Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2024

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2024.

My Lords, these regulations amend the Russia (Sanctions) (EU Exit) Regulations 2019. This instrument was laid on 5 September under powers in the Sanctions and Anti-Money Laundering Act 2018, and the measures in it entered into force on 6 September as “made affirmative” measures.

In recent years, the UK has transformed its use of sanctions. We have deployed them in innovative and impactful ways, including in our response to Russia’s invasion of Ukraine. This includes our prohibitions on the legal sector. We take a rigorous approach that is carefully targeted to deter and disrupt malign behaviour, as well as to demonstrate our defence of international norms.

In June 2023, a prohibition on legal advisory services, Regulation 54D, was introduced to prevent UK lawyers providing their services to those seeking to continue trading with Russia in goods or services that the UK had sanctioned. This was a unique prohibition that sought to prevent access to our world-renowned legal services market while retaining and upholding the UK values of access to justice and representational advice. Once introduced, it became clear that the sanction had the unintended effect of preventing the legitimate provision of advice on non-UK sanctions compliance, for instance in advising companies on compliance with US or EU sanctions on Russia. A general licence was therefore rapidly implemented in August 2023 as a temporary fix to enable UK lawyers to continue to provide this advice.

This instrument provides the permanent solution and clarifies in legislation the kinds of legal advice that the Government intend UK lawyers to be able to continue to provide. For example, it ensures that advice can be given on compliance with non-UK sanctions, on Russian counter-sanctions and on global criminal law. Receiving this advice is paramount to the functioning of an effective international sanctions response to Russia.

In amending this legislation, a full and thorough review was undertaken, including engaging with esteemed stakeholders in the legal and financial sectors. This engagement has assured us that this amendment will ensure greater clarity for the sector and continue to support our robust and unwavering commitment to cutting off access to our world-leading legal sector from those wishing to advance the interests of Russia.

The review also highlighted a number of other areas for improvement, which have been reflected in this instrument. They include amending Regulation 54D to align more closely with the way the existing circumvention regulations work, creating greater parity between legal advisory services that can be provided to a UK person and a non-UK person. The amendment clarifies expressly that Regulation 54D covers activity outside the UK, meaning that it more clearly operates alongside the existing circumvention regulations and avoids overlapping offences.

Some clarifications have beenmade to ensure that Regulation 54D does not capture services in connection with the management of claims under a contract of insurance or reinsurance. This Government are committed to enforcement, and it is right that we ensure that we have the necessary powers, tools and capacity to implement and enforce our sanctions regimes effectively. That is why, on 10 October, we launched the Office of Trade Sanctions Implementation, with enhanced civil enforcement powers, to maximise the impact of the UK’s trade sanctions against Russia. These powers include the ability to issue civil monetary penalties for breaches and to make details of breaches public. There are also new reporting requirements on sectors well positioned to find evidence of trade sanctions breaches.

Sanctions continue to play an important part in the UK’s response to Russia’s invasion of Ukraine. The amendments introduced by this instrument strengthen our commitment to an effective sanctions regime by making the regulations clearer and therefore more effective. This will continue to deter and disrupt Russia’s aggression towards Ukraine. I beg to move.

I am grateful for the Minister outlining in clear terms the Government’s position on the wider aspects of the sanctions enforcements. I support this measure. I spoke on the previous regulations on 19 July 2023, when I raised the issue that the Law Society had brought to our attention. It has subsequently had follow-up communications saying that this permanent solution is preferable, and I therefore support it.

I will raise a separate issue that the noble Lord, Lord Alton, spoke to me about—I think he spoke to the Minister prior to the Committee—concerning shipping insurance. I checked Hansard and, on 1 February 2022, I raised a question about this in a debate on one of our early Russia sanctions. The Minister’s colleague, the noble Lord, Lord Collins, heard us raise the continuing concerns in Grand Committee last week. I understand that this has also been raised in a letter today from the right honourable Sir Iain Duncan Smith, the chair of the all-party group on Magnitsky sanctions and reparation, regarding the concerns of 12 vessels that it alleges are continuing to receive insurance via the UK. I hope the Minister might reply on this, although I do not necessarily expect her to give the Government’s response to a letter that was sent to the Foreign Secretary today. But we have an important debate in the Chamber on Friday, so an update from the Government, if possible—written to Members of the Committee and also placed in the Library—would be of assistance to us in our debate on Friday. With that, I support the Government’s moves on these sanctions.

My Lords, I too can be brief. These are of course updates and clarifications of sanctions introduced by the previous Government. We were grateful for the support of the Opposition then and, on behalf of the Opposition now, I offer my full support for the changes that the Minister announced. It is important that we maintain the principle of unity across the parties in support of these sanctions and of Ukraine, taking action wherever possible to restrict Russia and its activities across the world. We need to be mindful of the big role that the City of London plays across the world in legal, financial and professional services. Some UK companies are undoubtedly involved in helping the Russians to circumvent these sanctions. We fully support the strictest clampdown on these activities. We should be very proud of these industries, but they should be used for right, not for helping Russia in this regard.

Following the noble Lord, Lord Purvis, I offer my support for the letter from Sir Iain Duncan Smith to the Foreign Secretary. We support these sanctions but ask the Government to look again at what more can be done to clamp down on the shadow fleet of tankers that Russia is using to spread its oil and gas around the world. As the noble Lord said, I do not expect the Minister to reply now to a letter that was sent only today and probably has not been received yet, but I hope that the Government can bear this in mind and can possibly give us an answer on Friday. We fully support these sanctions.

My Lords, I am grateful for the support of the noble Lords, Lord Purvis and Lord Callanan. I thank the noble Lord, Lord Purvis, in particular, for his ongoing—I will put it that way—interest in this issue. I very much welcome the comments of the noble Lord, Lord Callanan, on how vital it is that we keep our unity on these issues intact as we move forward. I am grateful and pleased that this is what we have seen today.

On the specific issue about the natural gas tankers, I am grateful to both noble Lords for their forbearance, as I do not have a full response on this today. The insurance is a complex issue. I will endeavour to get a fuller response by Friday. That is not a guarantee but, if I cannot get it by Friday, we will make sure that there is a response to the letter from Mr Duncan Smith.

I will do what I believe is called a pivot, to liquified natural gas more generally. I point out—because it is quite interesting and helpful, although it does not address the issue of insurance head-on—that Novatek, Russia’s largest producer of LNG, suspended production at its flagship Arctic project in April 2024 because of sanctions and a shortage of specialist tankers. This project is critical to Russia’s ambition to triple LNG production by the end of the decade, so we are taking measures that are having some effect on LNG. However, I will come back to noble Lords on the wider issue of insurance.

Motion agreed.