High Court orders payment into court pending outcome of arbitration despite potential breach of US sanctions

In a recent decision, the High Court has ordered the proceeds of sale of a cargo of naphtha, which was classified as "blocked property" under US sanctions laws, to be paid into court pending the outcome of an arbitration to determine entitlement to those proceeds. This was despite the shipowners' argument that payment into court, rather than a blocked US account in accordance with the licence granted by the relevant US authorities, would be a breach of US sanctions: O v C [2024] EWHC 2838 (Comm).

The decision is of interest to a general litigation audience in illustrating the principles the court will apply in considering whether to order a party to do something that is contrary to a foreign law, including a foreign criminal law, where the purpose of the order is to ensure a fair trial (or, as in this case, a fair arbitration). The onus will be on the party invoking the foreign law to show that there is a real risk of prosecution, as opposed to merely a fanciful risk. If there is a real risk, the court will then balance that risk against the importance of the order sought.

This approach has been applied in a number of cases where the court was considering whether to order the disclosure of relevant documents (such as the Court of Appeal's decision in Bank Mellat v HM Treasury [2019] EWCA Civ 449, considered here). The present case suggests that the same approach may be applied where the court is considering an order aimed at facilitating enforcement of a judgment or award, since (as the court commented) the ability to realise or enforce a right is one aspect of ensuring a fair trial.

For more information see this post on our Arbitration Notes blog.