In PJSC National Bank Trust v Mints, the Court of Appeal has considered a number of important and far reaching questions of law concerning the UK’s sanctions regime.
In the underlying proceedings, the claimants (both Russian entities) seek damages of c.$850 million, contending that some of the defendants caused them to enter into a disadvantageous transaction, which was a fraud on the banks, and that the other defendants were implicated in this fraud. A summary judgment application brought by the banks was dismissed by Foxton J in early 2022: see here.
Following Russia’s invasion of Ukraine, C2 was sanctioned by the Secretary of State and C1 is (on the Defendants’ case) ‘owned or controlled’ by at least one designated person, namely President Putin or Elvira Nabiullina (the Governor of the Central Bank of Russia, of which C1 is in effect a wholly owned subsidiary). The Defendants issued an application seeking a stay of the proceedings on the ground that it would be unlawful for the Court to enter judgment in favour of designated persons and that designated persons cannot lawfully provide security for costs, satisfy adverse costs orders or pay damages awarded on a cross-undertaking (and that OFSI, the regulator, has no power to license any of these things). The application was dismissed by Cockerill J who concluded that taking those steps would not be unlawful and, in any event, that C1 is not ‘owned or controlled’ by a designated person. She reached this latter conclusion on the ground that control exercised by virtue of a political office is to be disregarded in applying the test of control under Regulation 7(4) of the Russia (Sanctions) (EU Exit) Regulations 2019.
The Court of Appeal held that Cockerill J’s approach to the control issue was wrong but dismissed the appeal on the ground that she was right to conclude that the taking the steps referred to above would not be unlawful. The Chancellor of the High Court, who gave the judgment of the Court, concluded that, contrary to Cockerill J’s analysis, the test of control under Regulation 7(4) is purely factual and that there is no carve out for control exercised by virtue of a political office: see paras 225-233. The Court therefore held that C1 was controlled by President Putin for the purposes of Regulation 7(4).
The judgment is available here.
Laurence Rabinowitz KC and Niranjan Venkatesan acted for the Appellants (with Simon Paul of Fountain Court). They were instructed by Enyo Law LLP.