Professor Justine Nolan, from the University of NSW, stated that there were important implications for legal practitioners when dealing with Russian assets. She said that “lawyers should familiarize themselves with the UN Guiding Principles for Business and Human Rights and ensure the advice they provide is not contributing to violations of international law”.

“In particular, lawyers should outline the need for human rights due diligence to assist in identifying, tracking, assessing and communicating responses to prevent human rights abuses. Lawyers should acknowledge that companies have a responsibility to respect human rights and advice and be aware that company operations, supply chain relationships and financial flows can exacerbate conflict,” she said.

The United Nations Guiding Principles for Business and Human Rights were endorsed in 2011 by the United Nations Human Rights Council. The UN Guiding Principles are now the authoritative global standard for addressing and preventing human rights impacts associated with business activity. The UN Guiding Principles operate on a three-pillar framework, namely, the protect, respect and remedy framework.

Providing further guidance to legal practitioners, Professor Nolan stated that “risk assessments are part of the human rights due diligence process. Lawyers play a critical role here in providing guidance to companies to ensure due diligence is not a narrow based assessment that just focuses on risk to the company but also incorporates the perspective of what risk the company poses to others. Lawyers and the services they offer also fall within the UN Guiding Principles for Business and Human Rights and the services offered should be conducted with a human rights lens.”

In the context of Russia, Professor Nolan said that “a variety of sanctions have been imposed on Russia including sanctions against goods, services and finance in Russia and sanctions against individual companies operating in Russia, along with sanctions against specific individuals. The effect of these sanctions is widespread and has created legal and financial complexity for many companies and has highlighted the need for companies to better map their supply chains, to ensure they are not directly or indirectly caught up in the web of sanctions.”

The impact of such restrictions upon the economy is significant. Professor Nolan said, “companies supplying goods into Russia, particularly consumer goods, technology and financial services will be hit but the sanctions also impact the goods flowing out of Russia into the global economy, such as wheat, corn, metals, gas and oil. Firms providing advisory services – consulting, legal and accounting – should also be aware of their responsibilities flowing from the sanctions – both legal and reputational.”

Ultimately, Professor Nolan emphasised that sanctions were useful in relation to forcing change in the way that Russia operates. Nolan said “sanctions have a significant impact in raising awareness of foreign policy and human rights issues but have a mixed track record on effectiveness. Roughly about one third of the time have we seen serious change that has flowed via sanctions but it is difficult to pinpoint cause/effect with sanctions. In this case, there has been a strong and unified responses from a broad alliance of countries that has had an impact on Russia’s economy and forced change in the way the state and businesses within Russia operate.”

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An early briefing by global law firm Norton Rose Fulbright (NRF) had indicated that legal practitioners need to be aware of the implications of the situation in Ukraine in the context of making commercial transactions. They said that “in the light of the evolving situation in Ukraine, challenges will inevitably emerge when acquiring, merging or transacting with potentially sanctioned persons and entities, including state-owned enterprises, public-private partnerships, joint ventures, subsidiary companies, intermediaries and agents”.

NRF said that “fulsome risk assessments and contractual provisions/arrangements should be in place in order to identify and appropriately escalate sanctions issues before the commencement of an acquisition, merger or transaction”.

NRF partner Rajaee Rouhani told Lawyers Weekly that “Australia’s autonomous sanctions are a discretionary tool, which the Australian government can apply, alone or with like-minded countries where appropriate, to address ‘egregious situations of international concern’.  

“In response to Russia’s invasion of Ukraine, the Australian government is actively responding with sanctions measures, which align with Australian foreign policy and that of like-minded partners, including the United States, the United Kingdom and the European Union.”

Mr Rouhani said that “lawyers will be required to balance a number of competing considerations. On one hand, lawyers will need to carefully consider their existing and prospective clients as well as the legal advice and services they are providing to them. The Victorian Legal Services Board and Commissioner’s recent guidance on the importance of Russia/Ukraine sanctions compliance serves as a timely reminder that lawyers could face professional discipline, misconduct or even criminal liability for breaching sanctions laws.”

He said: “On the other hand, some clients will require legal advice and services to carefully navigate these escalating sanctions measures. There are certain exemptions under Australian sanctions laws, which allow for ‘legally required dealings’. These exemptions will of course, apply on a case-by-case basis.”

There may be financial consequences for individuals embarking upon transactions with Russia. Rouhani said, “individuals, if convicted could be subject to 10 years imprisonment, and/or fines up to 2,500 penalty units (totalling $555,000.00). Body corporates, if convicted could be subject to 10,000 penalty units (totalling $2,220,000.00) or three times the value of the transaction(s), determined by a court, whichever being the greater number. Directors and officers in particular should also be alert of their duties under the Corporations Act 2001 (Cth) in dealing and responding to sanctions risks.”

Mr Rouhani agreed with Professor Nolan that there would be a mixed impact upon the economy because of the sanctions against Russia, stating that “the former Australian prime minister, Scott Morrison previously acknowledged that the sanctions imposed on trade with Russia are unlikely to have a significant impact given Russia is not a significant trading partner with Australia”.

Mr Rouhani said, “however, responses by various Australian regulators and government bodies serve as a reminder of the broad application and implications of sanctions on the Australian economy as a whole. Some of these regulators and government bodies include, AUSTRAC, APRA, Australian Border Force and IP Australia.”

Russian sanctions extend to banning the travel of certain declared persons. This is where the minister is complicit in infringing the sovereignty or territory of Ukraine, prompting economic or strategic advantage to Russia, current members of government or their families. There are a number of persons and entities currently listed under the Autonomous Sanctions (Designated Persons and Entities and Declared Persons – Russian and Ukraine) List 2014 (Cth).

It also is prohibited to deal with financial instruments in the context of Russian-owned banks, military companies, oil or petroleum products, as well as subsidiaries or entities. A key action included the removal of selected Russian banks from the SWIFT global payments messaging system.

An earlier briefing by NRF emphasised the impact of the removal from the SWIFT banking system. They said that “such a measure would directly impact Australian banking and financial institutions who maintain correspondent banking arrangements with targeted Russian banks. The inability to transact and facilitate payments through SWIFT will present a major challenge for Australian businesses with interests and projects connected to Russia, Ukraine or Belarus.”