On 5 September 2024, the Court of Justice of the European Union delivered a landmark judgment in Case C-109/23, ruling that a notary's authentication of property sales involving Russian companies does not breach the EU sanctions regime.
Background
In 2022, the European Union imposed stringent sanctions against Russia, including a broad prohibition on providing legal advisory services to Russian entities. This measure aimed to exert pressure on Russia to cease its aggressive actions in Ukraine. A Berlin notary, tasked with authenticating the sale of an apartment owned by a Russian company, questioned whether such an action could potentially violate these sanctions.
The Court of Justice responded by clarifying that notarial authentication is distinct from legal advisory services, thus allowing notaries to continue their public functions without violating the EU's sanctions framework.
Key Provisions of the Judgement
1. Clarification on notarial functions
The Court of Justice ruled that the role of a notary in authenticating a property sale does not constitute providing legal advisory services. Notaries perform an official function delegated by the state, acting independently and impartially. Their role is thereby limited to ensuring the legality of the transaction rather than advancing the interests of the parties involved.
2. Nature of notarial tasks
The judgment emphasised that the procedural tasks carried out by notaries such as transferring the purchase price, removing encumbrances from the property, and updating the land register are administrative in nature. These functions do not involve legal advisory services, which means notaries are not engaging in strategic legal counsel, only in verifying the legality of the transaction.
3. Interpreter services
The Court also addressed the role of interpreters involved in notarial procedures. It ruled that interpreters do not provide legal advice and thus are not subject to the prohibition on advisory services, allowing their involvement without conflicting with EU sanctions.
Scope and Implications
Impact on EU sanctions compliance
The Court’s ruling provides clarity on the boundaries of EU sanctions, specifically regarding the role of notaries and related professionals. It makes a clear distinction that notarial authentication, which is essential for property transactions, falls outside the scope of the prohibition on legal advisory services to Russian entities.
This has significant implications for notaries, interpreters and other professionals within the EU. They can proceed with property transactions involving Russian entities, provided they strictly adhere to non-advisory roles.
Cyprus-level considerations
In Cyprus, the legal system operates differently compared to other EU jurisdictions when it comes to notarisation. Instead of traditional notaries, as found in many civil law countries, Cyprus relies on lawyers and specific public officials to perform similar functions. This system ensures that the roles typically assigned to notaries in other countries are fulfilled effectively within the Cypriot legal framework.
- Role of Lawyers in Cyprus. In Cyprus, lawyers are authorised to certify documents such as signatures on contracts, affidavits, powers of attorney, and other legal paperwork. They can also act as witnesses for these documents, ensuring their legal validity. This means that the function performed by notaries in other jurisdictions, such as authenticating property transactions, is undertaken by lawyers in Cyprus.
- Apostille Certification. For documents intended for international use, Cyprus employs the apostille system under the Hague Apostille Convention. The Ministry of Justice and Public Order in Cyprus is responsible for issuing apostilles, which certify the authenticity of documents for recognition in other jurisdictions. However, an apostille does not validate the content of the document itself, only the signature or seal.
- Compliance with EU Sanctions. Although Cyprus does not have notaries in the traditional sense, the same principles from the Court's ruling apply. Lawyers and public officials in Cyprus, when certifying or authenticating documents, do not provide legal advisory services to Russian entities in the same way that notaries in other EU countries are exempt from this restriction. As long as Cypriot professionals adhere to the administrative nature of their functions, they do not breach EU sanctions.
- Impact on Real Estate Transactions. The ruling from the Court of Justice has implications for real estate transactions involving Russian entities in Cyprus. Lawyers involved in certifying such transactions must remain aware that their role is limited to ensuring the legality of the process, without providing advisory services. The ruling allows Cypriot professionals to proceed with these transactions, provided they remain within the framework of administrative and certification duties.
- Monitoring and Updates. Given the evolving nature of the EU sanctions regime, Cypriot professionals should remain vigilant for any further updates or changes. Continuous monitoring of the sanctions landscape will ensure that Cyprus lawyers and officials remain compliant with the latest regulations.
Conclusion
The Court of Justice of the European Union's decision provides crucial clarification on the distinction between notarial duties and legal advisory services. For Cyprus, where lawyers fulfil the role of notaries, the ruling ensures that property transactions involving Russian entities can proceed without breaching EU sanctions, as long as professionals adhere strictly to their certification and administrative roles. By following this guidance, legal professionals in Cyprus can operate confidently within the boundaries of EU sanctions compliance, while maintaining the integrity of their legal duties.
For more information, feel free to contact any member of our AML Compliance and Sanctions team.
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