We decided to establish a sister company in the UAE just under a year ago. We are really enjoying this endeavour and we believe that it is also very forward-looking. Tragically, this was sparked, in part, by the war in Ukraine and the substantial upheavals that go along with this – both politically and economically. The world has already changed radically since 24 February 2022, with the flow of goods and services shifting in a way not seen since the end of the Second World War, at least here in Europe.
During a vote on a UN resolution last March condemning the war, it was not only Russia and China who contained their vote: they were also joined by India and 17 African states (all told, home to more than 3 billion people), not least due to their own colonial history. The number of states condemning key aspects of Western sanctions because of their impact on their economies, already battered by the pandemic, is far greater still. It is now clear that the world will split into several – largely separate – blocs, with the West (the EU, USA, UK, Australia, New Zealand, Japan, Korea, etc.) facing, in particular, the world of Russia and its partners (such as Belarus) and the world of China. In addition, there are economic areas that lean towards one bloc or the other, depending on the situation at hand (such as India, the South American states, Southeast Asia and Africa, which have roundly criticised the aspects of the sanctions that have an onerous impact on energy and food security). Contrary to what is often portrayed here, it is not the case that the European and US sanctions policies enjoy great support everywhere.
The Middle East region, and the United Arab Emirates in particular, have clearly come out well from these upheavals. The realignment of international trade flows, with trade intensifying between Russia, India, China and Africa on the one hand, as well as between the Middle East and Europe on the other hand, has bolstered the region significantly and thus also the commercial metropolis of Dubai and Abu Dhabi. One only has to look at local real estate turnover to see the scale of this boom: Dubai recorded transactions worth around USD 143 billion in this sector in 2022, as well as a price increase of around 9 – 12 % – truly a milestone for this emerging business hub in the Middle East.
For an internationally active Western law firm such as LGP, this means that we have expanded our sphere of activity considerably to adapt to global changes with the necessary flexibility. In addition to our existing offices in Austria, Bratislava, Prague, North Macedonia and the rest of the Western Balkans, Kazakhstan and Turkey, we now also have a strong presence in the UAE. At our bases in Dubai and Ras Al Khaimah, we focus on providing our clients with orientation in the jungle of international sanctions law, and our reach now extends from the Caribbean islands to a number of EU countries, Switzerland, the UK and the Middle East. In addition, we are helping a number of selected Russian businessmen who have been, in our view, unfairly targeted by European sanctions to defend themselves against the sweeping measures before the European Courts.
A critical word is, however, very much appropriate at this point: with Art. 17 of Regulation 269/2014 and Art. 13 of Regulation 833/2014, the EU has given sanctions law a geographical scope of application that is evidently very limited. Transactions that take place outside the EU and are carried out without the involvement of EU citizens do not generally fall within the scope of EU sanctions law and can therefore (even) be legally carried out by sanctioned persons. In this respect, it is misguided for the EU to repeatedly talk about the circumvention of EU sanctions law by India, China and the Emirates. Circumvention can only be applied to something that would, in principle (i.e. if the circumventing transaction were not carried out), fall under the circumvented norm. However, this only applies to transactions that have a minimum degree of connection to Europe. This is (unfortunately) no longer the case quite so often in view of the aforementioned recalibration of international trade via the various shifts in trade flows and transactions.
Finally, it remains for me to emphasise that, beyond sanctions law, we also, of course, assist our European and international clients with their move into the Arab world in terms of corporate law and tax law, with the help of our colleagues and networks. If you are interested in this, please feel free to contact us in this regard.
Join us in reading our latest issue of LGP News, which provides an introduction to this highly exciting project.