Assisting Russian Nationals with U.S.-Based Forfeiture Proceedings Against Foreign-Based Assets Likely Requires FARA Registration
Washington, D.C. (October 3, 2022) - In response to Russia’s action in the Ukraine conflict, the United States Department of Justice has initiated civil asset forfeiture proceedings with respect to several high-profile assets, including Suleiman Kerimov’s $300-million yacht (see our June 17 alert, “Administration Steps Up Forfeiture Activities Against Foreign-Based Assets of Russian Oligarchs”) – and Roman Abramovich’s Boeing 787–8 and Gulfstream G650ER airplanes (see our August 5 alert, “Biden Administration Uses Export Control Reform Act to Seek Forfeiture of Russian Oligarchs’ Foreign-Based Assets”). This alert addresses whether counsel retained to assist Russian oligarchs in such matters should register under the Foreign Agents Registration Act (FARA, or the Act), 22 U.S.C. secs. 611, et seq.
FARA’s Legal Representation Exemption
FARA’s salient purpose is that a covered agent of a foreign principal “make public record of the nature of their employment.” Viereck v. United States, 318 U.S. 236, 241 (1943). In 1966, Congress created the “legal representation exemption,” which exempts from FARA registration “[a]ny person qualified to practice law, insofar as he engages or agrees to engage in the legal representation of a disclosed foreign principal before any court of law or any agency of the Government of the United States.” P.L. 89–486, sec. 3(b); 80 Stat. 244, 246 (Jul. 4, 1966) (codified 22 U.S.C. sec. 613(g)) (emphasis added).
Congressional amendments in 1995 narrowed this exclusion by requiring disclosure of “attempts to influence or persuade agency personnel or officials” unless such were confined to “judicial proceedings, criminal or civil law enforcement inquiries, investigations, or proceedings, or agency proceedings required by statute or regulation to be conducted on the record.” P.L. 104–65, § 9(2), 109 Stat. 691, 700 (Dec. 19, 1995). The House Committee on the Judiciary Committee clarified the “exemption’s application only to communications with agency officials in the context of those specific instances set out in this amendment, [expressly including] judicial procedures, law enforcement proceedings, and agency proceedings to be conducted on the record.” H. Rep. No. 339, 104th Cong. 1st Sess., p. 12 (Nov. 14, 1995).
Application to Representation of Russian Oligarchs
Representing a Russian oligarch in an action to contest placement on the Office of Foreign Asset Control’s Specially Designated Nationals and Blocked Persons list (SDN list) by submitting materials and argument in administrative proceedings would not subject counsel to FARA registration. Such proceedings are conducted on the record and largely subject to public disclosure (see 31 C.F.R. secs. 501.744 and 501.725, respectively). Accordingly, the Department of Justice’s FARA Registration Unit issued an advisory opinion “not oppos[ing]” a law firm’s assertion of exemption under sec. 3(g) of the Act where the law firm limited its representation to seek its client’s removal from the SDN list. See FARA Adv. Op. 4-22-2020. Inquiring as to reasons the client had been added to the SDN list and obtaining a general license allowing for U.S. persons to wind down transactions with the client also fits within the legal representation exemption. Id.
“Political activities” require registration (see 22 U.S.C. sec. 611(o)), but that requirement does not swallow up the legal representation exemption. For example, a law firm engaged to represent a company placed on an unnamed sanctions list before “Executive Branch officials involved in the decision-making process concerning [the Company]’s specific situation” fits within the exception. See FARA Adv. Op. 5-21-2021. While advocating for the removal of sanctions is “inherently political in nature,” the FARA Unit advised non-registration because the law firm represented that it would not engage in public relations nor in efforts to generally attack the sanctions program under which the company was listed. Id. Similarly, advocacy before the Department of Commerce’s Bureau of Industry and Security to remove a client from the entity list, limited to civil administrative remedies set forth in the Expert Administration Regulations, does not subject counsel to FARA registration. See FARA Adv. Op. 9-10-2013.
Advocating that the State Department waive a tax revenue rule, however, is not considered a normal part of litigation on behalf of a foreign government in a dispute against a multinational distributor proceeding in federal district court for monetary damages. See FARA Adv. Op. 12-07-2010. The contemplated attempt to persuade State Department officials was not a proceeding conducted on the record. Id. Further, assisting a foreign government with the foreign government’s public relations campaign related the scope of work performed by the law firm constitutes political activities subjecting the law firm to registration. See Press Release, Dep’t of Justice, Prominent Global Law Firm Agrees to Register as an Agent of a Foreign Principal (Jan. 17, 2019) (disgorgement of $4,657,568.91 in fees received).
Representation of Russian oligarchs does not itself require attorneys to register under FARA. An attorney’s activities normally associated with legal proceedings on the record in accordance with procedures set by statute or regulation will fall within FARA’s legal representation exemption. Broader attempts to change a regulation’s applicability beyond the client’s situation and affirmative media exposure, however, will trigger FARA’s registration requirement. Hence, registration is often a wise course of action for a high-profile matter.
Lewis Brisbois’ attorneys are actively engaged with the wide range of legal issues arising out of the Russia-Ukraine conflict and are advising clients on managing legal and business risk as events continue to develop at an accelerated pace. For more information on this topic, contact the author or editors of this alert. Visit our Ukraine Conflict Response page for additional alerts in this area.
Justin Carl Pfeiffer, Partner
Jane C. Luxton, Managing Partner
Andrew Pidgirsky, Partner
Sean P. Shecter, Partner