Since the expansion of the UK’s sanctions against Russia on 22 February 2022, there has been a significant increase in sanctions-related commercial litigation before the High Court and the Court of Appeal. Financial institutions are mostly at the forefront of these disputes as they attempt to walk a tightrope between sanctions compliance and the contractual obligations they owe to their clients and counterparties.
The sanctions against Russia, following its invasion of Ukraine in 2022, have been described as unprecedented in scale, scope and coordination due to the number of targets, sectors and the global coordination of G7 countries all acting in unison. This has led to a prohibition on UK banks from processing payments to and from the Russian central bank and other designated banks. The UK alone has imposed asset freezes on over 4000 individuals and entities.
As a result, there has been a surge in directly connected sanctions litigation, such as designated individuals challenging their designations under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) or challenges to OFSI’s refusal to issue licences. However, there has also been an increase of indirectly connected sanctions litigation, including a spike in claims for declaratory relief and jurisdictional disputes, which have become the focus of an ongoing anti-suit injunction dispute between Russian and English courts.
The trend of sanctions-related litigation looks set to continue and potentially expand in the future, with many of these claims regularly being heard in the Court of Appeal and even now in the Supreme Court because of the novel and complex issues which arise out of sanctions-related litigation.
It is therefore important that when dealing with a commercial dispute, you instruct litigators that are familiar with sanctions-related matters, so that your interests are properly protected.
Representative matters:
- Advising counsel and a client based in Eastern Europe on challenging an arbitration award made in circumstances where security could not be provided due to sanctions
- Advising a management company of high-value properties in North London on bringing proceedings against off-shore trusts subject to sanctions