PJSC National Bank Trust & Anor v Boris Mints & Ors

Sanctions legislation does not bar a court from determining a designated claimant’s pre-existing claim unless Parliament has clearly authorised that interference with access to justice. That right includes obtaining a judgment, not merely entering the court. A judgment debt is a fund, while a cause of action is an economic resource, but entering judgment is not thereby dealing in or making available sanctioned assets. No licence is needed for judgment. OFSI may license adverse costs, security for costs and cross-undertaking damages. A favourable costs payment is also licensable, but post-judgment interest on costs is not.

The Claimants pursued complex conspiracy claims worth approximately US$850 million. Following the Russian invasion of Ukraine, the Second Claimant was designated under the UK sanctions regime, and the Defendants argued that the First Claimant was also subject to an asset freeze through alleged control by designated persons.

The First to Fourth Defendants sought a stay of the proceedings and release from undertakings given in connection with freezing orders. The central issues were whether sanctions prevented the Court from entering judgment for a sanctioned claimant, whether OFSI could license costs, security and cross-undertaking payments, and whether the First Claimant was controlled by designated persons.

The Defendants’ applications were dismissed. The Court held as follows.

1. The principle of legality applied to the Sanctions and Anti-Money Laundering Act 2018 and the Russia (Sanctions) (EU Exit) Regulations 2019, despite their UN and EU origins. Fundamental access to the courts could be curtailed only by clear words or necessary implication in primary legislation. The legislation did not clearly authorise a general prohibition on determining a designated claimant’s claim.
2. Access to justice included the right to obtain a judicial determination and judgment, not merely the right to enter the court.
3. A judgment debt was a fund under section 60 of the 2018 Act. A cause of action was, at most, an economic resource. Nevertheless, entering judgment was not thereby dealing in or making available funds or economic resources under Regulations 11 and 12. The EU sanctions background, the structure of the UK regime and the absence of a clear derogation all supported that conclusion. No licence was required to enter judgment.
4. OFSI could license payment of adverse costs and security for costs under Schedule 5, paragraph 3 of the 2019 Regulations. Damages payable under a cross-undertaking were licensable under paragraph 5 as an extraordinary expense, rather than under paragraph 3.
5. A favourable costs order in favour of a designated claimant involved making funds available, but payment was licensable under paragraph 3. VAT formed part of the relevant legal fees. No licensing ground was identified for post-judgment interest on costs, so interest was reserved.
6. The Court tentatively concluded that control through public or governmental office did not fall within Regulation 7(4). The First Claimant was therefore not controlled by Mr Putin or Ms Nabiullina for the purposes of the Regulations.

The stay arguments consequently fell away. The remaining agreed or stood-over matters were dealt with by agreement or deferred.