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

In circumstances where it is accepted that the Defendant’s only available assets to pay the Interim Payment Order are the ING Funds, which are in US dollars and are insufficient to pay the interim payments ordered by Bryan J., UK sanctions legislation is of limited relevance to the present application. This is particularly so, in circumstances where the Claimants have requested payment of the US dollar amounts owed by the Defendant into an account with a bank in the Republic of Ireland.

Nevertheless I shall briefly consider the position under the Russia Regulations and also under the Serious Crime Act 2007 (“the 2007 Act”).

The Defendant relied on Regulation 11(1) of the Russia Regulations which prevents a person (“P”) from dealing with “funds or economic resources owned, held or controlled by a designated person if P knows, or has reasonable cause to suspect, that P is dealing with such funds or economic resources.”. Per regulation 11(2), this is subject to an exception if a relevant licence is obtained.

Regulation 11(4) provides that a person “deals with” funds if that person “(a) uses, alters, moves, transfers or allows access to the funds, (b) deals with the funds in any other way that would result in any change in volume, amount, location, ownership, possession, character or destination or (c) makes any other change, including portfolio management, that would enable use of the funds”.

Regulation 11(7) states that “For the purposes of paragraph (1) funds or economic resources are to be treated as owned, held or controlled by a designated person if they are owned, held or controlled by a person who is owned or controlled directly or indirectly (within the meaning of regulation 7) by the designated person.”.

The Defendant submitted that any transfer by the Defendant of sums into the Claimants’ bank account would amount to a breach of Regulation because the Defendant would thereby deal with funds owned, held or controlled by a designated person (Mr. Isaykin) by transferring those funds to the Claimants’ bank account. Further the receipt of such funds by the Claimants would also amount to a breach of Regulation 11 as this would also fall within the scope of dealing with those funds.

There are in my view significant difficulties with the Defendant’s submissions as to the effect of Regulation 11:

The Defendant also submitted that, even if the Defendant was not in breach of the Russia Regulations, the actions of the Claimants and their legal representatives may still be unlawful under the 2007 Act. Section 45 of the 2007 Act specifies that “A person commits an offence if (a) he does an act capable of encouraging or assisting the commission of an offence and (b) he believes (i) that the offence will be committed and (ii) that his act will encourage or assist its commission.”

The Defendant identified the relevant acts for the purposes of s.45 as being:

In circumstances where I am not persuaded that there is a real risk that mere receipt of funds transferred by ING bank into a UK bank account would without more be a breach of Regulation 11, I am also not persuaded that there is a real risk of the Claimants or their legal representatives or the Defendant and its legal representatives being in breach of s.45 of the 2007 Act.