Boris Mints & Ors v PJSC National Bank Trust & Anor

This appeal concerned the effect of the United Kingdom sanctions regime (principally the Sanctions and Anti‑Money Laundering Act 2018 and the Russia (Sanctions) (EU Exit) Regulations 2019) on ongoing commercial litigation: specifically whether an English court may enter a money judgment in favour of a designated person while sanctions are in force; whether OFSI may license payments connected with litigation (adverse costs orders, security for costs, damages on a cross‑undertaking, and costs in favour of a designated person); and whether a person is "owned or controlled" for the purposes of Regulation 7 where control is exercised by virtue of political office.

The Court of Appeal upheld the judge's construction that, on proper construction and applying the principle of legality, the statutory and regulatory provisions do not clearly authorise barring entry of money judgments in favour of designated persons; a judgment debt is a "fund" but a cause of action is better characterised as an "economic resource" and the entry of judgment is not the kind of act that the Regulations were intended to prohibit; Regulation 58(5) and the licensing regime indicate continuity with the pre‑Brexit EU regime. The court also held that OFSI may licence payments of adverse costs orders, security for costs and, in appropriate circumstances, damages on a cross‑undertaking and costs orders in favour of a designated person under Schedule 5 licensing grounds. On the control issue the Court disagreed with the judge: it concluded that Regulation 7(4) is wide enough to catch control by virtue of office and that the first claimant (NBT) is controlled by designated persons, but that conclusion did not affect the outcome because the court had otherwise found that judgments and licensing are permissible.

Background and parties:

• This appeal arises from complex Commercial Court proceedings (commenced 2019) in which two Russian banks alleged that the appellants (the Mints) conspired to effect uncommercial transactions. The claimants obtained freezing orders; litigation was advancing towards trial when the Russian invasion of Ukraine led to UK sanctions (February 2022 onwards).
• The principal statutory materials were the Sanctions and Anti‑Money Laundering Act 2018 ("SAMLA") and the Russia (Sanctions) (EU Exit) Regulations 2019 ("the Regulations").

• The appellants applied (and appealed) for a stay of the litigation and discharge of undertakings on the grounds that SAMLA/the Regulations prevented the court entering a money judgment in favour of a designated person and that payments required by litigation outcomes could not be licensed by OFSI.
• The case comes on appeal from Cockerill J in the Commercial Court ([2023] EWHC 118 (Comm)).

Issues framed:

1. Entry of judgment issue: whether a judgment may lawfully be entered for a designated person following trial.
2. Licensing issue: whether OFSI may license (i) payment by a designated person of an adverse costs order, (ii) satisfaction by a designated person of security for costs, (iii) payment by a designated person of damages pursuant to a cross‑undertaking in an injunction, and (iv) payment of a costs order in favour of a designated person.
3. Control issue: whether a designated person "controls" another entity within Regulation 7 where the influence arises by virtue of political office.

Reasoning and conclusions:

• Statutory interpretation and principle of legality: the court applied orthodox rules of construction and the "principle of legality" (fundamental common law rights are only curtailed if that is clearly authorised by primary legislation). The right of access to the courts includes the right to have civil claims adjudicated and, where valid, to obtain judgment. Any derogation must be clear.
• Entry of judgment: the court concluded that a cause of action is best characterised as an "economic resource" and a judgment debt as a "fund" but that the statutory language does not unambiguously prohibit entry of a money judgment. The terms "make available" and "deal with" (Regulations 11–14) are not apt to describe the court performing its judicial function of entering judgment; the statutory history, Regulation 58(5), Schedule 5 licensing grounds and the intent to preserve continuity with the EU regime support that construction. Applying the principle of legality, the provisions must be read so as not to curtail the right of access to adjudication absent clear primary‑legislative authorisation.
• Licensing: the court held Schedule 5, paragraph 3 (legal services) is wide enough to permit OFSI to grant licences enabling payment of adverse costs orders and security for costs; paragraph 5 (extraordinary expenses) can cover damages on a cross‑undertaking in appropriate, exceptional circumstances; licences can also enable payment of costs orders in favour of a designated person. OFSI retains discretion and policing of licence applications prevents abuse.
• Control: on the construction of Regulation 7(4) the Court considered the provision sufficiently wide to capture control "by whatever means" and concluded (contrary to the judge) that control via office can satisfy Regulation 7; the Court concluded NBT was controlled by designated persons. That finding did not change the operative outcome because the court also held that judgments and the identified licences are permissible.

Practical effect and disposition: the litigation may proceed; judgments can be entered and OFSI licences may authorise relevant payments. The appeal was dismissed; the panel disagreed with the judge on control but that point did not alter the result.

The appeal is dismissed. The Court held that, on proper construction and applying the principle of legality, SAMLA and the Regulations do not clearly authorise a prohibition on the entry of money judgments in favour of designated persons and that OFSI may, under Schedule 5 licensing grounds, licence payment of adverse costs orders, security for costs and, in appropriate exceptional circumstances, damages on cross‑undertakings and costs orders in favour of designated persons. The Court differed from the judge on the control point and concluded that Regulation 7(4) can capture control exercised by virtue of office and that NBT is controlled by designated persons, but that conclusion did not change the outcome.

Appeal from the High Court (Commercial Court, KB), Cockerill J: [2023] EWHC 118 (Comm). This Court delivered judgment [2023] EWCA Civ 1132 (06 October 2023).