UK and US-origin law firms face the loss of lucrative oil and gas work as the Russian Duma plans for the confiscation of assets belonging to US and European companies, threatening the future of the firms’ 1,200 Moscow-based lawyers.
UK and US firms based in Moscow dominate advice to the oil and gas sector, accounting for 20 of the top 33 energy and natural resources practices.
Norton Rose, Herbert Smith Freehills, Linklaters, Allen & Overy, Baker & McKenzie, CMS, Clifford Chance, DLA Piper and Freshfields Bruckhaus Deringer are among the 20. As well as direct work for oil and gas clients, such firms handle ancillary instructions, including joint ventures, capital markets work, infrastructure and disputes.
The Duma bill would make legal the confiscation of property, assets and accounts of European and US companies were the US to impose sanctions upon Russia.
‘It’s sensitive – clients are concerned that contracts will be cancelled,’ an energy lawyer who asked not to be named told the Gazette. Gas, he noted, was the most volatile sector ‘because you can’t store it’. Action here would provide the EU with the greatest leverage, though a reduction in the gas market’s liquidity would cause market chaos.
Corporate counsel are concerned that the certainties on which they depend, such as the gas transit arbitration that settled disputed pipeline access across Ukraine, cannot be relied upon. Remedies for broken contracts are being checked under investment treaties.
A spokesperson for US firm Covington & Burling told the Gazette: ‘Retaliation by Russia could threaten US or European investment in the region and undermine contractual relationships that the US and European companies have with their Russian and Ukrainian partners.’
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