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  • Can China Force Your Business to Ignore Western Sanctions?

    Can China Force Your Business to Ignore Western Sanctions?

    China can now lawfully order your business to ignore Western sanctions.

    On 2 May 2026, China’s Ministry of Commerce (MOFCOM) issued its first formal China blocking order, prohibiting recognition, enforcement, and compliance with US sanctions imposed on five Chinese petrochemical companies. What was once a theoretical tension between competing legal regimes is a live conflict of law that every business with Chinese exposure must address.

    The blocking order activates a counter-sanctions initiative that China has been building since 2020. The legal toolkit extends from the Unreliable Entity List system and the 2021 Blocking Rules through the Anti-Foreign Sanctions Law (AFSL) and its March 2025 implementing regulations to two sweeping State Council decrees issued in April 2026. Taken together, these measures expose multinational companies to regulatory penalties in China for doing precisely what UK, US, and EU sanctions law requires of them.

    UK companies that continue to deal with Chinese counterparties designated on Western sanctions lists risk civil and criminal exposure under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) and its associated regulations. Those that cut off designated Chinese counterparties in compliance with those obligations may now face fines and civil litigation in China. For businesses operating in both jurisdictions, expert legal advice should be urgently sought.

    China’s Counter-Sanctions Framework

    China’s legislative response to Western sanctions began in earnest on 9 January 2021, when MOFCOM issued Order No. 1 of 2021, which was published on its English-language website. The Rules authorise MOFCOM to issue prohibition orders where foreign legislation is applied extraterritorially in breach of international law. Any Chinese citizen, legal person, or organisation subject to a prohibition order must report the relevant foreign restriction to MOFCOM within 30 days and may not accept, execute, or observe it unless an exemption is granted. For over five years, the Rules sat dormant.

    The National People’s Congress passed the Anti-Foreign Sanctions Law (AFSL) in June 2021. The AFSL goes further than the Blocking Rules by establishing a positive list of countermeasures that Chinese authorities may impose on foreign individuals and organisations deemed to have applied discriminatory sanctions against Chinese citizens or entities. Those countermeasures include asset freezes, visa cancellations, restrictions on business activities in China, and prohibitions on transactions with Chinese parties. Article 12 of the AFSL creates a private right of action: Chinese citizens and organisations may sue in Chinese courts any party that implements foreign sanctions against them and seek compensation for any losses caused.

    The March 2025 implementing regulations under the AFSL filled in the operational detail that the broad 2021 statute had left open. The regulations expanded the categories of assets subject to freezing and seizure to include bank deposits, securities, fund shares, equity interests, intellectual property, and accounts receivable. They extended the prohibited activity fields to cover education, legal services, environmental protection, tourism, and health. For a multinational operating across any of those sectors, the compliance exposure widened considerably.

    In April 2026, two further State Council decrees were issued. The Regulations on Industrial and Supply Chain Security (Decree No. 834), signed by Premier Li Qiang on 7 April 2026 with immediate effect, establish a coordinated mechanism across more than fifteen Chinese government agencies to monitor supply chain risks and impose countermeasures where foreign states, organisations, or individuals disrupt or discriminate against China’s industrial supply chains. The Regulations on Countering Improper Extraterritorial Jurisdiction by Foreign States (Decree No. 835), issued on 13 April 2026, create a Malicious Entity List for foreign parties that promote or implement extraterritorial measures. Authorised countermeasures under Decree No. 835 include entry bans, asset seizures, investment restrictions, and fines. Both decrees took effect immediately, with no transition period.

    The 2 May 2026 blocking order drew these threads together. Under MOFCOM Announcement No. 21 of 2026, MOFCOM invoked the 2021 Blocking Rules following a working mechanism assessment confirming that US sanctions imposed under Executive Orders 13846 and 13902 on five Chinese petrochemical companies constituted improper extraterritorial application of foreign law. The five companies are:

    • Hengli Petrochemical (Dalian) Refining and Chemical Co. Ltd.,
    • Shandong Shouguang Luqing Petrochemical Co. Ltd.,
    • Shandong Jincheng Petrochemical Group Co. Ltd.,
    • Hebei Xinhai Chemical Group Co. Ltd., and
    • Shandong Shengxing Chemical Co. Ltd.

    Chinese subsidiaries of foreign companies are caught. A foreign national employed as an executive of a Chinese subsidiary is not, because the Blocking Rules apply to Chinese citizens, legal persons, and other organisations rather than to individual foreign nationals. For businesses considering how to structure their internal compliance response, that distinction matters. Specialist advice on sanctions compliance for businesses with China exposure is now urgently required.

    The Nanjing Maritime Court Case

    The first judicial enforcement action against the AFSL occurred in late 2024 ((2024) Su 72 Min Chu 2157, translated in Chinese as（2024）苏72民初2157号民事调解书). A shipbuilding subcontract between an unnamed Shandong-based Chinese manufacturer and a Swiss marine equipment company, valued at approximately US$19.45 million, was used as the vehicle. The Swiss firm had made initial payments totalling more than US$7 million. In June 2024, it suspended the remaining instalment of approximately RMB 83.9 million (around US$11.86 million) after the Chinese counterparty was placed on OFAC’s Specially Designated Nationals (SDN) list. The suspension was expressly grounded in sanctions compliance obligations.

    The Chinese company filed a request with the Nanjing Maritime Court to seize a vessel owned by the Swiss company. The court granted the preliminary injunction in September 2024. The Chinese manufacturer then filed suit in October 2024 under Article 12 of the AFSL, asserting a tort claim for losses arising from the Swiss company’s decision to comply with US sanctions. The Swiss company applied to OFAC, obtained a specific payment licence, and deposited approximately US$14 million with the court as a counter-guarantee to secure the vessel’s release. The Nanjing Maritime Court facilitated a mediated settlement in November 2024.

    The Supreme People’s Court highlighted the case in its March 2025 work report to the National People’s Congress as the first civil action brought under the AFSL. The case report, published on China’s People’s Court Case Database, confirmed that the court recharacterised the dispute from a contractual to a tortious claim to fit Article 12’s private right of action. The precedent confirms that Chinese courts are prepared to hear claims against foreign parties that implement blocked US sanctions and thereby cause losses to Chinese citizens or organisations. Private litigation can move faster than state enforcement, and Chinese companies are already alert to the mechanism.

    Practical Implications for UK Businesses

    UK businesses must comply with the Sanctions and Anti-Money Laundering Act 2018 (SAMLA), which requires compliance with designations on the UK Sanctions List maintained by the Foreign, Commonwealth and Development Office (FCDO). The UK’s February 2026 Russia sanctions package, its largest since the full-scale invasion of Ukraine, included Chinese companies supplying dual-use goods and technology to Russia’s military-industrial complex. OFSI enforces those obligations on a strict liability basis: a civil monetary penalty can be imposed without proof that the business knew a breach had occurred.

    The May 2026 blocking order concerns US, not UK, sanctions. The five designated Chinese petrochemical companies appear on the OFAC SDN list under US executive orders relating to Iran. OFAC designations do not automatically bind UK businesses, but, as I point out to my clients, secondary sanctions exposure, the risk of losing access to the US dollar clearing system, and US correspondent banking relationships create strong commercial reasons for compliance. US Secretary of State Marco Rubio confirmed on 6 May 2026 that any entity honouring payments to the five blocked companies, including foreign financial institutions, would face secondary sanctions designation. A UK bank or trader that makes a payment to comply with China’s blocking order, therefore, risks being cut off from the US financial system.

    In my opinion, there is no straightforward resolution at present. Compliance with the blocking order exposes a business to the risk of OFAC secondary sanctions. Compliance with OFAC exposes the Chinese subsidiary to Chinese administrative penalties and Article 12 civil litigation. Each transaction involving the five named companies requires individual analysis: what currency is used, is there a US nexus, and does OFAC’s reach actually extend to this specific payment?

    Practical steps for UK businesses with Chinese exposure include the following:

    • Review whether any counterparties in your Chinese supply chain are among the five named petrochemical companies or their affiliates. Dealings with those entities now engage both OFAC exposure (for US-dollar transactions or US-nexus activities) and Chinese regulatory obligations under the blocking order.
    • Avoid blanket compliance policies that automatically block all transactions with SDN-listed entities. The blocking order specifically targets overcompliance: each transaction should be assessed individually against the actual scope of the applicable OFAC executive order.
    • Assess whether a MOFCOM exemption or an OFAC-specific licence can reduce the dilemma. Article 8 of the 2021 Blocking Rules permits Chinese citizens, legal persons, and organisations to apply to MOFCOM for an exemption within 30 days of the prohibition taking effect. MOFCOM has 30 days to respond or must act promptly in urgent circumstances. An OFAC-specific licence can separately authorise an otherwise restricted transaction. Neither route eliminates the underlying conflict between two sovereign legal systems, but both can reduce immediate exposure.
    • Audit Chinese subsidiary compliance policies. A Chinese subsidiary of a UK company is legally required to comply with the blocking order. UK parent companies and UK nationals acting in their personal capacity as foreign individuals are not directly bound. Uniform group-wide compliance policies may need to be restructured along jurisdictional lines.
    • Take specialist legal advice before acting. With criminal exposure under SAMLA at home and civil and administrative exposure in China, in my experience, this requires sanctions litigation and compliance legal expertise, not a unilateral decision by a compliance team.

    Policy Direction and the Expanding Toolkit

    The 2 May 2026 blocking order is part of a wider pattern. On 24 April 2026, one week before the order was issued, MOFCOM added seven EU defence and aerospace entities to China’s export control restricted list, prohibiting the export of dual-use items to those companies. The stated basis was arms sales to Taiwan; the timing, coming directly after the EU’s twentieth Russia sanctions package targeted Chinese entities, makes the sequence clear. The April 2026 supply chain and extraterritoriality regulations carry the same logic: they translate existing policy objectives into binding administrative law, enforceable by a coordinated apparatus of more than fifteen government agencies.

    The breadth of Decree No. 834 deserves specific attention. Its supply chain disruption provisions can capture commercial decisions that appear to have nothing to do with state conduct. Terminating a Chinese supplier to comply with the EU’s Corporate Sustainability Due Diligence Directive or the US Uyghur Forced Labor Prevention Act may engage the Regulations if that termination disrupts a supply chain that the Chinese state regards as protected. Providing documents in foreign litigation that involve a Chinese subsidiary may also engage the prohibition on supply chain investigations conducted in violation of Chinese law.

    Decree No. 835’s Malicious Entity List adds a separate exposure. It can catch lobbyists, think tanks, and professional advisers who assist in the implementation of extraterritorial measures. The outer edges of that provision are not yet tested in the courts. What is clear is that the direction of travel is consistent: China is converting its counter-sanctions architecture from a declaratory framework into an operational enforcement regime.

    Frequently Asked Questions

    Does China’s blocking order apply directly to UK companies?

    The 2 May 2026 blocking order applies to Chinese citizens, legal persons, and other organisations, which include Chinese subsidiaries of UK companies. UK parent companies incorporated in England and Wales, and UK nationals acting in their personal capacity as foreign individuals without a Chinese legal presence, are not directly subject to the order. They may, however, face indirect exposure through their Chinese subsidiaries and through US secondary sanctions pressure if they comply with the blocking order.

    What is the risk of simply doing nothing?

    Doing nothing is itself a compliance decision with exposure on both sides. A Chinese subsidiary that continues to transact with the five named petrochemical companies without a blocking order analysis may breach OFAC sanctions where there is a US nexus. Ceasing those transactions in compliance with OFAC, without first applying for a MOFCOM exemption, exposes the subsidiary to Chinese administrative penalties and Article 12 civil litigation. There is no passive position that avoids exposure in both jurisdictions simultaneously.

    Can a MOFCOM exemption resolve the conflict?

    A MOFCOM exemption can authorise non-compliance with the blocking order where a genuine justification is provided, but it does not constitute an OFAC licence and does not resolve US sanctions exposure independently. A business that obtains a MOFCOM exemption to continue complying with OFAC measures still needs to assess its OFAC position on its own terms. MOFCOM has 30 days to decide an exemption application, or must act promptly in urgent cases.

    Is the Nanjing Maritime Court case binding on Chinese courts?

    The Nanjing case has been highlighted by the Supreme People’s Court as the first civil action brought under the AFSL and included in the People’s Court Casebooks as persuasive authority for courts nationwide. No full judgment on the merits was issued because the parties settled. Courts retain discretion in how they characterise similar claims. The case, however, confirms that the private cause of action under Article 12 is operational and that at least one Maritime Court is willing to grant preliminary asset-freezing orders on that basis.

    How does the blocking order affect contracts governed by English law?

    A Chinese subsidiary bound by a contract governed by English law remains subject to Chinese mandatory law, including the Blocking Rules, as a matter of Chinese public policy. Chinese courts will not enforce contractual provisions that require a subsidiary to comply with blocked foreign sanctions and may treat such provisions as void under Chinese mandatory law. A foreign court ruling that enforces blocked OFAC sanctions is unlikely to be recognised in China. For contracts with Chinese law-governing clauses or Chinese arbitration seats, the Blocking Rules now constitute mandatory applicable law that overrides contractual sanctions-compliance provisions.

    This article provides general information about Chinese counter-sanctions law as of May 2026. It does not constitute legal advice for any specific situation. The law in this area is developing rapidly. Businesses affected by China’s blocking order or the wider counter-sanctions framework should take specialist legal advice from a qualified solicitor with experience in both UK sanctions law and Chinese regulatory compliance.

    To discuss your position, contact Eldwick Law on +44 (0) 203 972 8469 or at mail@eldwicklaw.com.

  • Can You Enforce a DIAC Award Through the DIFC Courts?

    Can You Enforce a DIAC Award Through the DIFC Courts?

    You can enforce a DIAC arbitral award through the DIFC Courts, and for many creditors this is an increasingly attractive route. An award that cannot be realised against assets has little commercial value. The DIFC Courts have positioned themselves as a preferred forum for international enforcement: proceedings are conducted in English, procedures are familiar to common law practitioners, and the judiciary is experienced in complex cross-border disputes.

    DIAC itself has expanded rapidly. In 2023, it registered 355 cases, including 323 arbitrations, spanning construction, real estate, and a wide range of commercial disputes involving parties from across multiple jurisdictions.

    The framework has, however, become more nuanced. Dubai Decree No. 29 of 2024 established the CJT to resolve jurisdictional conflicts between the DIFC Courts and the Dubai Courts, and Dubai Law No. 2 of 2025 expanded the DIFC Courts’ jurisdiction. Against that backdrop, understanding both the advantges of the DIFC route and its emerging limits is essential.

    Why Award Creditors Use the DIFC Courts

    A DIAC award can be enforced through the DIFC Courts, and the route is often built into enforcement strategy from the outset of high-value transactions. Its key feature is the “conduit” function.

    Dubai Law No. 2 of 2025 expressly preserves this conduit function in Article 32, allowing DIFC-recognised judgments to be enforced onshore even where the debtor holds no DIFC assets. For creditors familiar with English or Singaporean court practice, the procedural feel is recognisable. That familiarity matters when speed is a commercial priority.

    A creditor can seek recognition in the DIFC even where neither party has any connection to it and even where the arbitration was seated elsewhere. Once recognised, the award becomes a DIFC judgment, which can then be transferred to the Dubai Courts for enforcement against onshore assets under Article 7 of the Judicial Authority Law.

    At that stage, the Dubai Execution Judge does not revisit the merits. Enforcement becomes procedural, which is precisely what makes the route efficient.

    Dubai Law No. 2 of 2025 confirms that DIFC-recognised judgments can be enforced onshore even without DIFC assets. For international parties, the procedural familiarity of the DIFC Courts, often compared to English or Singaporean courts, adds further appeal, particularly where speed is critical.

    How the Three Legal Regimes Fit Together

    Three regimes govern enforcement, each performing a distinct role.

    UAE Federal Arbitration Law (2018) governs onshore enforcement. Its refusal grounds mirror the New York Convention and are interpreted narrowly, although application can vary in practice.

    DIFC Arbitration Law (2008) governs recognition within the DIFC. Articles 42 and 43 allow enforcement of arbitral awards, including certain interim or partial awards. In Neal v Nadir, the DIFC Court of Appeal confirmed that “finality” is interpreted flexibly, allowing enforcement of awards that are substantively decisive even if not formally final.

    The New York Convention underpins both regimes and reinforces the pro-enforcement approach. In Obert v Ondray, the DIFC Courts confirmed that public policy challenges cannot be used to revisit the merits and are construed narrowly.

    The Enforcement Process

    Enforcement begins with a recognition application in the DIFC Courts, typically by Part 8 claim for  support by the arbitral award, the arbitration agreement, and certified translations where required.

    Preparation is critical. Translation errors, incomplete bundles, and inconsistent documentation are common sources of delay and are readily avoidable.

    The DIFC Courts do not reconsider the merits. Their role is limited to assessing whether any refusal grounds under Article 44 of the DIFC Arbitration Law apply.

    Once recognised, the award becomes a DIFC judgment. The creditor then proceeds to Dubai Courts for execution, submitting the DIFC judgment, a certified Arabic translation, and an enforcement letter from the DIFC Registry.

    Execution measures include bank account attachment, property seizure, garnishment, and travel bans. The Execution Judge does not search for assets, making prior asset identification essential.

    The CJT Risk After Serene v Energen

    The CJT, established in 2024, resolves jurisdictional conflicts between the DIFC and Dubai Courts. Its 2025 decision in Serene v Energen has introduced a significant constraint on the conduit route.

    In that case, the creditor sought DIFC recognition of an arbitral award. The debtor responded by filing annulment proceedings in the Dubai Courts and applying to the CJT. The CJT held that: (i) neither party had a DIFC connection, (ii) there was no opt-in to DIFC jurisdiction, (iii) no assets were located in the DIFC, and (iv) the proceedings were closely linked.

    It therefore directed the DIFC Courts to suspend enforcement and designated the Dubai Courts as the proper forum.

    The practical consequence is clear: where a debtor initiates onshore annulment proceedings and there is no DIFC nexus, DIFC enforcement may be halted. This creates unresolved tension with the New York Convention, which generally allows enforcement to proceed despite pending annulment actions.

    Recurring Defences and How to Handle Them

    Jurisdictional objections, arguing that the DIFC Courts lack sufficient nexus to hear the claim, are regularly raised. They are often unsuccessful, but they delay proceedings when not addressed at the outset. Post-Serene v Energen, respondents with no DIFC connection who are willing to file onshore annulment proceedings have a more credible basis for those challenges than they did before September 2025.

    Parallel proceedings should be used tactically. A respondent who files an annulment application onshore before DIFC enforcement is sought can, on the current CJT analysis, create a genuine jurisdictional contest. Timing matters: where the CJT risk is real, moving before the respondent can establish competing onshore proceedings is a material tactical consideration.

    As to the merits, Obert v Ondray confirms that public policy objections will not be allowed to function as a back-door appeal. Administrative failures, meaning incomplete bundles, uncertified copies, and inconsistent translations, generate delays out of all proportion to the actual difficulty. They are preparation problems that should not arise.

    Practical Guidance for Award Creditors

    Asset mapping is essential. The Dubai Execution Court does not identify assets, so creditors must locate bank accounts, property, shareholdings, or receivables in advance.

    Seat selection matters. A DIFC seat places the arbitration within the DIFC Courts’ supervisory jurisdiction and reduces the risk of jurisdictional conflict.

    Arbitration clauses should be clearly drafted and up to date. Institutional changes, including the consolidation of DIFC-LCIA cases into DIAC, should be reflected in new agreements.

    Early engagement of counsel improves outcomes. Enforcement requires coordinated preparation, including documentation, translations, and risk assessment.

    Final Words

    Used effectively, the DIFC route is one of the most effective enforcement mechanisms available to international creditors across the region. The process is fast, the framework is creditor-friendly, and the onshore tools give you genuine leverage over a debtor’s assets. Getting there smoothly is not a legal problem. It is a preparation problem, and preparation is entirely within your control.

  • Do the New UK Sanctions End-Use Controls Apply to Your Business?

    Do the New UK Sanctions End-Use Controls Apply to Your Business?

    The Sanctions End-Use Controls were introduced by the Sanctions (EU Exit) (Miscellaneous Amendments) Regulations 2026, which come into force on 13 May 2026. They add Regulation 55A to eleven sanctions regimes: Belarus, North Korea, Iran (including the nuclear regime), Libya, Myanmar, Russia, Somalia, Syria, Venezuela, and Zimbabwe. The architecture is cross-regime deliberate, though the government’s enforcement guidance makes plain that Russia evasion is where resources are currently focused.

    The Sanctions End-Use Controls only apply to goods not already controlled under the UK’s strategic export control legislation. If your product appears on the military or dual-use control lists and you already require a licence under those regimes, you are in the wrong queue. The two systems are separate.

    How the Controls Work

    There is no new blanket licensing requirement for any category of goods. The control only fires when the government has identified a specific diversion risk attached to a particular exporter, shipment, route, end-user, or intermediary, and has communicated that risk in writing through a formal informing notice.

    The notice is issued by DBT, either directly by OTSI or through HMRC’s national clearance hub. Once received, the exporter faces a binary choice: apply for a licence before proceeding, or stop the transaction. There is no grace period. OTSI is not accepting advance licence applications from exporters who have not yet received a notice. The government guidance on the Sanctions End-Use Controls published on 21 April 2026 sets out the process in detail, including worked case studies showing both approvals and refusals.

    Licence applications are assessed individually. DBT will weigh the nature of the goods, the diversion risk posed by the route or end-user, the exporter’s compliance history, and any available intelligence about the ultimate recipient. If the licence is granted, the export may proceed, sometimes subject to conditions. If refused, the goods cannot be sent to that destination by that route.

    Russia Evasion and the Highest-Risk Routes

    The government has been direct about where it expects to deploy these controls first. Its Countering Russian Sanctions Evasion guidance identifies goods on the Russia Common High Priority List as the primary concern. These are Western-sourced components critical to Russian weapons systems: electronics, bearings, machine tools, optical equipment, and precision machinery.

    The transit routes carrying the greatest risk run through Central Asian jurisdictions (particularly Kazakhstan, Uzbekistan and Kyrgyzstan), the Gulf states (mainly the UAE), Türkiye, and parts of South-East Asia. The EU’s 20th sanctions package, adopted on 23 April 2026, is instructive here: it deployed the EU’s own anti-circumvention tool for the first time, specifically against Kyrgyzstan, after that country persistently re-exported EU-origin machine tools and telecommunications equipment to Russia. The UK mechanism operates on similar logic.

    Businesses with distribution agreements in those regions, whether for industrial equipment, electronics, chemicals, or precision components, should treat this as a live risk. Informing notices are being issued now.

    What Your Business Should Do

    When it comes to sanctions, we always advise clients to start with the due diligence process. The Sanctions End-Use Controls do not change existing record-keeping obligations, but they do put a premium on knowing your supply chain one or two steps beyond your immediate buyer. If you sell to a distributor in Kazakhstan who resells to customers the government suspects are connected to Russian entities, the informing notice will arrive with your name on it. Our trade and export control sanctions team can carry out a supply chain assessment and advise on your specific exposure.

    Six steps will reduce that exposure:

    • Map your distribution network against high-risk destinations. Cross-reference your customer list against the government’s Countering Russian Sanctions Evasion guidance and the Russia Common High Priority goods list. If your products appear on that list and your route passes through a flagged jurisdiction, the risk is real.
    • Screen counterparties at the point of each transaction, not just at the start of a relationship. Sanctioned entities change their corporate structures, and intermediaries who were clean on onboarding may not be clean today.
    • Obtain end-use statements for elevated-risk applications. Ask the buyer to confirm in writing the identity of the ultimate end-user and the intended use. Keep that document. If a licence application becomes necessary, the quality of your due diligence file will directly influence the outcome.
    • Train your logistics and sales teams. Informing notices may arrive through HMRC at the border as well as directly from DBT. A freight forwarder who does not recognise what the notice means and ships anyway can expose your company to criminal liability. The government’s published case studies make that consequence explicit.
    • Appoint a senior compliance owner. Someone in your organisation needs to own the response to an informing notice: how to contact OTSI, how to submit a licence application, and how to place a hold on a shipment within hours of a notice arriving.
    • Seek legal advice before the notice arrives rather than after. The licence application process works better when the exporter can demonstrate a track record of structured compliance, and that track record cannot be built overnight.

    Regarding penalties, civil monetary penalties are imposed on a strict liability basis under SAMLA. OTSI does not need to prove you knew of the breach — only that one occurred. OFSI’s enforcement framework, reformed in February 2026, now offers cumulative reductions of up to 70% for voluntary disclosure and co-operation. That discount is available only if you self-report before enforcement action begins.

    Wrapping Up

    The Sanctions End-Use Controls reflect a broader shift from reactive prosecution to proactive disruption. Set alongside OFSI’s reformed penalty framework, the expansion of OTSI’s remit, and the first criminal charge for a Russia sanctions breach brought by the National Crime Agency in April 2026, the direction is consistent: the UK is building an enforcement apparatus that can act earlier, act harder, and reach further than before. Businesses that have taken the time to map their exposure and build a credible compliance file before a notice arrives will find that conversation with OTSI considerably easier. For those who have not, our sanctions compliance service can provide a rapid assessment.

    Our Experience

    Whilst this legislation is new, the sanctions regulations in the UK are being constantly amended, in particular the Russia Regulations. We therefore have significant experience of dealing with these regulations, including the Trade Regulations. We have acted for:

    • A Kazakh state company in the energy sector on developing their compliance policy, specifically in relation to global supply chains, covering the sanctions regimes of the US, the UK, the EU, Australia, Canada, and Kazakhstan.
    • We advised a UK company, with subsidiaries in India, on the export of medicinal products to Russia through alternative supply routes (from the UK through its Indian subsidiary to Russia).
    • We advised a multi-national chemical company, headquartered in the UK, on the supply of chemical products through the EU and the UAE to Russia, providing both UK and EU law advice.
    • We advised a UK chemical company on the export of chemical products to Russia, and divestment of its Russian subsidiary from Russia, successfully obtaining a licence from the Export Control Joint Unit (responsible for trade sanctions licencing) and approval from OFSI.

    Frequently Asked Questions

    Do I need to take any action right now, before receiving an informing notice?

    Yes, businesses should audit their export distribution networks and due diligence processes against the government’s Countering Russian Sanctions Evasion guidance and the Russia Common High Priority goods list, particularly if they trade through Central Asian, Gulf, or South-East Asian markets, even though no licence is required until a notice is issued.

    Do the Sanctions End-Use Controls apply to services as well as goods?

    No, Regulation 55A, as introduced, applies only to goods and related technology; services are regulated by separate provisions under the relevant sanctions regulations and fall outside the new licensing gate.

    What happens to goods already detained at the border when a notice is issued?

    HMRC may hold the goods pending the outcome of a licence application or allow them to be returned to the exporter; the goods cannot proceed to the originally declared destination until either a licence is granted or the informing notice is withdrawn.

    Can I apply for a licence in advance if I think my goods might be affected?

    No, OTSI is not accepting advance licence applications; the licensing process only opens after receipt of a written informing notice, though you can prepare your compliance documentation and map your supply chain in anticipation.

    My goods are already on the dual-use control list. Do the new controls add anything?

    No, the Sanctions End-Use Controls only apply to goods not otherwise controlled under the UK’s strategic export control legislation, so if your products already require a licence under the dual-use or military control lists, you continue to use that existing process.

    If your business has received an informing notice or if you are concerned about supply chain exposure to these new controls, please get in touch with us on +44 (0) 203 972 8469 or email mail@eldwicklaw.com.

    Please note that this article does not constitute legal advice.

  • How to bring a claim in the DIFC Courts 

    How to bring a claim in the DIFC Courts 

    DIFC Jurisdiction 

    The first question is always jurisdiction. It most commonly arises through an express contractual clause, where the parties have agreed to submit disputes to the DIFC Courts. Such clauses are frequently used in international commercial agreements where parties seek a neutral common law forum. 

    Alternatively, jurisdiction may be established where there is a sufficient connection to the DIFC. This can include disputes involving DIFC-incorporated entities, contracts performed within the DIFC, or events occurring within its geographic boundaries. 

    Importantly, the DIFC Courts permit parties to “opt-in” to their jurisdiction. Parties with no physical or territorial connection to the DIFC may nonetheless agree to litigate there. This has proven particularly attractive in cross-border transactions, positioning the DIFC as a credible alternative to more traditional forums.  

    From a practitioner’s perspective, careful drafting of jurisdiction clauses is essential. Ambiguity at this stage can create costly disputes later on.  

    Pre-Action Considerations 

    Unlike the position under the English Civil Procedure Rules, the DIFC Courts do not impose formal pre-action protocols. However, parties are still expected to act reasonably before commencing proceedings. 

    In practice, this usually involves issuing a letter of claim or a Pre-Action Protocol Letter setting out the basis of the dispute and the relief sought and allowing the opposing party an opportunity to respond.  

    Another key consideration is whether urgent interim relief is required. The DIFC Courts are well-equipped to grant remedies such as injunctions and freezing orders, and this may influence how and when proceedings are commenced.  

    Commencing Proceedings via DIFC Courts’ eRegistry system 

    Proceedings are initiated by filing claim form P7 via the DIFC Courts’ eRegistry system. The platform is efficient and allows for electronic filing, payment of court fees, and case tracking. 

    The Claim Form must include the parties’ details, a concise summary of the claim, the remedies sought, and the value of the claim. 

    The Particulars of Claim may either be included in the claim form or served separately within 14 days. These should set out the factual and legal basis of the claim clearly, supported where appropriate by key documents. 

    Court fees are payable on issue and are generally calculated by reference to the value of the claim, subject to caps. Details on the exact figures for the fees can be found here. 

    Service of the Claim 

    Once issued, the claim must be served on the defendant in accordance with Part 9 of the Rules of the DIFC Courts (RDC). 

    Service within the DIFC is relatively straightforward. However, many DIFC disputes involve parties located outside the jurisdiction, making cross-border service a common consideration. In such cases, practitioners must consider whether permission to serve outside of the jurisdiction is required and ensure compliance with any applicable local rules or international conventions. 

    The DIFC Courts have demonstrated a pragmatic approach to service, including permitting alternative methods where traditional routes would be impractical or cause delays. 

    Defendant’s Response 

    Following service, the defendant is required to respond within prescribed time limits. Typically, this involves filing an acknowledgement of service followed by a Defence within 28 days. 

    The Defence should address each allegation in the Particulars of Claim, stating whether it is admitted, denied, or not admitted. 

    If the defendant fails to respond in time, the claimant may seek default judgment. This can provide a relatively swift route to obtaining judgment in uncontested cases. 

    Case Management and Procedure 

    The DIFC Courts adopt an active approach to case management, closely aligned with English practice.  

    Once statements of case have been exchanged, the Court will usually list a Case Management Conference (CMC). At this stage, directions will be given for the progression of the case, including disclosure, witness statements, expert evidence, and the timetable leading to trial.  

    Disclosure obligations are broadly similar to those under English law, requiring parties to produce documents on which they rely, as well as those that may adversely affect their case or support another party’s case. Efficiency and proportionality are emphasised throughout this process. Practitioners should expect firm timetables and limited tolerance for delay. 

    Trial and Judgment 

    Trials in the DIFC Courts are conducted in English and follow an adversarial format familiar to common law practitioners.  

    The process includes the presentation of witness evidence, cross-examination, and legal submissions. The Courts are known for their high-quality judiciary and well-reasoned judgments.  

    Judgments are usually reserved and delivered in writing, often with detailed analysis of both fact and law. This contributes to the growing body of DIFC jurisprudence and enhances the Courts’ credibility internationally.  

    Enforcement 

    Enforcement is a key consideration for any claimant and a notable strength of the DIFC Courts. 

    Within Dubai, DIFC judgments can be enforced through established mechanisms linking the DIFC Courts with the onshore Dubai Courts. This provides an effective route to execution against assets located in the Emirate.  

    Internationally, DIFC judgments may also be recognised and enforced in other jurisdictions, depending on applicable treaties or reciprocal arrangements.  

    This dual capability enhances the attractiveness of the DIFC as a forum for international dispute resolution. 

    Conclusion 

    Bringing a claim in the DIFC Courts is a structured and accessible process for common law practitioners. With their modern procedural framework, experienced judiciary, and international outlook, the DIFC Courts continue to establish themselves as a leading forum for commercial dispute resolution. 

    As cross-border disputes involving the Middle East continue to grow, familiarity with DIFC litigation will become an increasingly valuable asset for dispute resolution lawyers operating on the international stage. 

  • Force Majeure in the Middle East: Legal Risks and Practical Realities

    Force Majeure in the Middle East: Legal Risks and Practical Realities

    Force Majeure under English Law

    Force majeure clauses excuse contractual performance when events beyond a party’s control prevent fulfilment of obligations. Under English law, unlike many civil law systems, force majeure has no independent legal existence, it operates solely through express contractual terms. Courts interpret such clauses in a strict and narrow manner, requiring the triggering event to be both unforeseeable and outside the affected party’s reasonable control. The clause must also clearly cover the event in question and ambiguity is often construed against the party seeking relief.

    Key considerations for claiming Force Majeure

    A party seeking to rely on a force majeure clause must first establish that the conflict or related events are within the scope of the contractual clause.

    Foreseeability is also a critical factor. Where the relevant risk was ongoing or reasonably foreseeable at the time the contract was concluded, reliance on Force Majeure may be unsuccessful on the basis that the risk was effectively assumed.

    In addition, the affected party must show that it has taken reasonable steps to mitigate or overcome the impact of the event. Strict compliance with contractual notice provisions is equally essential. Failure to give timely notice, or to respond promptly to a counterparty’s notice, may prejudice a party’s position and, in some cases, be interpreted as acceptance of the claim. A passive “wait and see” approach is therefore not advisable.

    Impact on Energy Sector

    Disruptions in the Strait of Hormuz have led to vessel rerouting, delays, and increased operational risk. To support force majeure claims, parties should carefully document safety to crew and vessels, availability, or lack thereof, of alternative routes, and cost and time implications of rerouting. Many maritime contracts incorporate standardised BIMCO war risk clauses, which may permit shipowners to decline entry into hazardous zones and determine how additional costs arising from route deviations or elevated insurance premiums are to be allocated. The precise wording of these clauses frequently becomes a decisive factor in dispute resolution.

    Key state-owned companies, such as Kuwait Petroleum Corporation and Bahrain’s Bapco Energies, have invoked force majeure clauses, stalling shipments and lowering output following attacks on infrastructure and threats to shipping in the Strait of Hormuz.  Most recently, QatarEnergy declared force majeure on some of its long-term LNG supply contracts amid production and supply disruptions caused by the war between the USA, Israel, and Iran.

    Alternatives to Force Majeure

    If a contract does not have a Force Majeure clause, the doctrine of frustration might apply under English Law. Frustration allows for the agreement to be discharged, but only if performance becomes impossible, illegal, or fundamentally different from what was envisaged. The threshold for this is much higher than that of temporary disruption and/or inability to perform. The courts have applied this doctrine narrowly. In Tsakiroglou v Noblee Thorl [1962], the House of Lords held that a contract was not frustrated by the closure of the Suez Canal even though the only alternative route substantially increased costs, performance remained possible and the contract was not discharged. Similarly, in The Sea Angel [2007], the Court of Appeal reaffirmed that frustration is a doctrine of last resort, applicable only where the change in circumstances is so fundamental that it would be unjust to hold the parties to their contract. Increased costs or operational difficulties alone will not suffice.

    Companies should carefully document all disruptions and their mitigation efforts to substantiate future legal claims.

    Lessons for the future

    In light of recent disruptions, companies should take a proactive and structured approach to risk management by conducting a thorough review of their supply chains and sub-contractor arrangements to identify counterparties exposed to similar risks. Early engagement with these parties can help anticipate and mitigate potential disruptions before they escalate into disputes. It is equally important to ensure alignment and consistency of provisions across contractual frameworks, as gaps between main contracts and subcontracts may leave parties exposed. Attention should be given to strengthening the drafting of force majeure clauses to clearly define triggering events, establish the required causal link between the event and non-performance, and set out detailed procedural requirements, including notice obligations and evidentiary standards. Finally, meticulous record-keeping is essential; maintaining comprehensive documentation of disruptions, communications, and mitigation efforts will be critical in substantiating any future claims or defending against challenges.

    Post-crisis legal phase

    It is important to recognise that the resumption of navigation through the Strait of Hormuz following a period of tension does not bring the legal consequences of the crisis to an end. Rather, it may mark the beginning of a new phase of complex contractual disputes concerning delayed cargo deliveries, altered routes, and increased insurance and transportation costs. The manner in which such disputes are resolved will depend heavily on contractual wording, applicable law, and the chosen dispute resolution forum.

  • Kazakhstan Is Becoming The Go-To Arbitration Destination

    Kazakhstan Is Becoming The Go-To Arbitration Destination

    Kazakhstan is a serious player in international arbitration. The Astana International Financial Centre (AIFC) has built an independent court and arbitration centre that has genuinely attracted international business from across Central Asia, the Middle East, and China.

    I have been advising clients on commercial disputes in Kazakhstan and the surrounding regions for many years, and the pace of change at the AIFC has been striking. When the centre launched in 2018, it was an ambitious project. Today, the International Arbitration Centre (“IAC”) has handled nearly 5,000 cases, with around 90% of those cases having no direct connection to the AIFC itself. This means parties are actively choosing Astana as their arbitration seat.

    This article sets out how the AIFC arbitration framework works, what the interim measures regime looks like in practice, and the practical issues any legal adviser working on Kazakhstan disputes should understand before proceeding.

    The AIFC Framework in Brief

    The AIFC Constitutional Statute gives the AIFC Court exclusive jurisdiction over disputes between AIFC participants, disputes governed by AIFC law, and any commercial dispute that the parties agree to refer. That last category matters. Any two parties, regardless of whether they have any connection to the AIFC, can opt into the AIFC Court and IAC by contract. It is a deliberate feature of the system, designed to attract international business.

    The AIFC Court and IAC operate entirely in English. Proceedings are conducted under English common law principles, and where a moot point arises, the AIFC reverts to English law as its primary source of law. Most of the judges on the court have trained in English law, and that is the tradition they work within. The court will also take account of the law of other common law jurisdictions, including decisions from Singapore, Hong Kong, and Australia, which makes the AIFC’s jurisprudence genuinely familiar to international practitioners.

    The interest in English law is real and growing. Kazakhstan’s legal community has invested substantially in understanding it. This gives UK lawyers acting for parties in the region a practical advantage, as the procedural rules are the same or very similar.

    Availability of interim measures

    The AIFC Arbitration Regulations 2017 (the “Regulations”) contain an unusually clear and well-structured interim measures regime. Under Article 17, it is expressly stated to be compatible with an Arbitration Agreement for a party to apply to the AIFC Court for interim relief, before or during arbitral proceedings. The Tribunal’s constitution does not need to be complete before a party can seek protection from the Court. That is a meaningful difference from many domestic systems.

    Article 27 of the Regulations grants the Arbitral Tribunal the power to order interim measures. Those measures can cover four purposes:

    • Maintaining or restoring the status quo pending the outcome of the dispute
    • Preserving assets from which a future award might be satisfied
    • Taking action to prevent harm to a party or to the arbitral process itself
    • Preserving evidence relevant to resolving the dispute

    Where the Tribunal has already issued an interim order, a party can apply to the AIFC Court of First Instance to enforce it, provided that the Tribunal has given its written permission. Under AIFC Rules 27.30 and 27.31, the application must be made by Arbitration Claim Form, and the Court will not grant enforcement unless the applicant files written evidence of that permission. This is a sensible safeguard against parties using the court to bypass the Tribunal’s authority.

    In practice, the AIFC Court’s interim measures regime compares favourably with Kazakhstan’s domestic civil procedure rules. Under standard domestic practice, interim relief can only be obtained after proceedings have commenced, and a freezing order, once granted, may remain in place for six to eight months with little prospect of the respondent obtaining a discharge before then. The AIFC Court takes a different approach: it is required to schedule a review hearing at the point of granting relief, so the respondent’s position receives prompt consideration.

    The AIFC has developed a body of case law on interim measures. Cases include JSC Astana International Financial Centre Authority v Onyx Heavy Machinery Ltd (AIFC-C/CFI/2020/0004), Metallinvestatyrau LLP v Aksaystroy-2020 LLP (AIFC-C/CFI/2021/0013), LLP “TEMIR ZAT” v Joint Venture “Alaygyr” LLP (AIFC-C/CFI/2023/0046), and, most recently, Caspian Holding FZ-LLC v Gazexport Limited (AIFC-C/CFI/2025/0018). The 2025 energy sector case is particularly telling; it shows that the court is willing to grant relief in commercially sensitive disputes involving gas export arrangements.

    Enforcing Arbitration Awards In Kazakhstan

    The AIFC Court itself has an excellent enforcement record: 205 judgments delivered, with a 100% enforcement rate at the time of writing. AIFC Court orders carry the same legal force as judgments from Kazakhstan’s general jurisdiction courts. For disputes resolved within the AIFC system, enforcement has been reliable.

    The picture is more complicated when it comes to enforcing foreign arbitral awards in Kazakhstan’s domestic courts. Kazakhstan has acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which in principle means that awards made in other Convention states are enforceable in Kazakhstan. In practice, the position is more nuanced. A significant practical rule applies: in general, Kazakh courts will not enforce a foreign arbitration award if the debtor lacks an address or registered presence in Kazakhstan. Enforcement has occurred in some cases, but it is the exception rather than the standard outcome.

    There is also a structural tension in how the New York Convention operates in Kazakhstan. Kazakhstan joined the Convention by Presidential Decree in 1995 rather than by parliamentary ratification, and some Kazakh lawyers argue this means it does not automatically take priority over domestic law under the Kazakh Constitution. Others take the view that the decree still incorporates the Convention into national legislation, and it applies directly.

    Some argue that the mandatory public policy ground for refusal under Article 52(2) of the Law on Arbitration can be applied more broadly than the Convention’s permissive wording allows. From an international law perspective, Kazakhstan is bound by its accession obligations. From the perspective of a creditor trying to enforce in a Kazakh domestic court, that theoretical obligation may offer limited comfort.

    The AIFC is a genuine option for commercial dispute resolution, and for cross-border disputes with a Central Asian focus, it is increasingly the most practical one. The alignment with English law makes it accessible to UK-trained practitioners. The court’s independence, its interim measures framework, and its track record give clients reasonable grounds for confidence.

    That said, the domestic enforcement environment in Kazakhstan remains a distinct issue from AIFC enforcement. If a client’s strategy depends on recovering against a debtor whose assets are in Kazakhstan but who has no registered address there, the enforcement route will need careful planning. There is no automatic path from an arbitral award to a satisfied judgment.

    A few practical points worth keeping in mind:

    • Check whether the AIFC or IAC is specified in the contract. If it is, the AIFC Court’s jurisdiction and the arbitration framework apply directly.
    • For urgent asset protection, an application to the AIFC Court for interim relief before the tribunal is constituted has procedural advantages over domestic Kazakh courts.
    • If enforcement against a debtor in Kazakhstan is needed, investigate the debtor’s registered presence at an early stage. This will significantly shape the enforcement strategy.
    • Any matter involving Russian entities or judgments routed through Kazakhstan requires sanctions law review before any steps are taken.
    • The AIFC’s openness to other common law authorities means that English law arguments, properly framed, will be heard and understood.

    Kazakhstan’s Role in Enforcing Russian Judgments

    One development that deserves close attention is the volume of Russian judgments now being enforced in Kazakhstan. Since the imposition of Western sanctions following Russia’s invasion of Ukraine, Russian entities have found themselves unable to enforce judgments in most European jurisdictions. Kazakhstan has become a practical alternative. Russian companies with commercial relationships in Central Asia or with assets in the region have been seeking enforcement in Kazakh courts.

    For UK-based advisers, this creates a set of questions that require careful thought. Acting in connection with the enforcement of a Russian judgment can raise sanctions compliance issues depending on the identity of the parties, the nature of the underlying contract, and whether any relevant general licences or OFSI authorisations apply. The potential for conflict between Kazakhstan’s openness to Russian enforcement and the UK’s sanctions regime is an area where specialist legal advice is genuinely necessary.

    At Eldwick Law, we advise clients on exactly these types of cases: Kazakhstan arbitration procedure, AIFC enforcement strategy, and the sanctions law questions that often arise alongside them. If you are handling a matter involving Russian entities and Central Asian assets, or if you are instructed in a dispute where Kazakhstan is the enforcement jurisdiction, please do get in touch.

    Where Is Kazakhstan Headed?

    The IAC has signed 125 memoranda of understanding with arbitration institutions across Central Asia, the Middle East, China, and internationally. Those agreements are the mechanism through which the IAC is building the recognition and reciprocal enforcement relationships that give arbitration seats their long-term credibility. The direction of travel is clear.

    For the highest-value energy and infrastructure disputes, London, Geneva, and Stockholm remain the seats specified in legacy contracts, and they continue to attract the most complex cases. For example, the Kashagan oilfield arbitration, with claims now exceeding $160 billion, is registered with the Permanent Court of Arbitration and is being heard by a tribunal in Geneva, with hearings expected to continue into 2028. Kazakhstan also recently won the Karachaganak gas condensate arbitration before the Stockholm Chamber of Commerce, with the consortium of Eni, Shell, Chevron, and Lukoil potentially facing a payout of up to $4 billion.

    The disputes mentioned above concerned older contracts. New agreements, particularly those involving Chinese and Middle Eastern investors in the region, are increasingly selecting the IAC, DIAC, SIAC, or HKIAC. As the AIFC Court’s jurisprudence develops and its reputation outside Central Asia grows, there is every reason to expect the IAC’s share of mid-market and complex regional disputes to increase.

    Get in Touch

    If you are involved in a dispute with a Kazakhstan element, or if you are advising a client on a contract that may give rise to one, I am happy to discuss the legal and procedural options with you. You can reach the team at Eldwick Law by calling +44 (0) 203 972 8469 or emailing mail@eldwicklaw.com. We advise on AIFC arbitration, interim measures applications, enforcement strategy, and the sanctions law issues that frequently arise in Central Asian commercial disputes.

    Frequently Asked Questions

    Can any party use the AIFC Court, or is it restricted to AIFC members?

    Any party can opt into the AIFC Court by agreement, regardless of whether they have any connection to the AIFC or Kazakhstan. Article 13(4) of the AIFC Constitutional Statute expressly allows parties to transfer disputes to the AIFC Court by consent, making it accessible to international commercial parties as a chosen seat.

    How does the AIFC interim measures regime differ from domestic Kazakh courts?

    The AIFC Court allows a party to apply for interim relief before arbitral proceedings have even started, and it schedules a review hearing at the point of granting relief. Under the AIFC Arbitration Regulations 2017, Articles 17 and 27, this dual-track system is expressly preserved. Domestic Kazakh courts can only grant interim measures after proceedings commence, and freezing orders can remain in place for up to six to eight months without readily available discharge.

    Will a foreign arbitral award be enforced in Kazakhstan?

    Kazakhstan is a party to the New York Convention, so foreign arbitral awards are in principle enforceable. In practice, Kazakh courts generally require the debtor to have a registered address or presence in Kazakhstan before granting enforcement. This has been the prevailing approach, though enforcement has been achieved in some cases without it. The position should be assessed carefully based on the facts.

    What law does the AIFC Court apply?

    The AIFC Court applies English common law as its primary reference point. Where a legal question is not resolved by AIFC legislation or rules, the court turns to English law. It will also take into account decisions from other common law jurisdictions, including Singapore, Hong Kong, and Australia. Full details of the court’s legal framework are available at court.aifc.kz.

    How does the enforcement of Russian judgments in Kazakhstan affect sanctions compliance?

    Russian entities unable to enforce in European courts have been seeking enforcement in Kazakhstan. If a UK-based adviser or party is involved in such proceedings, they need to assess whether acting in connection with the Russian judgment or entity raises issues under the UK sanctions regime. Whether a relevant OFSI licence is required will depend on the specific facts, the identity of the parties, and the nature of the underlying transaction. OFSI guidance is available at gov.uk/ofsi.

  • What UK Businesses Need to Know About Secondary Sanctions on China

    What UK Businesses Need to Know About Secondary Sanctions on China

    The 2026 sanctions on China – update

    The UK’s approach to China sanctions has shifted significantly over the past two years. Where the UK once confined its China-related sanctions to a handful of entities linked to human rights abuses or cyber threats, it now regularly designates Chinese companies under the Russia sanctions regime for facilitating circumvention of export controls and supplying restricted goods. This represents a form of secondary-style sanctions: measures directed at third-country entities whose activities support a primary sanctions target.

    This approach sits within the Government’s broader “Protect-Align-Engage” framework for managing the UK-China relationship, articulated in the 2023 Integrated Review Refresh. That framework acknowledges China’s economic importance while committing to robust action against threats to national security. The February 2026 sanctions package is the clearest expression yet of how the “Protect” pillar operates in practice. The UK Government sanctioned 240 entities, seven individuals, and 50 ships on 24 February 2026, the fourth anniversary of Russia’s full-scale invasion of Ukraine. Among the designated entities were Chinese companies, including Xiefeng (HK) International Electronics, Yibin Vector Electronic Technology, Beijing Xichao International Technology, and Shandong Future Robot, each accused of supplying goods or technology to Russia’s defence sector.

    Sanctions framework and primary legislation

    The Sanctions and Anti-Money Laundering Act 2018 (SAMLA) provides the statutory basis for UK sanctions regimes. It empowers ministers to make, amend, and revoke sanctions regulations by statutory instrument. The principal instrument relevant to China-related designations is the Russia (Sanctions) (EU Exit) Regulations 2019, as amended.

    A critical development came with the Russia (Sanctions) (EU Exit) (Amendment) (No. 3) Regulations 2024, which came into force on 31 July 2024. These regulations materially broadened the criteria for designation. New regulation 6(4)(f) allows the Secretary of State to designate any person “providing financial services, or making available funds, economic resources, goods or technology” to a person already falling within the existing designation criteria. This expansion enabled the UK to designate foreign entities, including Chinese companies acting as supply chain intermediaries, without establishing a direct connection to the Russian state. It also captured those engaged in circumvention or facilitation of sanctions breaches, even where their activities took place entirely outside UK territory.

    Since 28 January 2026, the UK Sanctions List maintained by the Foreign, Commonwealth and Development Office (FCDO) is the sole official source for designations. The former OFSI Consolidated List of Asset Freeze Targets has been retired. Businesses must ensure their screening systems draw exclusively from the UK Sanctions List.

    Secondary sanctions on China

    The UK designates Chinese entities through asset freezes under the Russia sanctions regime. The mechanism operates by identifying companies acting as circumvention hubs for restricted goods, particularly dual-use electronics, machine tools, microprocessors, and components used in weapons systems.

    The trajectory of designations over 2025 and 2026 illustrates the acceleration. In February 2025, the UK designated eleven Chinese entities as part of its largest sanctions package at that time, including ACE Electronic (HK) Co Ltd, GSK CNC Equipment Co Ltd, and Poly Technologies Inc, for supplying machine tools, microelectronics, and dual-use technology to Russia’s defence sector. In December 2025, a separate set of cyber-related designations targeted Sichuan Anxun Information Technology Co Ltd (known as i-Soon) and Integrity Technology Group for carrying out indiscriminate cyberattacks against government and private-sector IT systems worldwide.

    Then came the February 2026 package, which added a further tranche of Chinese companies to the UK Sanctions List for their roles in supplying the Russian military-industrial complex.

    Beijing’s response has been consistent and sharp. The Chinese Ministry of Commerce stated in March 2026 that the UK has “repeatedly imposed sanctions on Chinese companies under the pretext of Russia-related issues” and described them as “unilateral sanctions that lack a basis in international law.” It warned that China would “take necessary measures to safeguard its business interests.” The Chinese Embassy in London issued similar protests in October and December 2025.

    Enforcement and regulatory bodies

    Two principal bodies enforce UK sanctions: OFSI and OTSI.

    The Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, is responsible for implementing and enforcing financial sanctions in a civil capacity. It has the power to impose civil monetary penalties of up to the greater of £1,000,000 or 50 per cent of the estimated value of the breach. In January 2026, OFSI published a penalty notice imposing a £160,000 fine on Bank of Scotland for breaching regulations 11 and 12 of the Russia (Sanctions) (EU Exit) Regulations 2019 by processing 24 transactions for an account belonging to a designated person. The bank benefited from a 50 per cent discount for voluntary disclosure.

    The new discount structure introduced by the Office of Financial Sanctions Implementation (OFSI) in February 2026 significantly reforms the calculation of civil monetary penalties. While the headline discount for voluntary disclosure has been reduced, the new framework allows for cumulative discounts that can reduce a baseline penalty by up to 70 per cent.

    The Office of Trade Sanctions Implementation (OTSI), part of the Department for Business and Trade (DBT), became operational in October 2024 and is responsible for the civil enforcement of trade sanctions. OTSI works in parallel with HMRC, which retains responsibility for criminal enforcement of trade sanctions and for export controls relating to physical exports and imports. OTSI’s regulatory reach extends beyond UK borders to UK businesses and traders operating abroad.

    Critically, the UK’s sanctions enforcement regime operates on a strict liability basis. Civil penalties can be imposed without requiring proof that the business knew, or had reasonable cause to suspect, that it was in breach of sanctions. This applies to both OFSI and OTSI enforcement.

    Case law and legal precedents

    Two recent legal developments are particularly relevant to businesses assessing their sanctions exposure.

    In Fridman v Agrofirma Oniks LLC EWCA Civ 139, the Court of Appeal held that the English courts lack personal jurisdiction over a sanctioned person who is indefinitely barred from entering the UK. Mr Fridman, designated under the Russia Regulations in March 2022, had his leave to remain cancelled, and the Court found that his absence from the jurisdiction could not be regarded as “temporary.” The claimants would need to apply for permission to serve proceedings out of the jurisdiction. This ruling has practical consequences for anyone seeking to bring claims against sanctioned individuals formerly resident in England.

    On damages for wrongful designation, the Economic Crime (Transparency and Enforcement) Act 2022 amended SAMLA to cap damages in designation challenge proceedings. The Sanctions (Damages Cap) Regulations 2022 set the cap at £10,000, and damages are only available where the claimant proves that the designation was made in bad faith. The cap may be disapplied where necessary to protect the individual’s Convention rights, but the threshold remains deliberately high. This significantly limits the Government’s financial exposure to claims arising from designation decisions.​

    How can UK businesses ensure compliance?

    Having spent many years advising clients on sanctions law, it is clear to me that sanctions compliance in 2026 demands more than periodic screening against the UK Sanctions List. Businesses with any exposure to Chinese counterparties, supply chains, or intermediaries should consider the following measures:

    • Conduct enhanced due diligence (EDD) on ownership and control structures. OFSI’s February 2026 call for evidence highlights that assessing whether a designated person exercises, or could exercise, control over an entity remains one of the most challenging areas for compliance teams. Firms should not rely solely on corporate registry data but should investigate the full chain of beneficial ownership.
    • Map supply chains to identify opaque intermediaries in third countries or overseas territories that may be routing goods or technology to China and onward to Russia. OTSI’s guidance on circumvention red flags provides a useful starting point for freight, shipping, and manufacturing businesses.​
    • Report suspected breaches to OFSI or OTSI “as soon as practicable.” For firms subject to mandatory reporting obligations, prompt disclosure carries material benefits: Bank of Scotland’s penalty was reduced by 50 per cent because it self-reported promptly.
    • Monitor the UK Sanctions List in real time. With designations issued at irregular intervals and sometimes with little advance notice, businesses cannot rely on monthly or quarterly screening cycles. Automated screening tools that draw directly from the FCDO’s UK Sanctions List are essential.​
    • Train staff at all levels to recognise sanctions risk indicators, particularly those working in procurement, trade finance, payments, and export compliance. The strict liability standard means that a lack of awareness is not a defence.​

    Wrapping up

    The UK’s willingness to designate Chinese entities under the Russia sanctions regime shows no sign of slowing. Designation volumes have increased markedly in each successive package, enforcement infrastructure through OFSI and OTSI is maturing, and the regulatory focus on ownership and control is intensifying. Businesses that trade with Chinese counterparties, source components from Chinese suppliers, or operate in sectors with complex international supply chains face a higher compliance burden than at any point since SAMLA came into force.

    My clients who have developed the most effective response view their compliance programme relating to sanctions risks as dynamic rather than static. They monitor the UK Sanctions List continuously, apply robust due diligence to ownership structures, and adapt swiftly to new designations.

    If you have a business with significant China exposure, taking specialist legal advice is the best way to ensure your commercial decisions remain lawful under an ever-expanding sanctions regime.

    Frequently asked questions

    Has the UK imposed direct sanctions on China as a country?

    No, the UK has not imposed a country-wide sanctions regime against China. The designations of Chinese entities have been made under the Russia sanctions regime (and, separately, the cyber sanctions regime). They target specific companies and individuals identified as facilitating Russia’s war effort or conducting hostile cyber operations, rather than Chinese commerce as a whole.

    Can a UK business be penalised for a sanctions breach it did not know about?

    Yes, the UK’s sanctions enforcement regime operates on a strict liability basis. OFSI and OTSI can impose civil monetary penalties without establishing that the business knew or had reasonable cause to suspect that a breach had occurred. This makes robust screening and due diligence essential for all UK businesses.

    What is the UK Sanctions List and how has it changed?

    Since 28 January 2026, the UK Sanctions List maintained by the FCDO is the sole official source for UK sanctions designations. It replaced the previous dual-list system, which included the OFSI Consolidated List of Asset Freeze Targets. Businesses must ensure that their compliance systems now draw exclusively from the UK Sanctions List.

    What should a business do if it suspects a sanctions breach?

    Report the suspected breach to OFSI (for financial sanctions) or OTSI (for trade sanctions) as soon as practicable. Prompt voluntary disclosure can result in a significant reduction in any penalty. Bank of Scotland received a 50 per cent discount on its penalty for self-reporting. Businesses should also seek specialist legal advice before taking any further steps in connection with the relevant transaction.

    How has China responded to UK sanctions on Chinese companies?

    China has consistently condemned the designations. The Chinese Ministry of Commerce described them in March 2026 as “unilateral sanctions that lack a basis in international law” and warned that China would “take necessary measures to safeguard its business interests.” China’s Anti-Foreign Sanctions Law of the People’s Republic of China also provides a legal framework for retaliatory measures against foreign sanctions. However, China has so far confined its response to diplomatic protests.

    To discuss any points raised in this article, please call us on +44 (0) 203972 8469 or email us at mail@eldwicklaw.com.

    This article does not constitute legal advice. For further information on Sanctions and China related enquiries, please contact our London office.

  • Upcoming Event – How Arbitration Friendly is Kazakhstan?

    Upcoming Event – How Arbitration Friendly is Kazakhstan?

    Rashid Gaissin will be co-moderating the “How Arbitration Friendly is Kazakhstan?” event, hosted by Latham & Watkins in association with the CIArb London Branch and the British-Kazakh Law Association.

    This event will bring together leading practitioners to discuss the evolving arbitration landscape in Kazakhstan and its attractiveness as a dispute resolution hub. It promises to offer valuable insights for professionals involved in international arbitration and cross-border disputes.

    Invitation document on Linkedin

  • Drafting and Enforcement Jurisdiction Clauses in International Contracts

    Drafting and Enforcement Jurisdiction Clauses in International Contracts

    A jurisdiction clause is a contractual provision that specifies which court has authority to resolve disputes between the parties. In cross-border commerce, where multiple legal systems may claim a connection to a transaction, these clauses provide the certainty that commercial parties need. Without one, a party may find itself defending proceedings in an unexpected or hostile forum, facing unfamiliar procedural rules and high additional costs.​

    The risk of so-called “torpedo” litigation, where a party pre-emptively commences proceedings in a slow-moving court to frustrate the other side’s claims, makes careful drafting essential. The High Court of Justice and the Commercial Court in London enjoy a global reputation for judicial independence, procedural rigour, and expertise in complex commercial matters. For these reasons, parties to international contracts frequently choose England and Wales as their forum for dispute resolution.

    Types of jurisdiction clauses

    There are three principal forms of jurisdiction clause used in international commercial contracts, each with different consequences for enforcement.

    Exclusive jurisdiction clauses

    These require both parties to bring proceedings only in the courts of England and Wales. They provide maximum certainty and, critically, trigger the protections of the 2005 Hague Convention on Choice of Court Agreements. Under that Convention, contracting states must give effect to the parties’ chosen court and refuse jurisdiction where proceedings are brought elsewhere in breach of the agreement. In Donohue v Armco Inc [2001] UKHL 64, the House of Lords confirmed that where parties have bound themselves by an exclusive jurisdiction clause, effect should ordinarily be given to that obligation in the absence of strong reasons for departing from it.

    Non-exclusive jurisdiction clauses

    These allow one or both parties to bring proceedings in England and Wales, while preserving the right to commence proceedings in another competent court. They offer flexibility but, until recently, lacked a clear international enforcement framework following Brexit.

    Asymmetric (or unilateral) jurisdiction clauses

    These are common in finance transactions. They typically allow one party (usually a lender) to sue in any competent court while restricting the other to a specified jurisdiction. In Commerzbank AG v Liquimar Tankers Management Inc [2017] EWHC 161 (Comm), the English Commercial Court upheld the validity of an asymmetric clause and treated it as an exclusive jurisdiction agreement for the purposes of the Brussels Recast Regulation. Practitioners should be aware, however, that some civil law jurisdictions have historically viewed asymmetric clauses with scepticism. The French Cour de cassation in Mme X v Société Banque Privée Edmond de Rothschild (2012) appeared to decide that such clauses were ineffective. However, the CJEU subsequently upheld their validity in EU law.

    The European Bank for Reconstruction and Development (EBRD) uses what is, in substance, an asymmetric dispute resolution clause in its standard loan documentation. The EBRD’s model provisions typically require the borrower to submit to a specified dispute resolution mechanism, such as LCIA arbitration seated in London, whilst reserving to the EBRD (or its co-lenders) the right, at their election, to refer disputes instead to the exclusive jurisdiction of the courts of England and Wales. The EBRD may also commence proceedings in any other court of competent jurisdiction and take concurrent proceedings in multiple jurisdictions. This structure, which mirrors the Loan Market Association (LMA) standard form, reflects the commercial reality of development finance: the lender requires maximum flexibility to enforce its rights wherever the borrower’s assets may be located, whilst the borrower accepts a single, predictable forum. Practitioners drafting jurisdiction clauses in EBRD-financed transactions should ensure that any asymmetric provisions are consistent across all finance documents, including intercreditor agreements and security documentation.

    Drafting best practices

    In my experience, precision in language is the single most important factor in drafting an effective jurisdiction clause. When I draft clauses, I ensure they refer to “the Courts of England and Wales” rather than vague formulations such as “UK Courts” or “a friendly jurisdiction.” This is important because the UK comprises three separate legal jurisdictions (England and Wales, Scotland, and Northern Ireland), and imprecise wording can create genuine ambiguity about which court system the parties intended.​

    I also ensure that the scope of the clause is broad enough to capture the full range of potential claims. A formulation such as “any dispute arising out of or in connection with this contract, including any question regarding its existence, validity, or termination” will cover both contractual and non-contractual claims, such as tortious or restitutionary claims arising from the same relationship.

    In addition, appointing a process agent in England is strongly advisable where one or more parties are domiciled abroad. Without a process agent, a claimant may face the expense and delay of seeking the court’s permission to serve proceedings overseas under the Civil Procedure Rules (CPR). Since April 2021, CPR 6.33(2B)(b) provides that permission is not required to serve a claim form out of the jurisdiction where jurisdiction is founded on any choice of court agreement in favour of the courts of England and Wales, but practical difficulties in effecting service abroad can still cause significant delay.

    Finally, all contractual terms relating to jurisdiction must be consistent. In multi-document transactions, conflicting jurisdiction terms in standard terms, purchase orders, or invoices can give rise to “battle of the forms” arguments. I ensure that any jurisdiction clauses are clearly identified and cross-referenced across all relevant documents.

    The enforcement framework post-Brexit

    The UK’s departure from the EU meant that the Brussels Recast Regulation and the Lugano Convention ceased to apply. This created uncertainty about how English judgments would be enforced in EU member states, and vice versa. The enforcement framework is now built on two international conventions and, where those do not apply, on common law rules.​

    The 2005 Hague Convention on Choice of Court Agreements is the primary vehicle for enforcing English judgments in contracting states where the underlying contract contained an exclusive jurisdiction clause concluded after 1 January 2021. It requires the chosen court to exercise jurisdiction and obliges courts in other contracting states to refuse to hear the case and to recognise the resulting judgment.

    The Hague Judgments Convention 2019, which entered into force in the UK on 1 July 2025, closes a significant gap. It applies to judgments arising from proceedings commenced on or after that date, and its scope expressly includes non-exclusive and asymmetric jurisdiction clauses, while excluding exclusive clauses to avoid overlap with the 2005 Convention. The Convention has been implemented into UK law through amendments to the Civil Jurisdiction and Judgments Act 1982. As of early 2026, contracting states include the EU (except Denmark), Ukraine, Uruguay, Albania, and (from March 2026) Montenegro.

    Where neither Convention applies, enforcement of English judgments abroad depends on the domestic law of the relevant foreign state. In some jurisdictions, this process is relatively straightforward; in others, it can be protracted and uncertain. Therefore, I conduct an enforcement risk assessment at the drafting stage, considering where the opposing party’s assets are located and which enforcement routes will be available in those jurisdictions.

    Practical challenges and remedies

    When a party commences proceedings in a foreign court in breach of a jurisdiction clause, the English courts have the power to grant an anti-suit injunction under section 37 of the Senior Courts Act 1981. This is an order restraining a party from pursuing or continuing foreign proceedings. In The Angelic Grace [1995]1 Lloyd’s Rep 87, Lord Millett stated that there is “no good reason for diffidence in granting an injunction to restrain foreign proceedings on the clear and simple ground that the defendant has promised not to bring them.” Breach of an anti-suit injunction constitutes contempt of court and carries the risk of significant fines, asset freezes, or even imprisonment.

    The doctrine of forum non conveniens, as established in Spiliada Maritime Corp v Cansulex Ltd 1 AC 460, allows a court to stay proceedings if the defendant establishes that another forum is “clearly or distinctly more appropriate.” If the defendant discharges that burden, the claimant may still resist a stay by demonstrating a real risk of being unable to obtain substantial justice in the alternative forum. Where an exclusive jurisdiction clause is in place, however, the court will ordinarily give effect to the agreement unless the party seeking to depart from it can show “strong reasons” for doing so.

    The recent decision in Alimov v Mirakhmedov [2024] EWHC 3322 (Comm) illustrates the Spiliada principles in action. The dispute arose from an alleged oral agreement concerning a bitcoin mining joint venture in Kazakhstan. Although the claimant established a plausible case that the agreement was formed in London, the Commercial Court stayed the proceedings on forum non conveniens grounds, finding that Kazakhstan was “clearly and distinctly more appropriate” than England. The court emphasised that the claims were governed exclusively by Kazakh law, that the parties had substantial connections to Kazakhstan, that the location of the relevant events and assets was in Kazakhstan, and that the majority of witnesses and documents were in Russian or Kazakh. The claimant’s connections to England were found to be relatively slight and insufficient to outweigh Kazakhstan’s strong links to the dispute. The court also found no cogent evidence of a real risk of substantial injustice in the Kazakh courts. Alimov v Mirakhmedov reinforces the principle that a tenuous jurisdictional hook, such as the location of a single meeting, will not suffice where the overwhelming weight of connecting factors points to a foreign forum.

    English courts also provide a strategic advantage through interim relief. Freezing orders (Mareva injunctions) can prevent a party from dissipating assets before judgment, and disclosure orders can compel the provision of information about assets worldwide. These remedies can be obtained rapidly, often on a without-notice basis, and are available to support both English and foreign or arbitration proceedings.

    Action points for those entering into international contracts

    Parties entering into international contracts should treat the jurisdiction clause as a core commercial term. The following practical steps will help protect their position:

    • Take legal advice before signing any contract containing a jurisdiction or governing law clause, particularly where the counterparty’s standard terms may include a competing clause.
    • Review existing contracts to ensure jurisdiction clauses are enforceable under the current Hague Convention framework. Pre-2021 exclusive clauses that pre-date the UK’s accession to the 2005 Convention may face enforceability challenges in some EU member states.
    • Conduct an enforcement risk assessment at the outset: identify where the opposing party’s assets are located and confirm that an English judgment can be enforced there, either under a Convention or under local law.
    • Ensure consistency between the jurisdiction clause and the governing law clause. Specifying the courts of England and Wales but choosing a foreign governing law, or vice versa, can create unnecessary complexity.
    • Act quickly if proceedings are commenced abroad in breach of the clause. Delay weakens the prospects of obtaining an anti-suit injunction and may be treated as acquiescence.​

    The outlook for English jurisdiction clauses

    The entry into force of the 2019 Hague Judgments Convention has materially strengthened England’s position as a forum for international commercial disputes. The gap left by Brexit for non-exclusive and asymmetric clauses is now substantially closed, and the Convention’s membership is expected to grow. As courts in contracting states begin to apply the Convention, a body of case law will develop, providing further clarity on its practical operation.​

    England and Wales continue to offer a combination of qualities that few jurisdictions can match: an independent and expert judiciary, a mature body of commercial law, powerful interim remedies, and a well-resourced enforcement framework. Practitioners should ensure that every international contract contains a clearly drafted jurisdiction clause, paired with an express governing law clause. Those two provisions, working together, remain the most effective means of securing commercial certainty in cross-border transactions.

    Frequently asked questions

    What is the difference between an exclusive and a non-exclusive jurisdiction clause?

    An exclusive jurisdiction clause requires both parties to bring any dispute only before the specified courts. A non-exclusive clause gives one or both parties the right to sue in the specified courts, but does not prevent proceedings elsewhere. Exclusive clauses offer greater certainty and benefit from the enforcement regime under the 2005 Hague Convention.

    Are asymmetric jurisdiction clauses enforceable in England and Wales?

    Yes, the English courts have consistently upheld asymmetric clauses. In Commerzbank AG v Liquimar Tankers Management Inc EWHC 161 (Comm), the Commercial Court confirmed their validity. It gave them the protection of an exclusive jurisdiction agreement under the Brussels Recast Regulation. Some civil law jurisdictions have historically taken a different view, so practitioners should check the position in relevant foreign courts.

    How does the 2019 Hague Convention improve the enforcement of English judgments?

    The 2019 Convention, in force in the UK since 1 July 2025, provides a framework for the recognition and enforcement of judgments between contracting states that covers non-exclusive and asymmetric jurisdiction clauses. Previously, the 2005 Convention covered only exclusive clauses, leaving a significant gap following Brexit for other types of jurisdiction agreements.

    What can I do if the other party starts proceedings abroad in breach of our jurisdiction clause?

    An application for an anti-suit injunction from the English courts is the primary remedy. This will order the other party to cease or refrain from commencing the foreign proceedings. The application should be made promptly, as delay can be fatal. Breach of the injunction amounts to contempt of court.

    Should I always pair a jurisdiction clause with a governing law clause?

    Yes, a jurisdiction clause determines where disputes are heard, while a governing law clause determines which legal principles the court applies. Without an express governing law clause, the court will apply its own conflict-of-laws rules to determine the applicable law, which may yield an unexpected result. Including both clauses ensures the court applies the substantive law the parties intended.

    To discuss any points raised in this article, please call us on +44 (0) 203972 8469 or email us at mail@eldwicklaw.com.

    This article does not constitute legal advice. For further information, please don’t hesitate to get in touch with our London office.

  • Infinni Innovations SA v OFMS Ltd & Ors [2026] EWHC 470 (Comm)

    Infinni Innovations SA v OFMS Ltd & Ors [2026] EWHC 470 (Comm)

    Eldwick Law acted for the Defendants in Infinni Innovations SA v OFMS Ltd & Ors [2026] EWHC 470 (Comm), in which Mr Justice Saini handed down judgment on 3 March 2026 following a three-day hearing in the Commercial Court.

    The dispute arises from the OnlyFans creator economy and the use of customer relationship management platforms by agencies to manage communications with subscribers on behalf of creators. The Claimant alleges that information was unlawfully accessed and extracted from its platform. The Defendants contest those allegations, relying on the position that agencies authorised the transfer of relevant material in the context of platform migration.

    The Court continued interim relief until trial but accepted that the terms of the injunction required refinement. In particular, the Court narrowed the scope of the restraints, recognising the importance of the practical consequences for parties beyond the immediate litigation, including agencies and creators operating within the OnlyFans ecosystem. The Court also declined to order the broad disclosure affidavit sought by the Claimant and instead directed affidavit evidence in a more limited form.

    The claim will now proceed towards trial.

    The judgment can be accessed at Infinni Innovations SA v OFMS Ltd & Ors [2026] EWHC 470 (Comm)

    Barristers’ update: Judgment handed down in Infinni Innovations SA v OFMS Ltd & Ors | Maitland Chambers