A designated individual receives a claim filed against them in an Australian court. Their assets are frozen under the Autonomous Sanctions regime administered by the Department of Foreign Affairs and Trade (DFAT — Australia's primary sanctions authority). Their chosen legal counsel requests a retainer. The funds are blocked. Can the individual pay their lawyers at all?
Yes — but only through a specific authorisation. Under Australia's Autonomous Sanctions regime, a person whose assets are subject to a sanctions-related asset-freeze must obtain a permit from DFAT before releasing funds to pay legal fees. There is no standing general authorisation for this purpose. Every release requires a case-by-case application, and the window to act is short once legal proceedings begin or a retainer is demanded.
This guide sets out, step by step, how a legal-fees permit works under Australia's regime, how it compares with the approach taken by OFAC, OFSI, and the EU, what the most common errors are, and when to involve specialist sanctions counsel.
Step 1: Understand the governing regime and authority
Australia's Autonomous Sanctions regime operates under the Autonomous Sanctions Act and the associated Autonomous Sanctions Regulations, administered by DFAT. A sanctions-related asset-freeze prohibits a person or entity from dealing with assets owned, held, or controlled by a designated person. Paying legal fees from frozen assets is a "dealing" and is therefore prohibited without a permit.
DFAT grants permits on a case-by-case basis. There is no published general licence for legal fees of the kind that exists under some other regimes. The permit covers a specified amount, for a specified legal matter, for a specified period. Any variation — a new proceeding, a different counsel, a higher fee estimate — ordinarily requires a fresh application or a formal amendment.
It is important to understand that DFAT is the licensing authority, not the enforcement authority in isolation. The Australian Federal Police and other agencies share enforcement responsibilities. DFAT, however, is the correct counterparty for a permit application. Practitioners who approach the wrong agency lose time they may not have.
Australia's regime sits alongside the United Nations Security Council Consolidated List, which Australia implements domestically. Where a designation arises from a UN Security Council resolution rather than from an autonomous Australian decision, the legal basis differs slightly, but the licensing mechanism through DFAT remains the operative route for domestic purposes. In our experience, this distinction frequently confuses applicants at the outset, and clarifying it early prevents a misaddressed application.
Step 2: Confirm the applicant's position and identify the legal matter
Before filing, the applicant must confirm three things: that the individual or entity is genuinely designated under the Australian regime; that the funds intended for legal fees are within the scope of the asset-freeze; and that the legal matter for which fees are sought is clearly identified and described.
DFAT requires a precise description of the legal matter. A vague reference to "ongoing legal proceedings" is insufficient. The application should identify the jurisdiction, the nature of the proceeding (civil claim, criminal defence, administrative review), and the stage of the matter. This level of particularity reflects DFAT's practice of issuing narrow, matter-specific permits rather than broad standing authorisations.
The legal professional engaged to bring the application faces a threshold question of their own: are their own retainer fees covered by the permit being sought, or do they need a separate authorisation to receive funds from the designated person in the first instance? In practice, a well-structured application addresses both issues simultaneously — the initial retainer and the ongoing fee arrangement — rather than filing piecemeal. Failing to cover the initial retainer in the first application is among the most frequent procedural errors we see.
The position differs from that under OFSI in the United Kingdom. Under OFSI's licensing regime, a general licence has at various times covered certain legal fees paid to UK-regulated solicitors, subject to conditions. Australia has not adopted that approach. Every Australian application is specific. The practical implication is that Australian proceedings involving a designated person require forward planning: the permit application should be filed well before funds are needed, not on the day a payment falls due.
Step 3: Prepare the permit application — what DFAT requires
A complete DFAT permit application for legal fees should address several elements, each of which DFAT will scrutinise before granting an authorisation.
- Identity of the designated person: full legal name, date of birth or company registration details, and the precise listing reference. Confirm the designation is current and active before filing — designations are occasionally updated or revoked, and an application referencing a stale listing creates confusion.
- Description of the frozen assets: identify the account, property, or other asset from which fees are to be drawn. DFAT will want to know that the asset is genuinely subject to the freeze and that the proposed dealing falls within its scope.
- Nature and scope of the legal matter: describe the proceeding, the jurisdiction, the stage, and why legal representation is required. If the matter involves multiple jurisdictions, address each separately.
- Quantum and basis of the fees: provide a fee estimate from the legal professionals involved. DFAT will assess whether the amount is reasonable relative to the matter. Overstated estimates attract scrutiny; understated estimates require a supplementary application later.
- Legal professional's details: name, firm, Australian legal practice accreditation details, and confirmation that the firm has conducted its own sanctions screening on the instructions it proposes to accept.
- Proposed duration: the period for which the permit is sought. A permit tied to a discrete hearing is straightforward; a permit covering ongoing litigation requires justification of the duration.
The application is submitted directly to DFAT's sanctions team. There is no publicly stated statutory decision deadline, but DFAT has indicated in its published guidance that it aims to process applications in a reasonable timeframe. In practice, processing can take several weeks. Urgent applications should be flagged as such at the point of lodgement, with a clear explanation of why urgency applies.
The position under OFAC in the United States provides a useful contrast. OFAC publishes a specific general licence authorising lawyers to receive fees and expenses above a defined minimum from blocked persons, subject to record-keeping and filing conditions. That authorisation is self-executing within its stated conditions. Australia's regime imposes a per-application obligation with no self-executing equivalent. For a designated person with assets in both jurisdictions, the two regimes must be managed separately and in parallel.
The position before the EU is also instructive. EU Council regulations permit legal fees in certain circumstances, subject to conditions set by individual member-state competent authorities. The authorisation process varies between member states, and some operate closer to the OFSI model, others closer to the per-application DFAT model. A business or individual managing sanctions exposure across multiple regimes simultaneously should treat each as a separate procedural track.
Step 4: Manage the risk flags — what goes wrong and why
Legal-fees permit applications under Australia's regime fail or are delayed for a predictable set of reasons. Understanding them before filing is materially more efficient than correcting them after.
Incomplete identification of the legal matter. DFAT will return an application that does not identify a specific proceeding. Generic descriptions — "potential litigation", "anticipated regulatory investigation" — are insufficient. The matter must be real, identifiable, and sufficiently progressed that a genuine fee obligation exists or is imminent.
Failure to confirm that the asset-freeze applies to the specific account. Not all assets of a designated person are necessarily frozen under Australian law. The scope of the freeze depends on the terms of the designation and the asset-type. An application to release funds from an account that is not within the freeze is legally unnecessary — but an application that misidentifies the account as frozen when it is not creates a different compliance risk entirely.
Fee amounts that are not supported by a professional estimate. DFAT does not simply accept a figure asserted in the application. A letter from the legal professionals confirming their fee basis, scope of engagement, and estimated cost for the relevant period is expected. Applying without this document extends the process.
Treating the permit as standing authority. A permit issued for Proceeding A does not cover Proceeding B. A permit issued for the period January to June does not extend to July. Practitioners who treat a permit as a broader authorisation than its terms state risk an unauthorised dealing. In our practice, we build permit-expiry monitoring into the compliance calendar from the point of initial grant.
Overlooking the interaction with the legal professional's own obligations. A lawyer accepting instructions from a designated person is subject to Australian anti-money-laundering and counter-terrorism financing rules as well as the sanctions regime itself. The legal professional must conduct their own due diligence and must not accept instructions in a way that constitutes an unlicensed dealing prior to the permit being issued. The sequencing — permit application first, retainer formally accepted second — is important.
Step 5: Cross-border considerations — where the regimes diverge
A designated person whose assets span multiple jurisdictions faces a matrix of licensing requirements, and Australia's legal-fees permit is only one piece of that matrix.
Consider a matter where an individual is designated under both Australian autonomous sanctions and under the UK regime administered by OFSI. Their legal assets include a property in Australia and a bank account in the United Kingdom. Their legal representation operates across both jurisdictions. Two parallel applications are required: one to DFAT under the Australian regime, one to OFSI under the applicable UK sanctions regulations. The applications are not mutually reinforcing — a grant from DFAT does not persuade OFSI, and vice versa.
The practical implication of this divergence is that the legal-fees licensing strategy must be designed at the outset with all relevant jurisdictions in mind. A permit obtained in Australia while the UK application is pending may produce a situation in which the designated person can pay only part of a global legal team's fees, creating allocation problems within the engagement itself.
Where secondary-sanctions risk is a factor — for instance, where the designation arises from a regime that carries extraterritorial reach — legal professionals operating in Australia must also consider whether their engagement exposes them to risk under a foreign regime. We regularly advise legal professionals, as well as designated persons, on this cross-regime dimension. It is not a question that the DFAT permit alone resolves.
The UN Security Council's Consolidated List presents a further cross-border consideration. Where an individual is designated under a UN resolution, certain jurisdictions impose additional conditions on legal-fees licensing beyond their autonomous rules. Australia, in implementing UN-based designations, follows its own statutory process through DFAT, but the UN framework may impose parameters that constrain DFAT's discretion. In our experience, this layer is most relevant for designations under Chapter VII resolutions, and it is worth confirming the legal basis of the designation before structuring the application.
Step 6: Assess whether to involve specialist sanctions counsel — and when
A legal-fees permit application under Australia's Autonomous Sanctions regime is, on its face, a procedural filing. In practice, it involves a series of legal judgments that can determine whether the application succeeds, how long it takes, and whether the applicant's legal representation is interrupted in the interim.
There are situations where specialist sanctions counsel adds decisive value. If the designation is recent and its legal basis is unclear, the threshold question of whether the asset-freeze applies to the relevant assets at all requires sanctions law analysis, not merely the completion of a form. If the legal matter for which fees are sought itself involves a challenge to the designation, the permit application and the substantive litigation interact in ways that a generalist practitioner may not anticipate. If the individual or entity is designated under multiple regimes simultaneously, coordinating parallel permit applications requires cross-border sanctions expertise.
The myth worth addressing here is that DFAT's permit process is straightforward enough to handle without specialist input — that it is simply a matter of completing a form and waiting. That view underestimates the degree of legal judgment embedded in each element of the application. It also underestimates the cost of a poorly prepared application: not only the delay, but the risk that the designated person's chosen legal representation withdraws because funds are not available in time.
We have acted for designated individuals, for their legal representatives, and for financial institutions holding frozen assets, in matters where the permit question was time-critical. An early consultation — before the first communication with DFAT — is consistently more efficient than a consultation prompted by a refused or stalled application.
The position above covers the standard case. Your facts — the designation, the assets, the legal matter, the jurisdictions in play — change the analysis materially.
For an assessment of your position under Australia's licensing regime, contact Calder & Vance at info@caldervance.com.
Step 7: After the permit is granted — obligations and record-keeping
A DFAT permit for legal fees does not end the compliance obligation. The permit will contain conditions, and compliance with those conditions is itself a legal requirement.
Standard conditions include: a cap on the total amount that may be released; a requirement that funds be paid directly to the legal professional rather than to the designated person; restrictions on the use of funds (legal fees only, not disbursements or unrelated expenses unless separately covered); and a requirement to notify DFAT if the legal matter concludes or the representation changes before the permit expires.
Record-keeping is a serious obligation. The person or entity relying on the permit, and the financial institution processing the payment, should retain documentation of the permit itself, the payment made under it, the legal professional's invoice, and any DFAT correspondence. Australian sanctions law, like the regimes of the United Kingdom, European Union, and United States, imposes record-keeping obligations on those who rely on authorisations. The precise retention period should be confirmed against the current version of the relevant instrument; as a matter of practice, we advise clients to retain sanctions-related records for a minimum of five years from the date of the dealing.
Where the legal matter continues beyond the permit period, a renewal or extension application is required before the existing permit expires. Filing for renewal at the last moment creates the same risk as the initial application: a gap in coverage during which fees cannot lawfully be paid. Building a renewal trigger — flagged at least a month before expiry — into the compliance calendar is standard practice in matters of any duration.
If a transaction is made that was not covered by the permit — a payment for a matter not described, a payment above the cap, a payment to a party not named — this constitutes a potential violation of Australian sanctions law. The appropriate response in that situation is to seek specialist advice on whether and how to report the matter to DFAT and, where applicable, to the Australian Federal Police. Voluntary disclosure and prompt corrective action are relevant to how enforcement authorities treat apparent violations.
If a transaction has already been flagged, or a payment has been made without the required permit, an early review can preserve options that narrow with time. Contact us at info@caldervance.com.
Related practices
- Frozen account management under BIS/EAR – accessing blocked assets and managing licence conditions under the US export-control regime
- Legal-fees licences under Australia: advanced issues – multi-party designations, nomination disputes, and contested permit conditions
- Legal-fees licences under BIS/EAR – the US export-control licensing process for accessing blocked funds to pay legal counsel