UK Commercial Court Lets Fraud Case Proceed Against Russian Businessmen Over Sanctions Concerns

The U.K.'s Commercial Court in a Jan. 27 judgment let a proceeding involving PJSC National Bank Trust and PJSC Bank Otkritie Financial Corp. be taken to the Court of Appeal, finding it raises key questions of law concerning the impact of the U.K.'s Russia sanctions on ongoing litigation involving a designated party.

Filing the case in 2019, the banks asserted that various of the defendants, including Russian oligarchs Boris, Dmitry, Alexander and Igor Mints, conspired with representatives of Bank Otkritie to enter into "uncommercial transactions" in which "loans were replaced with worthless loans." A summary judgment application from the claimants was dismissed in 2022. The defendants applied for a stay on the premise the banks cannot lawfully satisfy adverse costs orders, or provide security for costs because Bank Otkritie is a sanctioned entity and National Bank Trust is controlled by Russian President Vladimir Putin or the governor of the Russian Central Bank.

Justice Sara Cockerill said the issue is only with Bank Otkritie and not the National Bank Trust, which is not considered controlled by Putin or the central bank governor simply due to their political office. The justice held the asset freeze prohibitions as part of U.K. and EU sanctions regimes do not prevent a judgment relating to a pre-sanctions claim from being entered for or against a designated party. The Office of Financial Sanctions Implementation can license orders for adverse costs, the payment of costs ordered to a sanctioned party and security for costs to meet adverse cost orders, though post-judgment interest on costs cannot be licensed, the justice ruled.