CL-2022-000249 - [2025] EWHC 1156 (Comm)

For the reasons set out below, I do not consider it appropriate to vary the Interim Payment Order.

First, while I am not bound to apply the test that any variation requires the Defendant to establish a material change of circumstance, misstatement or mistake since the Interim Payment Order was made, I accept that the general principles that apply under CPR 3.17 provide good guidance as to how I should decide whether it is appropriate to order a variation to the Interim Payment Order under CPR Rule 25. In this context, it follows that applications to vary orders should be rare and should be made without delay.

In the present case, I do not consider that the evidence does establish that the Court overlooked at the previous hearing the possible effect of either the UK or US sanctions legislation when making the Interim Payment Order or that there was otherwise a material change of circumstances, misstatement or mistake since the Interim Payment Order was made. Although the Defendant was not present during the afternoon session of the hearing on 11 February 2025, it was present during the morning session when the effect of the sanctions legislation on the payment of the Defendant’s legal fees was discussed and made submissions on that issue. When Bryan J. came to determine the Interim Payment Application, he was aware that the Defendant was subject to both UK and US sanctions. Having understood and accepted that the Defendant was having difficulty paying its legal fees due to sanctions, it is reasonable to infer that the Judge was also aware that sanctions would mean that the Defendant would have difficulty transferring funds to pay the Claimants. In this regard, the impact of US and UK sanctions on the ability of a sanctioned party or someone closely linked to that party to make payments in sterling or US dollars is well-known. As set out earlier in this judgment, I do not consider that the evidence supports any inference that the Judge overlooked the possibility that sanctions would make it difficult for the Defendant to transfer funds to the Claimants without a licence.

I also take into account that the Defendant waited until the last day for payment under the Interim Payment Order before making the present application. The Defendant did not take any steps during the period from 11 to 25 February 2025 to apply for either an OFSI or OFAC licence and only made the necessary applications on 07 April 2025.

Accordingly, I am not persuaded that the Defendant has established a sufficient basis on which I should consider exercising a discretion to vary the Interim Payment Order.

But even if I were otherwise persuaded that it was appropriate to consider whether to order a variation to the Interim Payment Order, I decline to do so for the following reasons.

First, the Interim Payment Order itself does not breach either UK or US sanctions.

Second, it is common ground that the only funds available to the Defendant to make payments under the Interim Payment Order are the ING Funds, which are subject to the garnishee order issued by the Dutch court. While I have no evidence of Dutch law before me, it seems to me to be reasonably obvious that the Claimants’ prospects of obtaining an order from the Dutch court for payment out of those funds are better if they have an immediately enforceable order for payment to them rather than an order which makes payment contingent on the Defendant obtaining licences from OFSI or OFAC.

Third, there is no realistic prospect of the ING Funds being transferred in breach of US sanctions legislation. ING have already indicated that they are not prepared to release the funds without the protection of an OFAC licence. Further, it would seem inevitable that the Dutch court will want to be satisfied that any order it makes for payment out of the funds does not breach any applicable sanctions legislation.

Fourth, given that the interim payments to be made in US dollars exceed the amount of the ING Funds and the Claimants have requested that any dollar funds are paid to a bank account in Ireland, it would seem unlikely that any part of the ING Funds will be paid into the UK. In any event, for the reasons given above, I do not accept that there is a real risk that by paying funds into a UK bank account nominated by the Claimants, the Defendant or indeed the Claimants would breach the Russia Regulations. In particular, even if there were any realistic prospect of the Defendant making such a transfer, the transfer would have to be into an account which was frozen pending approval from OFSI for any dealing with the funds.

Fifth, while I accept that in the absence of an order varying the payment terms of the Interim Payment Order, the Defendant is currently in breach of the terms of that order, the Claimants have given an assurance that they will not seek to pursue contempt proceedings against the Defendant. In any event, it seems to me that, while the Defendant is prevented from making any payment under the Interim Payment Order due to the effect of US sanctions legislation on the ING Funds and the garnishee order of the Dutch court, there is no realistic prospect of the Defendant being held to be in contempt of court.

In relation to paragraph 57 above, there was a discussion during the hearing as to whether I should require an undertaking from the Claimants that they will not seek to pursue contempt proceedings. However, I am satisfied that the assurance given by Mr. Allen KC on behalf of his clients is sufficient and that it is not necessary to go further and require an undertaking.

Finally, the Defendant briefly raised in the second witness statement of Mr. Botiuk two respects in which it submitted that the Claimants had failed to comply with their duty of fair presentations before Bryan J. Those respects were (i) it was suggested that the Claimants had changed the basis on which they were seeking interim payments at the 11February hearing and (ii) that the Claimants had overstated the minimum amounts of their claims by a margin of several hundred million US dollars. Only the second of these was addressed in the Defendant’s skeleton argument and neither point was addressed orally by Mr. McLaren KC. There is in my view no merit to the Defendant’s case on breach of a duty of fair presentation.