision of legal advice to a designated person under an asset-freeze is not prohibited. By contrast, payment for legal services, including payment for legal services provided on credit, has required a specific licence from the Minister.
5. Bearing in mind the extraordinary number of new designations under the Russia and Belarus sanctions regimes, and the correlating increase in the number of those seeking a licence from the Minister for the payment of legal fees, the Minister has issued a general licence to permit the payment of legal fees owed by individuals and entities designated under either of these regimes.
6. In practice, General Licence RUSSIA/JSY/2022/1 (the "Jersey General Licence (Legal Services)") means that a Jersey law firm or Jersey legal counsel who has provided legal advice to a person designated under either the Russia or Belarus sanctions regime, will not have to wait for a specific licence from the Minister before they can receive payment from or on behalf of that designated person, provided that the terms of the Jersey General Licence (Legal Services) are met.
7. Anyone wanting to make use of the permissions contained in the Jersey General Licence (Legal Services) should carefully consider the terms therein before doing so.
8. Some of the key provisions of the Jersey General Licence (Legal Services) are as follows:
'Pre-designation' and 'post-designation derogations'
9. The Jersey General Licence (Legal Services) distinguishes between legal services based on a prior obligation (i.e. an obligation entered into 'pre-designation'), and legal services not based on a prior obligation (i.e. an obligation entered into 'post-designation').
10. For legal services which are carried out in satisfaction of a prior obligation (for example where a law firm or barrister is engaged before the designation of the individual or entity), there is a £500,000 (inc. GST) cap on the amount that can be claimed over the duration of the Jersey General Licence (Legal Services). This amount reflects the potentially costly nature of sanctions-related legal work and therefore covers legitimate requests, while still maintaining the policy intent of a financial sanctions designation.
11. For all legal work commenced post-designation, users of the Jersey General Licence (Legal Services) will need to demonstrate through their reporting obligations that all fees which have been paid are reasonable. This will be done by providing details of hourly fees, workstreams, and evidence that overall fees are at or below a cap of £500,000 (inc. GST). It is important to note that this cap applies to a designated person's total legal fees per case and the cap can be used separately by multiple legal firms involved in a case.
12. Where applicable, the two caps referred to above can also be combined, meaning if work is undertaken for a designated person that involves fees for legal work carried out in satisfaction of a prior obligation (£500,000 limit inc. GST) and work commenced post-designation (£500,000 limit inc. GST), up to £1 million could be paid under the Jersey General Licence (Legal Services). For any fees above these caps, a specific licence must be sought.
13. Those who use the Jersey General Licence (Legal Services) must provide a report (see below for links) to the Minister when their use of the Jersey General Licence (Legal Services) has ended, or upon the expiration of the Jersey General Licence for work that has been paid for under the Jersey General Licence (Legal Services). Those using the Jersey General Licence must keep records of its use for a minimum of 6 years.
14. Hourly rate caps for legal advisers are set out in the Jersey General Licence (Legal Services).
15. Hourly rates to be charged by Counsel must not exceed £1,500 per hour.
16. Fee rates cap under the 'pre-designation' derogation of £500,000 (inc. GST).
17. Fee rates cap under the 'post-designation' derogation of £500,000 (inc. GST).
18. Where applicable, 'pre-designation' and 'post designation' caps can be combined, meaning applicants could be entitled to claim fees under both derogations for the same case up to a total of £1,000,000.
19. Cap on expenses of 5% of the amount payable for professional legal fees and Counsel fees or £25,000 (whichever is lower) for the duration of the Jersey General Licence (Legal Services).
20. The Jersey General Licence (Legal Services) is due to expire on 27 April 2023.
21. The Minister can vary, suspend, or revoke the Jersey General Licence (Legal Services) at any time.
22. If you breach the terms of the Jersey General Licence (Legal Services) you may be committing a criminal offence.
23. Reporting forms for the Jersey General Licence (Legal Services) can be found by clicking on the following link: Reporting forms.
24. Please see guidance on licences and exceptions for more detailed guidance on general licences.
25. Any questions about this notice should be addressed to:
Financial Sanctions Implementation Unit