A notable decision of the UK Court of Appeal Mints & Ors v PJSC National Bank Trust & Anor [2023] EWCA Civ 1132 was handed down on 6 October 2023.
The case concerns the UK Russian sanctions’ regime.
There were three issues raised in the appeal and they are set out at paragraph 3 of the judgment.
(The regulations referred to in the judgment are the Russia (Sanctions) (EU Exit) Regulations 2019 (“Regulations”).
The first issue raised was whether a judgment can lawfully be entered for a designated person by the English court following a trial at which it has been established that the designated person has a valid cause of action;
The second is the circumstances whereby Treasury /OFSI can license certain payments;
The third is whether a designated person controls an entity within the meaning of Regulation 7 where the entity is not a personal asset of the designated person, but the designated person is able to exert influence over it by virtue of the political office that he or she holds at the relevant time. (The control issue).
The Court of Appeal found that as (1) the entry of a money judgment in favour of a designated person was not prohibited by the UK sanctions regime and (2) the payments/litigation steps could be authorised by licence, the issue of control did not arise .However the judge said that as the control issue was fully argued and of some general significance he would briefly address it .The remarks are therefore obiter dicta ,not a binding part of the decision and of persuasive authority only .
The judge said that the wording of Regulation 7 does not distinguish between different forms of “non-ownership control” or “calling the shots”. He concluded that control can be established under Regulation 7 by whatever means including political and corporate office. In any event the judge said that even though he would have found for the appellants on this issue, because they lost on the first two issues, the appeal must be dismissed.
Following the decision the UK Foreign ,Commonwealth and Development Office (FCDO) issued a statement on the Mint decision saying that it was carefully considering its impact. It said that the FCDO would look to designate a public body where possible when designating a public official if FCDO considered that the relevant official was exercising control over the public body. It went on to say that there is no presumption on the part of the Government that a private entity based in or incorporated in Russia or any jurisdiction in which a public official is designated is in itself sufficient evidence to demonstrate that the relevant official exercises control over that entity.
The statement helps to support the conclusion that the UK government did not intend for all Russian companies to be subject to sanctions restrictions by virtue of Mr Putin’s designation, but legislative clarity on this issue would be best to ensure certainty in this area.
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