The BVI Commercial Court recently made clear that the current Russian sanctions regime is exclusively aimed at freezing the assets of sanctioned entities, not confiscating them.
Apart from that their assets are frozen, sanctioned entities retain all their civic rights, including full access to the BVI courts and an entitlement to have their rights and obligations determined by the BVI courts.
The Court held that it should be extremely wary of interpreting the sanctions legislation as having any intended effects beyond those which appear from the plain wording of the legislation.
The issue arose when Ogier, the law firm representing JSC VTB Bank (VTB), a sanctioned entity that is the claimant in proceedings before the BVI Commercial Court, sought the Court’s permission to withdraw from representing VTB.
In BVI, as in many jurisdictions, courts have the power to refuse a lawyer’s application to withdraw from representing the lawyer’s client in pending court proceedings – that is to “come off the record”. This is the case because lawyers are officers of the court and owe an overriding duty to ensuring access to justice and the rule of law.
The Commercial Court’s judgment was issued on 22 March 2022.[i] The Honourable Mr. Justice Jack observed (commencing in paragraph 12 of his judgment):
 … In particular, the sanctions regime is exclusively aimed at freezing assets. No provision is made for the confiscation of assets. Save that their assets are frozen, sanctioned entities retain all their civic rights, including full access to the Courts and an entitlement to have their rights and obligations determined by this Court. VTB’s right to litigate against Mr. Taruta has not been curtailed.
 [Counsel for Ogier] accepted that the effect of Ogier ceasing to act for VTB would be potentially disastrous for VTB’s conduct of the current proceedings. He accepted that … VTB would be unrepresented and unable to appear, even by a director, to fight its claim. Far from being a problem, this, he submitted, was a good thing. Reprehensible entities such as state-owned Russian banks should forfeit their rights by being denied the right to litigate.
Clearly Justice Jack did not agree that “Reprehensible entities such as state-owned Russian banks should forfeit their rights by being denied the right to litigate” in western courts when western governments have not removed that right by lawful means.
Justice Jack referred with approval to what I. Stephanie Boyce, the president of the Law Society of England and Wales, said in expressing support for law firms representing Russian clients:
“It’s the job of solicitors to represent their clients, whoever they may be, so that the courts act fairly. This is how the public can be confident they live in a country that respects the rule of law — unlike Putin’s tyrannical regime…”[ii]
Justice Jack observed that once Ogier took on VTB as a client in litigation, unless disinstructed by VTB, it was obliged to continue to represent VTB to the best of its skill and ability unless and until the Court permitted it to come off the record.
“VTB may be a pariah,” as Ogier’s counsel submitted. “That does not afford a ground for its legal representatives to withdraw from representing them. Quite the contrary. It is precisely when VTB are stigmatised as a pariah that VTB need the best endeavours of their legal representatives to advise them and to advocate in Court on their behalf. However uncomfortable it may be for Ogier, this is, a vital safeguard for ensuring the rule of law in this Territory. Even pariahs have rights.”
Justice Jack pointed out that The Code of Ethics in the BVI Legal Profession Act, 2015 (which, it should be noted, is not dissimilar to lawyer’s ethical rules in many jurisdictions) is to the same effect, providing that:
“A legal practitioner shall defend the interests of his or her clients without fear or judicial disfavour or public unpopularity and without regard to any unpleasant consequences to himself or herself or to any other person.”[iii]
Ogier’s application was dismissed. Justice Jack reasoned as follows:
 I turn then to my decision in relation to Ogier’s application. So far as outstanding fees are concerned, this is a matter which needs to be kept under review. If Ogier cannot obtain licences so as to legitimise payment to them by VTB, then there may be a need to release Ogier on that ground. However, it is in my judgment too early in the sanctions regime to know what the practicalities of payment are.
 So far as reputational damage is concerned, there is on the one hand Ogier’s commercial interest in keeping its name unsullied by association with Russian state entities. Their contractual terms entitle them to terminate the retainer. On the other hand, their duties as officers of the Court require them to maintain the rule of law by ensuring access to the Courts for the proper and fair determination of parties’ rights and obligations.
 Standing back and weighing on the one side the issues of fee payment and damage to Ogier’s reputation in conjunction with their standard terms and condition and on the other side their duties as officers of the Court, in the exercise of my discretion I find that their duties as officers of the Court outweigh the other considerations. I accordingly refuse the application for Ogier to come off the record.
Justice Jack’s observations about the sanctions regime not being aimed at confiscation of assets or denial of civic rights are important for western justice systems, both through courts and arbitration.
Actions taken based on our common objective of maintaining maximal pressure on Putin and his enablers should not lead to knee-jerk reactions but rather to a thoughtful analysis of the pros and cons – and reasonableness and fairness – of each possible measure or tactic.
Actions being taken, or not being taken, by governments which are leading the support for Ukraine appear to be trying to do that, carefully analysing and balancing the potential upsides and downsides. While that is not to say they are getting it exactly right with each move, or each restraint from moving, they appear to be trying to take a firm and sensible approach, and so should others.
While permission to withdraw from representing a party may not be required in the same way in arbitration, the principles that are developed in the BVI Commercial Court’s judgment likely will be of relevance as arbitration practitioners work their way through the implications of the Russian sanctions.
[ii] Law Society Gazette, “Ukraine backlash — profession hits back over ‘amoral’ allegations”, accessed 17th March 2022, News focus: Ukraine backlash - profession hits back over 'amoral' allegations | News | Law Gazette
[iii] https://www.chba.org.uk/for-members/library/practice-directions-court-notices/legal-profession-act-2015-bvi, Schedule 4, Part A, para 5
The Honourable Barry Leon
Independent Arbitrator and Mediator. Independent Consultant and Professional Services Provider (independent corporate director; independent corporate meeting chairman; consulting to professional services firms in senior supporting roles and providing strategic and tactical advice and assistance). Disputes experience as arbitrator, mediator and counsel include corporate and commercial, contract, shareholder and business breakup, joint venture, insurance, intellectual property, technology, expropriation, natural resources, construction, and executive employment disputes.