Tag: sanctions

How Sanctions Work in Three Moves

The coordinated sanctions offensive operates across three dimensions, each carrying distinct legal implications.

The first move is the direct designation of oil producers. When Lukoil was designated on 15 October 2025, any UK person or entity became prohibited from dealing with frozen Lukoil assets without specific authorisation from OFSI. The US followed on 22 October with OFAC blocking sanctions, whilst the EU imposed transaction bans. Wind-down general licences provided breathing room, but these have now expired (although some specific, tailored general licenses have been issued or extended for certain operations (e.g., specific oil projects, non-Russian retail stations, and certain EU-based subsidiaries) and these remain active into 2026 and, in some cases, beyond). December’s designation of Tatneft and other mid-tier producers extended the sanctions net further, signalling systematic targeting of Russia’s entire oil export infrastructure.

The second move weaponises market access. The January 2026 refining loophole ban prohibits the import of refined petroleum products from any refinery that processes Russian crude oil. Indian refiners have become major buyers of Russian crude since 2022, purchasing at steep discounts and exporting refined products to Europe. The ban presents these refiners with a binary choice: continue processing Russian crude and lose European markets or abandon Russian supply chains to preserve EU and UK access.

The third move targets logistics. Over six months, the UK has sanctioned 133 oil tankers that form Russia’s shadow fleet, the largest such action in Europe. Without access to insurance, port services, and mainstream maritime infrastructure, Russia’s export capacity is constrained by physical limitations.

Together, these measures create what one analyst described as a “strategic vice.” Direct company sanctions cut demand. The refining ban closes third-country workarounds. Maritime sanctions restrict physical transport. For Russian oil producers, the result is seaborne storage of stranded crude, discounts of $25 or more per barrel against the Brent benchmark, and potential shut-ins of 1.6 to 2.8 million barrels per day.

When Contracts Collide with Sanctions

The High Court’s decision in Litasco SA v Der Mond Oil and Gas Ltd [2023] EWHC 2866 (Comm) provides a starting point in relation to contractual disputes, though the case predates Lukoil’s own designation. Litasco, a Swiss oil trading company wholly owned by Lukoil, sued Der Mond for non-payment under an oil supply contract. Der Mond invoked sanctions and force majeure defences, arguing that Litasco should be treated as an extension of its designated parent.

The court rejected this reasoning. Mere ownership by a designated person does not, by itself, render a subsidiary designated by extension. There must be evidence that the designated person exercises routine control over the use of funds. This became known as the “control test.”

Now that Lukoil itself is designated, the calculus shifts. Subsidiaries fall squarely within the asset freeze provisions unless covered by a specific general licence. OFSI has issued such licences for certain Lukoil entities: one covering Lukoil’s Bulgarian subsidiaries (valid for three months and renewable), and another for Lukoil International GmbH and its subsidiaries. These licences permit “continuation of business as normal” regarding UK financial sanctions, providing temporary relief whilst sales negotiations proceed.

Yet the licences create their own complications. The three-month validity period introduces uncertainty. Parties negotiating long-term supply contracts face the risk that licences will expire mid-transaction. Renewal is not automatic. Each OFSI quarterly renewal decision becomes a pressure point.

Wind-down licences have expired. Transactions initiated under those licences but not completed before expiry dates now require specific OFSI authorisation. This has left “stranded contracts,” agreements caught mid-performance when licences lapsed.

Force majeure clauses face immediate pressure. Suppliers refuse delivery, citing illegality or sanctions-related impossibility. Buyers refuse payment, claiming sanctions prohibit processing payments to designated entities. The legal analysis turns on the precise wording of the clause and whether sanctions render performance illegal or merely more difficult and expensive.

Price adjustment provisions are being tested with equal intensity. Many long-term oil supply contracts link pricing to benchmark rates, typically Brent crude. With Russian Urals crude trading at discounts of more than $25 per barrel to Brent, existing contracts are under severe pressure. Material adverse change clauses, renegotiation provisions, and hardship doctrines are all invoked.

Arbitration Becomes the Terrain of Conflict

Dubai Arbitration Week 2025 featured extensive discussion of how major oil company designations reshape arbitration strategy. Tribunals seated in Dubai can hear both sides, maintain procedural integrity, and preserve potential enforceability whilst dealing with sanctions restrictions that might complicate access to London or Paris seats.

Yet UK practitioners must recognise that a Dubai seat does not eliminate UK sanctions risks. If a UK national serves as an Arbitrator or if a UK law firm represents a party, a UK nexus arises. The Arbitration Costs General Licence permits payments up to £500,000 per arbitration for Arbitrator and institution fees involving designated persons, but it does not cover legal services costs. These are governed by a separate “Legal Services” cap (often £1 million or a percentage of the dispute value), beyond which a specific OFSI licence is mandatory.

The £500,000 cap creates planning challenges. Complex energy disputes routinely exceed this threshold in terms of costs. Once reached, parties require specific OFSI licences for additional payments.

Barclays Bank plc v VEB.RF [2024] EWHC 2981 (Comm) illustrates how enforcement can be challenged. Barclays obtained an LCIA arbitration award against VEB.RF, a Russian state development bank, for $147.7 million. However, VEB.RF was designated under UK sanctions, so Barclays could not collect. VEB.RF subsequently breached the Arbitration Agreement by pursuing parallel Russian court proceedings.

Sanctioned Russian entities, facing arbitration awards they cannot satisfy due to frozen assets, increasingly resort to Russian court proceedings in defiance of Arbitration Agreements. Russia’s Article 248.1 of the Arbitration Procedural Code claims exclusive jurisdiction over disputes involving Russian entities subject to “unfriendly state” sanctions.

In Linde GmbH v RusChemAlliance LLC [2023] HKCFI 2409 and Renaissance Securities (Cyprus) Ltd v PJSC Prominvestbank [2023] EWHC 2816 (Comm), the courts upheld the Arbitration agreements and granted anti-suit injunctions restraining Russian court proceedings. For practitioners, when a sanctioned counterparty threatens or initiates Russian court proceedings in breach of an arbitration clause, the best route is to seek anti-suit injunctions promptly in arbitration-friendly jurisdictions.

The Refining Ban and Cascade Disputes

The January 2026 refining loophole ban introduces disputes rooted not in direct designation but in market exclusion. Indian refiners like Bharat Petroleum, Indian Oil Corporation, and Reliance Industries became significant buyers of Russian crude after 2022. The refining ban disrupts this equilibrium. Refiners importing refined products into the EU or UK must certify that the products were not derived from Russian crude oil.

Supply contracts with Russian oil exporters are at risk of termination or renegotiation. Force majeure provisions are invoked, with refiners claiming that EU and UK bans constitute supervening events preventing performance. Russian exporters counter that the bans target refinery operations, not crude oil purchases.

Buyers of refined products may pursue claims based on misrepresentation or breach of origin warranties. Trade finance disputes will follow: letters of credit involving misrepresented cargo origins, insurance claims, and documentary credit discrepancies will all lead to arbitration and/or litigation.

Sanctions analysts predict that Russian oil exporters will attempt to disguise the origin of their oil through ship-to-ship transfers, forged documentation, and complex trading chains. Disputes over certificates of origin, cargo inspection reports, and chain-of-custody documentation will proliferate.

Pricing disputes add another layer. With Russian Urals crude trading at discounts of more than $25 per barrel to Brent, existing long-term contracts are under pressure. Sellers receiving Urals-linked prices argue that the spread represents market reality. Buyers resist price adjustments, pointing to contractual terms.

What Practitioners Must Do Now

• Due diligence now extends beyond direct counterparties to entire supply chains. Lawyers must screen against the OFAC Specially Designated Nationals List, the EU Consolidated List, and the UK OFSI Consolidated List. For energy transactions, it is vital to examine shippers, insurers, refiners, and storage providers.

• For existing contracts, sanctions clauses must address the designation of counterparties themselves, not merely underlying transactions. Build in payment alternatives, recognising that traditional USD-denominated, SWIFT-routed payments may become unavailable.

• Arbitration clauses demand fresh analysis. Seat selection carries sanctions implications. Dubai offers procedural accessibility but may complicate enforcement in Western jurisdictions. London provides robust enforcement mechanisms but introduces UK sanctions compliance obligations.

• For existing disputes, verify whether wind-down licences have been applied and confirm their expiry dates. If a counterparty is Lukoil or Tatneft, check whether specific general licences exist. These provide temporary safe harbours but introduce quarterly uncertainty.

The October and December 2025 designations, combined with the January 2026 refining ban, mark a shift in enforcement strategy. Previous sanctions targeted specific transactions or individuals. Current measures dismantle the infrastructure of the Russian oil trade itself. For dispute resolution practitioners, this is not a future risk. The instructions are arriving now, reflecting contract breakdowns, arbitration triggers, and enforcement challenges across jurisdictions. Understanding the interplay between asset freezes, general licences, arbitration frameworks, and enforcement strategies has become an essential practice.

Waleed’s Interview at LBC News

A clip of Waleed’s interview at
LBC News with John Stratford.
The full episode can be found here.

What happened this week

The money sits in a British bank account like a sealed room that everyone can point to, and nobody can enter. More than £2.5bn, raised when Mr Roman Abramovich sold Chelsea Football Club in 2022, has remained frozen ever since, caught between sanctions law, diplomacy, and a promise that never turned into a transfer.​

This week, the government decided to change the tempo. In a press release, the Chancellor and the Foreign Secretary issued Mr Abramovich a final opportunity to release the funds for humanitarian causes in Ukraine, warning that the UK is prepared to pursue court action if he fails to act.

Prime Minister, Keir Starmer said:

“The clock is ticking on Roman Abramovich to honour the commitment he made when Chelsea FC was sold and transfer the £2.5 billion to a humanitarian cause for Ukraine.

This government is prepared to enforce it through the courts so that every penny reaches those whose lives have been torn apart by Putin’s illegal war.”

Can the British Government force Mr Abramovich to hand over the money from the Chelsea sale?

The mechanism matters. The government says an OFSI licence has been issued to permit the transfer of the proceeds, once a charitable foundation is established to receive and distribute them. Under the licence terms described by ministers, the proceeds must go to humanitarian causes in Ukraine. Any future gains earned by the foundation could support victims of conflict worldwide, but the money cannot benefit Abramovich or any other sanctioned person.

Behind the brisk language sits a dispute about meaning as much as money. Abramovich pledged the sale proceeds would help “all victims” of the war. The government has held the line that this means humanitarian support inside Ukraine. Several outlets also note the legal awkwardness: freezing is straightforward, forcing a sanctioned owner to direct property in a particular way is much harder. As I told LBC Radio, the key question is “what was agreed between Mr Abramovich between the short time he was designated under UK sanctions law in March 2022, and the sale of Chelsea Football Club in May of the same year?”

Why does the British Government want Mr Abramovich’s funds released?

The Government’s case rests on both urgency and principle. The press release cites UN estimates that 12.7 million people in Ukraine need humanitarian support, and notes a 2025 UN and partners appeal of $3.32bn for humanitarian and refugee response plans.

There is another tension, quieter but significant. Reporting suggests the full £2.5bn may not be cleanly available once historic loans connected to Abramovich’s Chelsea ownership are accounted for. Even if a foundation forms quickly, the amount available for it could be considerably reduced.​

I told LBC Radio that the Government is likely well aware its legal position regarding forcing Mr Abramovich to transfer the money to the charitable foundation is shaky. This is primarily because the UK sanctions regime is coercive but does not provide powers to confiscate property, unlike the Proceeds of Crime Act 2022 (POCA). Assets can be frozen, but they remain ultimately the property of the owner.

Final words

The question of whether the Government can force Mr Abramovich to transfer the funds from the Chelsea Football Club sale to a foundation to help Ukrainian people who have suffered due to the ongoing war with Russia depends on the terms of the licence and the agreement made at the time of the sale. Although the Ukrainian people’s need for humanitarian aid is critical, any measures to deal with Mr Abramavich’s assets must comply with the sanctions regime and property law, and must maintain the integrity of the rule of law itself.

FAQs

What did the UK government actually do this week?

It issued an OFSI licence intended to allow the transfer of Chelsea sale proceeds to a new charitable foundation for humanitarian support in Ukraine. It warned of court action if Mr Abramovich does not co-operate.

Why has the money been frozen since 2022?

Mr Abramovich was sanctioned after Russia’s full-scale invasion of Ukraine, and the proceeds from the Chelsea sale have remained in a frozen UK bank account under the sanctions regime.​

Why does the government insist the funds must be spent in Ukraine?

Ministers say the licence requires the proceeds to go to humanitarian causes in Ukraine and frame this as fulfilling the 2022 agreement around the sale and the pledge attached to it.​

What happens if Mr Abramovich refuses?

The government says it will consider all options, including pursuing the matter in court, though reporting notes uncertainty about how such a case would operate in practice.​

Is it definitely £2.5bn that would reach Ukraine?

Not necessarily. Reporting suggests corporate loans linked to Abramovich-era Chelsea structures could affect what is immediately available, even though the headline proceeds figure remains £2.5bn.​

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 contact our London office.

Background

Following Russia’s invasion of Ukraine in February of 2022, the UK has implemented an extensive regime of sanctions and export controls, restricting Russia’s access to goods required to sustain its military operation. In response, Russia has taken increasingly complex steps in an effort to evade sanctions by the UK and its partners.

Under Regulation 55 of The Russia (Sanctions)(EU Exit) Regulations 2019, knowing participation in direct or indirect circumvention of the UK’s prohibitions is a criminal offence.

Given the UK’s extensive financial footprint and involvement in global supply chains, the shipping and freight industry is particularly vulnerable. The Guidance is therefore addressed to “freight forwarders, carriers, hauliers, customs intermediaries, postal and express operators, and other companies facilitating the movement of goods.”

Means of Circumvention

The Guidance highlights a number of such complex means of evasion potentially being employed. Key modes of circumvention identified by the Guidance include:

• Third countries: shipments to neighbouring third countries may facilitate Russia’s access to sanctioned goods. Additional due diligence should be employed particularly where the destination country borders Russia, and has not imposed sanctions against them. The use of unreasonably complex shipping routes, or the avoidance of established ports is another potential indicator.
• Use of Shell Companies: Procurement entities may attempt to use a shell company as a purchasing front for sanctioned goods. Companies should therefore be wary of unusual customers, transactions that inexplicably involve multiple parties based in third countries, and unsolicited approaches to ship goods from the UK. Financial inconsistencies such as dubious modes of payment should also be investigated.
• Deceptive labelling and side-stepping customs: concealing the consignment may be a means of attempting to evade sanctions. This may be done through false or incomplete descriptions of goods, or shipping parts of a product in smaller quantities that fall under export control limits. Businesses should be wary of unusual or inconsistent shipment quantities and vague descriptions.

Steps Advised for Compliance

Businesses within the industry are expected to take pro-active measures to combat attempts to evade sanctions. A holistic assessment of each transaction should be conducted, which can include the following:

• Due diligence: businesses are advised to conduct enhanced due-diligence of consignments, customers, and transactions where indicators of evasion are found. This involves pre-screening of customers, screening consignments and accompanying paper work, and conducting regular checks even with established trading partners. While any one of the above warning signs is not concrete evidence of circumvention, the Guidance sets out the expectation of independent research and prompt steps to address a sanctions risk.
• Policy revisions to mitigate risk: Postal and express deliveries are advised to publish a ‘sanctioned goods policy’. Businesses across the shipping and freight sector would benefit from adding sanction-specific clauses to the terms and conditions, and any contracts of carriage.   
• Supply chain investigation: shipping and freight businesses should clarify the role and involvement of suspicious third-parties. They should ensure that intermediaries and brokers have no involvement in prohibited activities.

Implications

The Guidance sets out a clear expectation for businesses in the shipping and freight industry to remain wary of circumvention red flags, and investigate such transactions promptly. Businesses should remain familiar with any amendments to the UK’s Consolidated Sanctions List, and the Russia (Sanctions)(EU Exit) Regulations 2019. Breach of trade sanctions may result in enforcement actions including criminal prosecution or civil monetary penalties.

The Guidance can be found here: Countering Russian sanctions evasion: guidance for the freight and shipping sector – GOV.UK

The High Court has ordered that Standard Chartered, the high-profile global bank, must hand over documents related to communications with US and Singaporean regulators. In doing so, it dismissed the company’s argument that it faced criminal prosecution if it disclosed the information to investors.

Standard Chartered is currently embroiled in a £1.5 billion claim. Investors accused it of concealing critical information concerning sanctions breaches involving Iran. At issue were crucial regulatory disclosures and whether they were misleading or incomplete.

Why does this matter? Because clear, accurate disclosure underpins investor rights, market integrity, and confidence in financial markets. Therefore, the ruling in Various Claimants v Standard Chartered PLC ordering disclosure provides clarity for investors in England and Wales who have investments in companies caught up in allegations of breaching UK, US, EU, or UN sanctions.

Background: The Standard Chartered Sanctions Scandal

Standard Chartered has made headlines in recent years for breaching Iran sanctions, prompting hefty fines from US and UK regulators. The bank was penalised for processing transactions that violated anti-money-laundering rules tied to Iranian interests. These incidents severely damaged its reputation and triggered internal regulatory overhauls.

Between 2007 and 2019, StanChart issued investor communications, including prospectuses, that glossed over the real extent of its sanctions exposures. Those documents formed the backbone of investor expectations and are now the basis of legal claims.

The Claimants and Their Allegations

The claimants represent a coalition of more than 200 institutional investors, totalling around 1,400 funds. Their case is straightforward but far-reaching: they allege that Standard Chartered issued prospectuses and other disclosures that were untrue or misleading, failing to disclose regulatory breaches and thereby distorting investor understanding.

The essence of the claim is based on “common reliance” or “fraud on the market” theory. In short, this doctrine provides that if a company makes a false or misleading statement that affects its share price, investors who bought or sold shares during that time can bring a civil claim against the company. Critically, the investors do not have to have read the documents containing the misleading statement themselves to claim reliance. What matters is that the misleading statement influenced the share value.

Standard Chartered’s legal arguments

Standard Chartered resisted disclosure at every turn, arguing that giving up certain documents would breach confidentiality duties and expose it to prosecution in the US and Singapore. Among the most sensitive materials were internal regulatory reports and communications with foreign authorities.

The Civil Procedure Rules, Part 31, however, sets a firm test for disclosure. Documents are disclosable if they are relevant, in the party’s control, and not protected by privilege or confidentiality, such that non-disclosure would be just. The question for the court was – did legitimate privilege exist, or was this a shield against presenting inconvenient evidence?

Judge Green’s Analysis and Ruling

Judge Green delivered a firm answer. The asserted risk of prosecution abroad was found exaggerated, and there was no credible threat in the US or Singapore that could justify non-disclosure. The judge concluded that public policy favours disclosure in the interest of justice and the effective conduct of civil litigation.

Ultimately, the court ordered full disclosure of the documents at issue, rejecting confidentiality claims in this context. The ruling underscores that confidentiality cannot be used to avoid presenting documents if, under the Civil Procedure Rules, transparency is clearly warranted.

What does the decision in Various Claimants v Standard Chartered PLC mean in practice?

This case marks a critical moment for common reliance or fraud on the market claims in England and Wales. Unlike the US, where such claims are well established, English courts have traditionally been cautious. The StanChart ruling gives new credibility to such claims, making them more viable and reinforcing investor protection.

Previously, StanChart unsuccessfully attempted to strike out nearly half the claimants’ cases, which the court rejected. That decision showed the English courts’ willingness to allow such group claims to proceed.

The potential liability for Standard Chartered is enormous, as a £1.5 billion claim is not merely symbolic. Prior fines and reputational damage leave the bank in a highly precarious position.

The ruling sends a clear message to regulators and boards: transparency matters, and failure to secure it can result in both financial cost and erosion of market trust.

What Happens Next?

With disclosure ordered, the case moves into a crucial phase: reviewing the revealed documents, testing their impact, and preparing for trial. Standard Chartered may still seek an appeal, though its narrow window of confidentiality exception has been severely curtailed.

Conclusion

This case is a powerful reminder that transparency and accountability are not optional. The courts have taken a firm stand that excuses cannot justify withholding critical information in a civil fraud claim. For investors, it offers renewed hope that legal recourse remains alive where misstatements or omissions occur.

FAQs

What is a “common reliance” or “fraud on the market” claim?

A legal theory where investors sue on the grounds they relied on public statements that were misleading. They need not prove personal reliance if the statements inflated the market as a whole.

Why did Standard Chartered want to withhold documents?

The bank claimed confidentiality and risk of foreign prosecution, particularly in the US and Singapore, as reasons not to disclose internal and regulatory materials.

What did Judge Green decide about confidentiality?

He ruled that the alleged prosecution risk was exaggerated and that confidentiality did not outweigh the importance of disclosure in civil justice.

What does this mean for future investor litigation in England and Wales?

It strengthens the standing of group investor claims, particularly those based on omissions or misleading disclosures, opening a door for broader securities litigation.

How should financial institutions respond?

They should review and enhance disclosure controls, ensuring investor communications are accurate, complete, and defensible, especially in multi-jurisdictional claims.

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

Note: This article does not constitute legal advice. For further information, please contact our London office.

VTB Capital PLC v Continental Capital Markets Ltd

The yet to be decided case of VTB Capital PLC v Continental Capital Markets Ltd (case number LM-2025-000237), which concerns settling securities trades for a sanctioned Russian company, illustrates how sanctions can result in costly legal disputes concerning contractual non-performance.

The decision in VTB Capital PLC v Continental Capital Markets Ltd will provide strong indications about how the High Court will interpret the ongoing obligations of contractual parties when one party and their affairs are affected by international sanctions. This is incredibly important for businesses, which require certainty when it comes to entering into cross-border contracts.

Background of the Case

VTB Capital PLC (VTB) is the UK arm of VTB Bank, one of Russia’s largest financial institutions. Continental Capital Markets Ltd (CCM) was a London-based brokerage firm specialising in settlement services for securities transactions.

The two parties had entered into a contract in which CCM was to perform trades in Russian securities. The contract was entered into before Russian sanctions were put in place. However, trades were due for settlement after the UK, EU, and US tightened restrictions on Russian banks. VTB claims CCM owes around $3.4 million for the trades that were left unsettled.

The timeline leading up to the dispute is as follows:

• Pre February 2022 – Trades executed without controversy.
• February 2022 onwards – Invasion of Ukraine prompts coordinated sanctions.
• Post-sanctions – VTB’s UK operations restricted, accounts frozen, and financial institutions forced to reassess obligations.
• VTB brings a claim against CCM, alleging breach of contract.

The Impact of Sanctions

Although financial sanctions are designed to injure the country or persons connected with a particular State, they can and do cause considerable commercial upheaval and uncertainty.

For VTB, the sanctions meant its accounts were frozen. The bank was barred from receiving payments or settling trades without UK government authorisation. Similar restrictions applied across Europe and the United States, creating uncertainty for contractual parties such as CCM.

In practical terms, trades lawfully executed before Russia invaded Ukraine and sanctions imposed could not be settled afterwards. The result was millions of dollars in suspended transactions, leaving brokers and banks exposed to financial and legal risk.

This is a textbook example of how international sanctions can affect investment bankers, forcing them to weigh contractual obligations against compliance with sanctions law.

What are both parties’ legal arguments?

There are three interlocking concepts: illegality, frustration, and sanctions licences.

VTB position:

• CCM owes $3.4 million under trades executed before the sanctions.
• Performance was still possible under an OFSI general licence granted in  February 2022, which permitted certain wind-down activities.
• VTB expressed a “clear intention” to fulfil its obligations under the contract and argued that sanctions did not extinguish CCM’s duty to perform the trades in question.

CCM’s defence:

• Performance of the trades was illegal under UK sanctions law without specific licences that were not available at the time.
• The contracts were frustrated, meaning events outside the parties’ control made performance impossible.
• Even where licences existed, they were limited and temporary, designed for winding down positions rather than creating new obligations.
• Any payment would result in an overall loss rather than profit, since the resale of securities linked to VTB was effectively blocked.

What are the implications of the High Court’s decision in VTB Capital PLC v Continental Capital Markets Ltd?

The case before the High Court will hopefully clarify the following questions:

• Can UK sanctions imposed under the Sanctions and Anti-Money Laundering Act 2018, frustrate contracts or simply suspend them until licences permit performance?
• To what extent should the court prioritise commercial certainty when governments impose sanctions?

To mitigate the risks of contract disputes developing, due diligence needs to be undertaken when entering into commercial contracts where one party is based, or is a subsidiary of a company based in a volatile region. An experienced Commercial and Sanctions Law Solicitor can assess the risks, including whether the scope of existing OFSI licences will allow ongoing performance. In addition, they can draft effective force majeure and frustration of contract clauses to protect their client’s interests.

Wrapping up

The High Court’s decision in VTB Capital PLC v Continental Capital Markets Ltd is highly anticipated. However, given the sums involved, certainty may remain elusive whilst the inevitable appeals proceed.

We will keep you updated as more information comes to light.

FAQs

What is the VTB Capital v Continental Capital Markets case about?

It concerns unsettled Russian securities trades worth around $3.4 million. VTB sued CCM for payment, but CCM argued the contracts were frustrated and illegal due to sanctions.

What does “frustration” mean in English contract law?

A contract may be discharged on the ground of frustration when something happens which makes it physically, legally, or commercially impossible to fulfil, or changes the obligations so radically that they are completely different to what was originally agreed.

How do UK, US, and EU sanctions implemented after the Ukraine invasion affect investment bankers?

They may prevent payments to and from sanctioned Russian banks, freezing transactions, and making settlement of specific trades highly uncertain.

What is an OFSI general licence?

It is an authorisation issued by the Office of Financial Sanctions Implementation allowing limited activities that would otherwise breach sanctions, such as winding down existing trades.

Why does this case matter beyond the two parties?

The decision may offer some commercial certainty about how the courts will handle claims brought on the grounds that contractual obligations disrupted by sanctions resulted in breach of contract.

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

Note: This article does not constitute legal advice. For further information, please contact our London office.