Sanctions tracker – new UK guidance following Mints decision on ownership and control

Our previous briefing commented on the recent Court of Appeal decision in Mints v PJSC National Bank Trust [2023] EWCA Civ 1132 and, particularly, the court’s consideration of the “ownership and control” test under the UK sanctions regime. In summary, the court concluded that there was no carve-out to the ownership and control test for control exercised through political office and, accordingly, it could be said that Vladimir Putin (Russian President and a designated person) may be deemed to control “everything in Russia” for the purposes of the statutory instrument imposing the UK’s Russian sanctions regime.

In an effort to resolve some of the uncertainty arising from this decision, the Foreign, Commonwealth & Development Office (the “FCDO”) has this week published a statement noting that it is “carefully considering” the impact of the Court of Appeal’s decision. The statement goes on to say that the FCDO would look to designate a public body where possible when designating a public official, if it concluded that the relevant official was exercising control over the public body. The FCDO state that there “is no presumption on the part of the UK government that a private entity based in or incorporated in Russia, or any jurisdiction where a public official is designated, is in itself sufficient evidence to demonstrate that the relevant official exercises control over that entity”. The statement concludes by noting that the FCDO is exploring the options available to the government in clarifying this position further.

This statement helps to support the (common sense) conclusion that the UK government did not intend for all Russian companies to be subject to sanctions restrictions by virtue of Mr Putin’s designation, and may provide some comfort to companies that they will not face enforcement action solely on the control theory articulated by the Court of Appeal in circumstances where they deal with non-designated private sector Russian entities. That said, the statement does not have the force of law, and is somewhat equivocal in relation to the position of public sector bodies, such that an amendment to the relevant legislation would be the optimal route to ensure clarity in this area.