High Court finds UK sanctions do not preclude entry of judgments in favour of Russian sanctioned parties

The High Court has recently considered the impact of the UK sanctions against Russia on various aspects of litigation involving a sanctioned party: PJSC National Bank Trust v Mints [2023] EWHC 118 (Comm).

The judgment raises important questions of law with wide implications for litigation involving sanctioned entities. The court’s key finding was that the UK sanctions do not prevent the English court from entering judgment on a pre-existing (ie pre-sanctions) claim brought by the sanctioned person. There is no need for a licence from the Office of Financial Sanctions Implementation (“OFSI”) in order to enter judgment. OFSI can, however, license a sanctioned party to (i) pay an adverse costs order, (ii) satisfy an order for security for costs and (iii) pay damages awarded in respect of a cross-undertaking in damages, which means that ongoing proceedings involving a sanctioned party do not necessarily prejudice the non-sanctioned party.

As part of an interesting obiter discussion of what constitutes “ownership” or “control” for the purposes of the UK sanctions regulations, the court expressed the view that this does not include control by virtue of a sanctioned person’s political office, as opposed to personally (including through a trust structure) or (potentially) via a corporate officeholding.

In view of the importance of the issues raised, the judge gave permission to appeal the judgment to the Court of Appeal.

With our colleagues in our litigation team, we have prepared a briefing on the judgment which can be found here.