High Court grants anti-suit and anti-enforcement injunctions in favour of bank, rejecting novel argument that arbitration agreement frustrated by sanctions

In an ongoing dispute between Barclays Bank and VEB (the state development bank of the Russian Federation), the High Court has granted: (i) an anti-suit injunction (ASI) to prevent VEB from pursuing a claim that it commenced against Barclays in the Russian courts in breach of an arbitration clause; and (ii) an anti-enforcement injunction (AEI) to restrain VEB from enforcing any substantive order made by the Russian courts in relation to its claim. In doing so, the court rejected VEB's novel argument that the arbitration agreement had been frustrated as a result of sanctions imposed on VEB: Barclays Bank plc v VEB.RF [2024] EWHC 1074 (Comm).

The judgment will be of interest to financial institutions, as the court put down a clear marker that the imposition of sanctions does not mean sanctioned entities face obstacles to access justice, and they will not be sufficient to allow sanctioned parties to avoid their contractual obligations. 

It is another pragmatic decision from the English court, which demonstrates that it will employ all available tools to uphold arbitration agreements when parties are faced with a deliberate breach of contract. The court will have regard to the wider picture when deciding whether to grant ASIs and AEIs. In this case, the court placed weight on the need to uphold UK sanctions in circumstances where VEB was seeking to circumvent them by commencing proceedings in Russia. Although such orders may be ignored by Russian parties and the Russian court, ASIs and AEIs may nonetheless provide some protection against the enforcement of Russian judgments in third country jurisdictions.

For more information on the decision, please see our Arbitration blog post.