A notary in Germany refused to notarize a sale and purchase agreement for a real estate object owned by a Russian company, citing the EU's ban on providing legal consultancy services to Russian companies. The notary referred the matter to the Berlin Regional Court, which in turn referred it to the European Court for a preliminary ruling on the interpretation of the EU's ban on legal services.
In its ruling on Case C-109/23 dated 5 September 2024, the European Court stated that notarizing and executing such contract does not constitute providing legal consultancy or legal advisory services to a Russian person within the meaning of Article 5n(2) of Regulation No. 833/2014. The court held that this is an official state function, not legal advice to a physical person.
The court also stated that interpreting Article 5n(2) to include notarial services would hinder the transfer of property in certain countries where notarization is required, and property transfer is not prohibited by EU rules regarding Russia, provided that the property is not controlled or owned by the Russian state.
The court's decision is based on three key arguments:
- Notarial actions are not considered legal services, as notaries act in the interest of the law and legal certainty, rather than in the interest of the parties involved.
- The ban on notarial actions would contradict the teleological interpretation of the sanction regulation, which only prohibits transactions with state-owned or sanctioned Russian entities.
- The EU's sectoral sanctions were introduced to prevent Russian companies from engaging in commercial activities that contradict EU policy, and the sale of real estate does not fall under this category.
This ruling has significant implications for companies doing business in Russia, as many regulatory actions in Russia require notarized documents to be obtained in Europe.